CHANDYPORE TEA ESTATE Vs. COMMISSIONER OF TAXES ASSAM

JUDGEMENT

(1.) THIS reference is by the Assam Board of Revenue, hereinafter referred to as the "Board", under section 28(2) of the Assam Agricultural Income-tax Act, 1939, hereinafter called the "Act", for the decision of this court on the following questions of law :

(2.) THIS reference was apparently made at the instance of the Chandypore Tea Estate, hereinafter referred to as the "petitioner-firm". The reference has relation to the assessment of the petitioner-firm to the agricultural income-tax for the assessment year 1956-57 and 1957-58. The petitioner-firm is a firm registered under the Indian Partnership Act, 1932, hereinafter called the "Income-tax Act." The income derived by the petitioner-firm having been regarded as agricultural income, forty per cent. thereof had been assessed to income-tax, and in doing so, as the firm was registered under the Income-tax Act, the assessment procedure indicated in section 23(5)(a) of the Income-tax Act was followed and the incomes of the partners were individually assessed; but as regards the balance of the income, namely, sixty per cent. thereof, which is assessable under the Act, was assessed to the income-tax on the basis of the agricultural income of the firm as a separate entity and not on the individual shares of the partners. Such an assessment under the Act, necessarily involves payment of agricultural income-tax at a higher rate than what would have become assessable, had the partners been treated as separate individuals and separately assessed in respect of their respective shares of the income. The Income-tax Officer had assessed the net income from the income of the petitioner-firm from tea at Rs. 1,11,277 for the year 1956-57 and Rs. 1,40,846 for the year 1957-58. The sixty per cent. portion of this net income amounted to Rs. 66,766 for the year 1956-57 and Rs. 84,507 for the year 1957-58, and on this part of the income, agricultural income-tax was levied in a sum of Rs. 15,325.31 for the 1956-57 and Rs. 20,822.13 for 1957-58, treating the firm as an assessable entity, as already indicated. The firm appealed against the order of the Agricultural Income-tax Officer to the Assistant Commissioner of Taxes, claiming that each individual partner should have been assessed separately, the partnership firm itself not having been regarded as a distinct legal entity. But those appeals were rejected on the principal ground that the partnership firm was a distinct entity by itself, apart from that of the partners who constituted the firm. Against this order rejected the appeals, the petitioner-firm preferred further appeals before the Board before whom it was urged that the petitioner-firm was not a separate juristic person and as such could not be assessed and that, therefore, the individuals partners alone could be assessed on the basis of their respective shares in the income and that the firm was a common manager for the partners and should get the benefit of section 13 of the Act and that the sixty per cent. of the total income was not agricultural income at all. The Board dismissed the appeals rejecting all the points raised by the firm.

(3.) THE expression "agricultural income" has been defined in section 2(a) of the Act, the relevant portion whereof is extracted below :