COMMISSIONER OF AGRICULTURAL INCOME TAX U P COMMISSIONER OF AGRICULTURAL INCOME TAX U P Vs. M L BAGLA AND:SHRI PURAN MAL JAIPURIA

JUDGEMENT

(1.) A common question arises in this group of appeals. One Bhagwati Prasad was the owner of an extensive area of land. By a deed dated 21/01/1941, he granted a lease for agricultural purposes of 316.3 acres of land to Puran Mal Jaipuria; and by another lease dated 20/04/1942, he granted a lease for agricultural purposes of 326.1 acres of land to M. L. Bagia. For the Fasli years 1356, 1357, 1353 and 1359, the two lessees appointed a common manager for cultivation of the land. The manager maintained a common account of expenditure and income, kept the profits joint and later divided them between the two lessees according to their respective area. In. the proceeding for assessment of the income received by the lessees to agricultural income-tax, it was claimed by the two lessees that income was their separate income and was liable to be assessed separately. The Income Tax Officer upheld the plea and separately assessed the tax. The Commissioner of Agricultural Income Tax disagreed with that view and assessed the income of the two lessees as income of an association of individuals. That order of the Commissioner was confirmed by the Board of Agricultural Income Tax, U. P. The following question was then referred by the Board to the High court:

(2.) S. 3 of the U. P. Agricultural Income Tax Act, 1948 , 1948 provides for the levy of tax on the agricultural income on the previous year of every person. By S. 2 (11) , a "person" is defined as meaning an individual or association of individuals owning or holding property for himself or for any other, or partly for his own benefit and partly for that of another,, either as owner, trustee, receiver, manager, administrator or executor or in any capacity recognised by law, and includes an Undivided Hindu Family, firm or company, but does not include a local authority. In the view of the Board of Agricultural Income Tax, because there was common management and common account of the receipts and expenditure, and the net income was divided, the lands were held by an association of individuals, and the income thereof was liable to be assessed as income of an association of individuals.

(3.) The High court examined the argument in three branches. First, whether there was an association of individuals; secondly, whether the association of individuals held property, and thirdly, whether the land was held in any of the capacities mentioned in the definition of the expression 'person' in S. 2 (11) of the U. P. Agricultural Income Tax Act, 1948 , 1948. The High court held on the first branch that there was an association of persons, on the second that there was a holding of land by an association of men, and, on the third that the land was not held by the association as owner, trustee, receiver, manager, administrator or executor, or in any other capacity recognised by law as partnership, company or local authority, and on that ground, answered the question in the negative.