Jagannadha Das, C.J.
1. This is an application under Section 29 (3), Orissa Agricultural Income-tax Act asking that we should require the Revenue Commissioner to state a case to this Court for its decision in the following circumstance. The petitioner was assessed to agricultural income-tax for the assessment year 1949-50, the accounting year being the previous year, viz., 1948-49. The petitioner contends that the assessment is illegal on various grounds, of which only the following three, to be presently stated, are pressed before us.
2. The petitioner is the Zamindar of Himgir estate which formed part of the independent State of Gangpur. Gangpur State became integrated with the Province of Orissa along with a number of other States, since 1-1-1948. From that date this State and other integrated States were being administered by the Government of Orissa under Administration of Orissa States Order. The Orissa Agricultural Income-tax Act of 1947 was extended to the integrated Orissa States by virtue of Government Notification No. 980 dated 19-1-1949, which added the Orissa Agricultural Income-tax Act to the schedule of laws applicable to the integrated States under the Administration of Orissa States Order. The contention of the petitioner is three-fold: (1) The Orissa Administration of States Order and the notifications made thereunder are all void inasmuch as they purport to have been made in exercise of certain delegated powers under Sections 3 and 4, Extra-Provincial Jurisdiction Act, Which go beyond the limits of permissible delegation of legislative functions. (2) The income that the petitioner derives from his Zamindary is not 'agricultural income' within the meaning of Orissa Act 24 of 1947. (3) Since the Agricultural Income-tax Act was extended to the ex-States area only in January 1949, no tax could be levied in respect of the agricultural income derived by the petitioner prior thereto and the assessment in question for the year 1949-50 which according to Section 3 is in respect of the income of the previous year, viz., 1948-49, a major portion of which falls before the date when the Act was brought into force, is invalid.
3. The petitioner raised these and other contentions before the Agricultural Income-tax Officer, but they were overruled. He appealed to the Collector of Agricultural Income-tax who dealt with these contentions and negatived them. Thereupon, he made an application to the Revenue Commissioner under Sub-section (2) of Section 29, to refer the case to the High Court for its determination as regards the above-mentioned three points of law. The Revenue Commissioner considered the same and by his order dated 30-7-51 refused to refer the case to the High Court. Hence this application by the petitioner under Section 29(3) of the Act to this Court.
4. Three points raised by the petitioner may now be dealt with seriatim. It may be stated at once that all the three questions raised by the petitioner are clearly points of law arising from the appellate order of the Collector of Agricultural Income-tax; but it does not follow that merely because certain questions of law were formulated and raised before the Income-tax authorities, the High Court should require the Revenue Commissioner to refer those points of law to the High Court. The High Court can do so under Sub-section (3) of Section 29, only if 'it is not satisfied with the correctness of the decision of the Revenue Commissioner', Where the High Court is satisfied about the correctness of the decision of the Revenue Commissioner, it has no power to direct him to refer those questions for the decision of the High Court. We cannot, therefore, accept the contention of the learned advocate for the petitioner that merely because he raises what may appear to be a plausible or arguable question of law, the High Court without satisfying itself that it is prima facie correct and requires further consideration, can direct a reference. We accordingly proceed to consider the three questions raised as above stated.
5. (1) As has been narrated above the Orissa Agricultural Income-tax Act has been included inthe schedule of the Orissa Administration of States Order by virtue of Notification No. 980 dated 19-1-1949. The Administration of Orissa States Order, 1948, is an order made by the Orissa Government in purported exercise of the powers conferred on the said Government by Section 4, Provincial Jurisdiction Act, 1947, read with notifications No. III-B, dated 23-12-47, and 23-3-48, of the Central Government Ministry of States under Section 3 of the said Act. The objection raised by learned counsel for the applicant if I understood him correctly is two-fold: (a) Section 4, Provincial Jurisdiction Act in so far as it authorises the enacting of what may be called 'legislative orders' by the Central Government is a delegation of legislative power to the Central Government by the Central Legislature. The delegation under the said section is in terms so wide as to amount to abdication and goes beyond the limits of permissible delegation, (b) In any case, Section 3 of the said Act in so far as it authorises delegation by the Central Govt. of legislative power to any other authority amounts to delegation by a delegate and is hence invalid. I may state at once that these contentions are untenable. Both the arguments are based on a fundamental misconception as to the source of legislative authority of the Central Government at the time in respect of the integrated areas. That question has been fully dealt with in the Special Bench case of this Court reported in -- 'Saradhakar Naik v. The King' ILR (1949) 1 Cut 1. The Court unanimously held that legislative authority of the Central Government in respect of the integrated States was one not derived from the Central Legislature, but from cession of such authority under the integration agreements by the Rulers of those States themselves and that the Extra-Provincial Jurisdiction Act only recognizes it and regulates the exercise thereof. The theory on which this view is based is fully dealt with in the judgments of all the three Judges responsible for that decision and is no longer open to question in this Court. It follows that the Central Government itself was the Sovereign Legislative authority for the States area after the integration agreements. Section 4, Extra-Provincial Jurisdiction Act, therefore, cannot be said to be any delegation of legislative functions by the Central Legislature to the Central Govt. and its validity cannot be tested by considering whether the terms of Section 4 amount to delegation or abdication of legislative authority in the light of the principles propounded by the Supreme Court in 'The Article 148, Constitution of India & Delhi Laws Act (1912) etc, In re, reported in AIR 1951 S C 332. I may also add that even if the question raised required to be considered with reference to the principles of that case, I am not prepared to say that the terms of Section 4 amount to abdication and not delegation. The further challenge to the validity of the Administration of Orissa States Order based on the delegation of legislative authority by Central Government to the Provincial Government by notification under Section 3, Extra-Provincial Jurisdiction Act is equally groundless. In view of the legal position that the Central Government was at the time direct and sovereign legislative authority for the ex-States areas, the objection that a delegate cannot further delegate his authority does not arise. Further, it is to be observed that the terms of the relevant notification show that the delegation to the Provincial Government, is statedly subject to the control of the Central Government and is without prejudice to the exercise of the legislative functions of the Central Govt.itself in the same field. The terms of the notification are as follows:
'Dated New Delhi, 23rd March, 1948.
No. 172-IB- Whereas Central Government Has full and exclusive extra-provincial jurisdiction for, and in relation to the governance of the States specified in the Schedule annexed hereto.
Now, therefore, in the exercise of the powers conferred by Sub-section (2) of Section 3, Extra-Provincial Jurisdiction Act, 1947 (47 of 1947), and of all other powers enabling it in this behalf and in supersession of the notification of the Government of India in the Ministry of States, No. III-IB, dated 23rd December 1947, the Central Government is pleased to delegate to the Provincial Government of Orissa, the extra-Provincial jurisdiction aforesaid, including the power conferred by Section 4 of the said Act to make orders for the exercise of that jurisdiction. Provided that:
(i) the exercise of the jurisdiction hereby delegated shall be subject to the control of the Central Government, and:
(ii) the delegation shall not preclude the Central Government from exercising the jurisdiction hereby delegated.
The objection therefore to the validity of the Administration of Orissa States Order and of the extension of the Orissa Agricultural Income-tax Act to the ex-States areas by including it, by a notification, in the schedule to the said order is clearly untenable, No reference to this Court by the Revenue Commissioner can therefore be directed on this question.
6. The second question that has been raised is whether the income derived by petitioner from his Zamindari can be said to be agricultural income. 'Agricultural income' is defined in the Act as follows:
'Any rent of income derived from land which is used for agricultural purposes, and is either assessed to land revenue in the Province of Orissa or subject to a local cess or rate assessed and collected by officers of the Crown as such.'
According to the petitioner, he pays to the Government only 'Takoli' which is not land revenue or a local cess or rate, but is only a tribute paid by a feudatory vassal to the landlord. The facts relating to this contention have been set out in the order of the Collector of Agricultural Income-tax as follows:
'The Administration report of the State of Gangpur for the year 1946-47 shows that the Zamindari (Hemgir) paid the following contributions to the State:
(a) Takoli .. .. Rs. 542-10-0(b) School and Dispensary Cess Rs. 2666-14-0(c) Police Contribution Rs. 306-0-0(d) Jail ' Rs. 319-0-0(e) Forest ' Rs. 1517-13-0'It is admitted that these contributions are being continued and are now paid to the Government of Orissa with effect from the date of merger.'
These facts thus stated in the Collector's order and said to be extracted from a fairly recent administration report of the State of Gangpur, do not appear to have been challenged by the petitioner either in the application made to usor in the application made to Revenue Commissioner. For the statement of facts in a case of this kind where we are concerned only with any questions of law arising out of the Collector's appellate order, we must have reference only to the facts as stated therein. The contention of the petitioner's advocate is that these various payments have no relation to assessment of land revenue for the land, nor can it be said that the land as such was subjected to a local cess or rate assessed by the Government. To show that these payments have no relation to land, the advocate relied on certain extracts from various books. The first, an extract from the Imperial Gazetteer of India, Vol. IV, p. 478 with reference to the State of Gangpur: the second, an extract from the Survey and Settlement Report 1907-1911 by C. E. E. Connolly and the third, an extract from the Administration Report for the year 1946-47 of the State of Gangpur. In addition the Advocate for the petitioner referred to various other books of which the latest was the report of the land tenures and the land revenue system of Orissa States by R.K. Ramdhyani, Vol. III Pages 82-92. The contention. With reference to these various reports, of the Advocate for the petitioner was that 'Takoli' in its origin was a payment in recognition of the feudatory tenure of the Zamindari in relation to the Ruler of the State and was not in the nature of assessment by way of land revenue; and that the other payments referred to in the administration report of the year 1946-47, were not local cesses or rates which were assessed in respect of the land or to which the land as such is subject. (After considering the opinions expressed by the Collector and the Revenue Commissioner on the contention so raised his Lordship proceeded:) It may be true as the Commissioner points out that the word 'Takoli' in Central Provinces is synonymous with 'Land revenue' and that the term probably conveys the same meaning in or around Sambalpur area which was originally a part of the Central Provinces. That it was so understood in the Central Provinces also appears from an incidental statement in the judgment of his Lordship Mahajan J. in -- 'State of Bihar v. Kameshwar Singh' : 1SCR1020 left-hand side column. But it is not quite clear that the nomenclature 'Takoli' should be taken as conclusive as regards the question whether it is an amount payable by virtue of its being as assessment on land revenue. (After further considering the opinion expressed by the Revenue Commissioner his Lordship concluded:) It may be a question for consideration, if income from other sources having nothing to do with the land, also entered into the calculation in fixing 'Takoli', whether 'Takoli' could be said to be in the nature of land revenue. It has also been urged that the extract from the Imperial Gazetteer Vol. IV, referred to above, indicates that at least in the beginning, however calculated and from whatever source, 'Takoli' was only the tribute payable by the feudatory vassal to his Ruler, and cannot, therefore, be treated as land revenue. On the other side, it is contended that notwithstanding that it may have been feudal in its origin, it was nevertheless land revenue, even from the commencement or at least became such in view of the altered circumstances of the petitioner's tenure subsequent to the integration of the States. All these are matters which appear to us to require a much more careful consideration than they have received at the hand of the Agricultural Income-tax authorities. Further elucidation of facts and of law may be required before it can be definitely pronounced that Takoli' is land revenue so as to make the Agricultural Income-tax Act applicable to the petitioner's Zamindari. We are, therefore, of the opinion that on this point it is necessary to require the Revenue Commissioner to state a case.
7. As regards the third point, the question that arises is that in view of the admitted facts that the Agricultural Income-tax Act was made applicable to the ex-States areas only from January 1949, whether the assessment for the year 1949-50 could be based on the income of the previous year, i.e., 1948-49, for the major portion of which not only was the Act not in force, in Gangpur State, but in one sense the Gangpur State and the Hemgir Zamindari comprised therein, may be urged not to have been taxable area. Learned counsel for the petitioner draws our attention to certain passages in -- 'Beharilal v. Indra Narayan' : AIR1927Cal553 & -- 'Comr. of Income-tax v. Karuppiah Kangani' AIR (SIC) Mad 35 (F.B.), to show that though the assessment year is the year 1949-50, the income that is taxed is that of the previous year, viz., 1948-49. He also draws our attention to a decision of the High Court of Rajasthan in -- 'Madan Gopal v. Union of India' , which shows that the income of the previous year cannot be taxed if during that previous year, the territory in which the income was derived was not taxable territory. Learned counsel for the petitioner strongly relies on this case. Learned counsel for the Agricultural Income-tax authorities points out that that was a case which arose under the Income-tax Act and draws our attention to the fact that under Section 4, Income-tax Act, the total income of the previous year is itself defined as income received in a taxable territory in such area; while Section 3, Agricultural Income-tax Act of Orissa which is the charging section contains no such limitation as regards its conception of the income of the previous year. But it is arguable that this difference in wording can make no difference in basic principle on which taxation in respect of the previous year's income is to be based and that the omission of any reference to the requirement of income arising from taxable territory may be due to the fact that the Agricultural Income-tax Act is a mere provincial Act and can have no extra-territorial operation It appears to us, therefore, that this question ' also requires further consideration. Our attention has also been drawn by learned counsel for the Agricultural Income-tax authorities to our decision reported in -- 'Sri Ramchandra v. Collector of Agricultural Income-tax' 18 Cut L.T. 88. The question as it arises in' this case has not been specifically raised there and it may be possible to distinguish it on the facts. It appears to us, therefore, that this question also requires further consideration.
8. We accordingly direct the Revenue Commissioner to state a case to the High Court referring questions (2) and (3) above stated in para 2 for the decision of this Court. The Revenue Commissioner is submitting the statement of the case to this Court will have to elucidate all the relevant material on which the decision of either of the questions is dependent, and may give to the petitioner such further opportunity as may be necessary to adduce material in respect thereof.
9. I agree.