SARDAR SHAMSHER SINGH Vs. STATE OF UTTAR PRADESH

JUDGEMENT

(1.) The following questions have been referred by the Agricultural Income Tax Board, U.P. under Sec. 24(4) of the U.P. Agricultural Income Tax Act for the opinion of this Court:-

(2.) This Court directed the Board to refer to it the statement of the case at the instance of the assessee who has been assessed to a tax under the Agricultural Income-Tax Act for the year 1363 Fasli. The tax is charged under Sec. 3 on the total agricultural income of the previous year of every person. Every assessee is given an option of having his agricultural income computed on an amount equal to the rent multiplied by a certain multiple or at the gross proceeds of sale of the produce of all the land subject to certain specified deductions. The assessee in this case has opted in favour of the latter method, i.e., his income was to be computed on the basis of the gross proceeds of sale of the produce of his entire land. He produced a statement of the income showing the gross proceeds of sale of the produce of all his land and of the expenditure incurred by him but his accounts were disbelieved by the Assessing Authority and it proceeded to determine to the best of his judgment the amount of the produce and the market value thereof. R. 15 of the Rules framed by the State Government provides that in determining the amount of produce and the market value thereof under Sec. 6(3) the Assessing Authority may take into consideration the account books, if any, kept by the assessee, the average yield for the crop reported in neighbouring areas having regard to the class of soil and the situation thereof and the average prices during the year for such produce in the nearest market. The Assessing Authority in the instant case determined the amount of the produce not by taking the average yield of each crop reported in the neighbouring areas but on the basis of the average yield of each crop in a bigha regardless of the situation and the class of soil. He took the total area under each crop, multiplied it by the assumed yield of the crop per bigha and thereby arrived at the total yield of the crop. Applying the market rate he arrived at the total income from the crop. By adding up the total incomes of the different crops he arrived at the figure of Rs. 87, 251-8-6 which is a mistake for Rs. 77, 251-8-6. In adding up the total incomes from the total crops he committed this mistake. The assessee claimed that on account of an agricultural calamity, viz. floods and frost the yield from his land had suffered considerably. This was accepted by the Assessing Authority and it reduced the income by 20 per cent on account of the agricultural calamity. The assessee claimed having spent Rs. 35, 951-7-3 on cultivation and purchase of agricultural implements; the Assessing Authority allowed this deduction also. Out of the amount of Rs. 87251-8-6 he deducted the amount of Rs. 49, 352-8-0 and the balance left was Rs. 37, 899-0-6. To this income he added Rs. 1164 on account of the income from groves and charged the assessee to a tax on the total amount of Rs. 39, 063-0-6.

(3.) The assessee filed an appeal before the Commissioner. The Commissioner corrected the total of the incomes from the various crops as found by the Assessing Authority and took it to be Rs. 77, 251-8-6. He accepted the figure of the income from the groves. He allowed the deduction of Rs. 33, 937-7-3 on account of the cost of cultivation but disallowed the deduction of 20 per cent on account of loss from the agricultural calamity. Out of the entire land about 93 bighas are in possession of sajhidars and the assessee contributed towards the expenses of cultivation half and half and divided the produce between them half. and half. Half the produce of this area of 93 bighas was thus taken away by the sajhidars and the assessee realised only the other half of the produce. Whatever expenses were incurred by him over cultivation of half of the land have been included in the figure of Rs. 33, 937-7-3. He claimed that the price of half the produce taken away by the sajhidars should be deducted from his income but the Commissioner disallowed it on the ground that the sajhidars had no status except as servants, that the assessee has to be taxed on the whole income and that whatever he pays in cash or kind to the sajhidars should be treated as his expenditure. In the result the Commissioner assessed him on an income of Rs. 44, 478-1-3, a higher amount than that found by the Assessing Authority.