PROVINCE OF BIHAR Vs. MAHARANI JANKI KUER

JUDGEMENT

(1.) This is a reference by the Bihar Board of Agricultural Income-tax under Section 25 (2) for the opinion of this Court as to whether certain claims should be allowed to the assessee out of his agricultural income. The assessment year is 1941-42. The assessment has been made upon the Bettiah Estate under the Court of Wards through its manager.

(2.) Claim No. 1. - The assessee pays Rs. 3,96,354 as land revenue to the Government. The assessing authorities have disallowed Rs. 17,662, in this way. They find that the total agricultural and non-agricultural income of the assessee was Rs. 29,82,263 in the previous year and that this included Rs. 1,33,412 as the sair or non-agricultural income. Therefore they have calculated the share of the revenue payable for non-agricultural income at Rs. 17,662. The assessing authorities profess to follow the decision of their Lordships of the Judicial Committee in the celebrated case of Raja Probhat Chandra Barua. In that case the question decided was that non-agricultural income derived from lands in permanently settled estates was chargeable to tax under the Indian Income-tax Act of 1922. Lord Russell of Killowen in delivering the judgment of the Board observed at page 5 : "Their Lordships were unable to ascertain upon what footing the appellant had been assessed in respect of the income derived from his zamindari, i.e., whether on the gross income or after some allowance had been made in respect of the jama assessed and paid upon the lands. Their Lordships are of opinion that, in assessing the appellant to income-tax in respect of the income derived from his zamindari, his income, profits and gains from that source should be computed after making proper allowance in respect of the jama assessed and paid." It should be observed that in the Indian Income-tax Act there is no special section which allows a deduction on account of the jama paid upon the land from which non-agricultural zamindary income is derived. It is only under Section 9 which deals with the head "Property" that by sub-clause (v) a deduction is permissible on account of land revenue. But non-agricultural zamindari income is taxable not under the head "Property" but under "Other sources." For this reason their Lordships followed the general principles which require or allow such a deduction to be made.

(3.) In the present case, however, there is a statutory direction in Section 6 of the Bihar Agricultural Income-tax Act, 1938 (hereinafter to be referred to as the Act). Under Section 6(a) of the Act a deduction has to be made of "the sum actually paid in the previous year as revenue to the Crown or as rent to a landlord in respect of the land from which such agricultural income is derived." The assessee claims that there is no warrant for the procedure adopted by the Agricultural Income-tax Officer by which he calculated a proportion of the land revenue as being attributable to the land from which agricultural income is derived. I agree with this contention. The agricultural income is derived by the assessee from all the villages which are subject to the payment of land revenue as assessed at the time of the permanent settlement. It is not permissible to dissect the lands comprised in the villages and then find out that so much of the land yielded agricultural income and the remainder non-agricultural income. Upon the plain words of the section, the assessee, in my opinion, is entitled to claim a deduction. The claim must be allowed.