FAIRLEY K D Vs. STATE OF MADRAS

JUDGEMENT

(1.) ONE Mr. Hight was the owner of certain coffee estates. These estates were sold by him to certain other persons on May 14, 1957. Under the terms of the sale, the coffee crop of the years 1956 -57 and the earlier years was to belong to the vendor and that of 1957 -58 to the vendees. During the account years relevant to the asst. yrs. 1958 -59 and 1959 -60 the representatives of the vendor received from the India Coffee Board the price of the coffee delivered to the Board, the coffee being the crop of the account years 1954 -55 to 1956 -57 inclusive. The payments in respect of the coffee so delivered by the owner to the Coffee Board were however received on various dates from April 1, 1957, onwards. Since this owner Mr. Hight ceased to be the owner on and from May 14, 1957, the contention was advanced in relation to assessments under the Agrl. IT Act that the receipts after May 14, 1957, constituted capital receipts and did not represent agricultural income. This contention was rejected by the ITO, who however purported to include in the assessable income a sum of Rs. 642 which related to the coffee crop of the year 1951 -52. The gross agricultural income for the asst. year 1958 -59 was computed at Rs. 10,25,755. Allowing for an expenditure of Rs. 23,857 the taxable income was computed at Rs. 10,01,897. The tax thereon came to Rs. 4,44,173. For the asst. year 1959 -60, the quantum of receipts from the Coffee Board relating to 1956 -57 and 1954 -55 crops came to Rs. 1,16,057 on which the tax payable was assessed at Rs. 45,545.

(2.) AGAINST these orders of assessment, appeals were taken to the Assistant Commr. of Agrl. IT by the representatives of the estate of the assessee. The only ground urged in the appeals was that the coffee pool payments received after the date of the sale of the estates cannot be regarded as income assessable under the Agrl. IT Act. This contention was not accepted. Further appeals to the Tribunal also failed. The Tribunal however deleted the sum of Rs. 642 which related to the crop of the year 1951 -52. The Tribunal relied upon a Bench decision of this Court rendered in W. As. Nos. 121 and 122 of 1957 and held that the assessments were rightly made. The contention that the assessee should be a person owning the land on the date of the receipt of the income was repelled by the Tribunal. It is against these orders of the Tribunal that these revision petitions have been filed and the same ground that was advanced before the Department and the Tribunal, namely, that the receipts after May 14, 1957, did not represent agricultural income assessable to tax has again been pressed before us. That is the question which we have to consider in these petitions. Mr. K. Srinivasan, learned counsel for the assessee, presents the above contention and develops it in the following manner : Under S. 3 of the Madras Agrl. IT Act, the tax shall be charged for each financial year in accordance with and subject to the provisions of the Act on the total agricultural income of the previous year of every person. Under S. 2(q) of the Act "person" has been defined to mean "any individual or association of individuals owning or holding property for himself or for any other..." Reading the two together, it is argued by learned counsel that the person sought to be assessed should be a person who holds land during the year of assessment. Reference is also made to S. 10 of the Act by learned counsel which provides for exemption and which is in these terms :

(3.) FAR from supporting the contention of the learned counsel, S. 23 seems to us to lead to the contrary conclusion. The very fact that where land has been transferred by one person to another, both the transferor and the transferee have been made liable by S. 23 of the Act to tax on their respective shares of the agricultural income, undoubtedly establishes that so long as person, who was either the owner or was entitled to receive the income, did receive any part of such income, he is liable to be assessed thereon. It is not necessary that at the time of the assessment the person would still continue to be the owner of property. Nor can we find anything in S. 10, which is an exemption provision which aids in the interpretation of the charging provision. Coming to the facts of this case, undoubtedly the assessees or their predecessors -in -interest were the owners of the land and did realise or receive the agricultural income which arose during the period of such ownership. It is true that this income came into their hands only after the date of the sale, May 14, 1957. If for the reasons we have stated above such agricultural income is liable to tax, notwithstanding the cessation of ownership of the lands, there can be no doubt that the income was assessable in the assessment years in question.