PROVINCE OF BIHAR Vs. DALIP NARAIN SINGH

JUDGEMENT

(1.) This is a reference under Section 25 (2) of the Bihar Agricultural Income-tax Act, 1938, for the opinion of the Court on the following questions : (1) Whether the assessee should not be allowed deduction from the assessable income a sum of Rs. 10,000 claimed by him as interest on arrears of rent on which tax has already been recovered by the Central Income-tax Department. (2) Whether the assessee should not also be allowed deduction at 12 1/2 per cent. collection charges on the total amount of cess collected by him under Section 6 (c) of the Bihar Agricultural Income-tax Act; and (3) Whether the Agricultural Income-tax Officer was right in allowing the assessee only a proportionate deduction on account of the municipal tax payable for his residential house, a part of which is used along with his co-sharers as zamindari sherista, although the full amount of the tax is paid by the assessee.

(2.) Question 1. - The first question will be answered in accordance with the answer given by this Court in Lakshmi Daiji V/s. Commissioner of Income-tax, Bihar and Orissa, decided on the 15 February 1944, in which we held that interest on arrears of rent is part of the assessees agricultural income within the meaning of Section 2(1)(a) of the Income-tax Act, and, therefore, exempt from taxation under the Income-tax Act. It follows that the sum of Rs. 10,000 must be included under the agricultural income of the assessee assessable to agricultural income-tax. If the tax has been recovered by the Central Income-tax Department on this sum, the remedy of the assessee is to apply for relief elsewhere. No deduction can be given to the assessee in these proceedings.

(3.) Question 2. - The assessee claim that he should be allowed deduction of 12 1/2 per cent. of the amount of cess which accrued to him during the previous year as collection charges. By Section 6, sub-clause (c), of the Bihar Agricultural Income-tax, Act the deduction permitted is 12 1/2 per cent. of the total amount of the rent which accrued due in the previous year. The assessee contends that cess in included in the term rent and drawn attention to a number of authorities and various provisions in the Tenancy Act, where it has been held that the definition of rent in the Tenancy Acts includes road cess. In my opinion the contention is fallacious because the question is not whether cess is recoverable or recovered as rent within the meaning of the Tenancy Acts but whether the word rent used in Section 6 (c) also includes cess.