Back
HIGH COURT OF CALCUTTA
CHAKRABARTI, LAHIRI
BENOY KUMAR SAHAS ROY - Appellant
Versus
COMMR. OF INCOME-TAX, WEST BENGAL - Respondent
Income-Tax Reference 35 Of 1952
Decided On : MAY 27, 1953
INCOME TAX - Re-assessment - Validity - Definite information - Agricultural income - Forest income - Whether agricultural income - Held, yes.
Fact of the Case:
The assessee owned an area of 6000 acres of forest land, assessed to land revenue and grown with Sal and Piyasal trees. The forest was originally of spontaneous growth, "not grown by the aid of human skill and labour" and has been in existence for the last 150 years. A considerable income is derived by the assessee from sales of trees from this forest. The assessment year in which this forest income was last taxed under the Indian Income-tax Act was 1923-24, but thereafter and till 1944-45 which is the assessment year now in question, it was always left out of account.
Finding of the Court:
1. The information contemplated by Section 34, Income-tax Act, must be information as to a fact. 2. Information as to the state of the law, derived freshly from an external source of an authoritative character cannot be information as contemplated by Section 34. 3. A decision as to the true import of an existing provision of law is undoubtedly liable to be overruled, but the view taken in it is not, so long it is not overruled, any the less definite than a clear provision in the statute itself, because the latter also is liable to be superseded with retrospective effect. 4. The word 'agriculture', as used in the Income-tax Act, contemplated employment of human skill and labour in actual cultivation of the soil and did not extend to the activities of a sylviculturist. 5. In order that there may be agriculture, it is the agar, the field which must be cultured. 6. When income is derived from natural growths from the soil, it is derived from land, but not derived from land by agriculture. It is derived from land by agriculture, as the definition requires, when the land is subjected to the labour and skill of man, whether in the form of cultivation or otherwise, in order to the production or the improvement of the produce which yields the income.
Issues: 1. Whether on the facts and in the circumstances of this case, Section 34 is applicable? 2. Whether on the facts and in the circumstances of the case, the sum of Rs. 34,430 is 'agricultural income' and as such is exempt from payment of tax under Section 4 (3) (viii), Indian Income-tax Act?
Ratio Decidendi: 1. The information contemplated by Section 34, Income-tax Act, must be information as to a fact. 2. Information as to the state of the law, derived freshly from an external source of an authoritative character cannot be information as contemplated by Section 34. 3. A decision as to the true import of an existing provision of law is undoubtedly liable to be overruled, but the view taken in it is not, so long it is not overruled, any the less definite than a clear provision in the statute itself, because the latter also is liable to be superseded with retrospective effect. 4. The word 'agriculture', as used in the Income-tax Act, contemplated employment of human skill and labour in actual cultivation of the soil and did not extend to the activities of a sylviculturist. 5. In order that there may be agriculture, it is the agar, the field which must be cultured. 6. When income is derived from natural growths from the soil, it is derived from land, but not derived from land by agriculture. It is derived from land by agriculture, as the definition requires, when the land is subjected to the labour and skill of man, whether in the form of cultivation or otherwise, in order to the production or the improvement of the produce which yields the income.
Final Decision: 1. Yes. 2. Yes.
( 1 ) THIS reference relates to a re-assessment under Section 34, Indian Income-tax Act and comprises two points taken by the assessee, one of which seeks to make out that the entire re-assessment proceedings were without jurisdiction and the other of which seeks to make out that, in any event, the income brought to tax under the re-assessment was not taxable. The contention in the first case is that the Income-tax Officer had no "definite information" on which he could legally proceed under Section 34. In the second case, it is that the income concerned, is agricultural income.
( 2 ) BEFORE dealing with the reference on the merits, it is necessary to dispose of a preliminary point. Section 66 (1), Income-tax Act provides that the Commissioner or the assessee may, by an application made within a certain time, require the Appellate Tribunal to refer to the High Court any question of law arising out of its order and further provides that "the Appellate Tribunal shall, within ninety days of the receipt of such application, draw up a statement of the case and refer it to the High Court. " in the present case the reference was not made within ninety days from the receipt of the application. As this was happening in too many cases, it appeared to this Court that the statutory direction contained in Section 66 (1) of the Act was being disregarded by the Tribunal and, accordingly, it was directed by an administrative order that references made after the expiry of the period prescribed by the Act, should be accepted only provisionaliy, subject to all just exceptions thab might be taken at the hearing on the ground of limitation. The order was directed to be incorporated in the Paper-Book of every case in which the question was involved so that the matter might be judicially examined. The present case is the first in which the matter has come up for consideration and we have heard the learned counsel for the Commissioner of Income-tax and the assessee. Both contended that the provision contained in Section 66 (1) as to the time within which the reference was to be made was not mandatory, but only directory and, therefore, although a reference might be made after the expiry of the period prescribed, the validity of the reference would not thereby be affected. We are of opinion that that contention is correct. The act which the statute enjoins to be done within a particular period is an act to be done by the Tribunal and it is a settled principle of construction that when the effect of construing such provisions as mandatory would be to affect the rights of individuals, they ought not to be so construed: -- 'canadian Pacific Rail. Co. v. Parke', (1899) AC 535 (A ). The principle was stated by the Privy Council more elaborately in --'montreal Street Railway Co. v. Normandin', AIR 1917 PC 142 (B), which is the leading case on the subject. As stated there, the principle is that where the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of that duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty, and at the same time would not promote the main object of the Legislature, such provisions should be construed as being directory only and not imperative. It is true that the act which the Privy Council was considering was an act of a different kind, but it appears to us that the principle laid down is none the less applicable here, because the object of the Legislature is to provide that questions of law arising out of the order of the Tribunal shall be further considered by the High Court, if either of the parties so desires and it is in furtherance of that object that a duty has been laid on the Tribunal to place such questions before the High Court. The Tribunal is a judicial body and over its actings, the parties have no control. In those circumstances, to construe t
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
