P.V.B. Rao, J.
1. The Income Tax Appellate Tribunal, Calcutta Bench, referred the following question to this Court for opinion under Section 66(1) of the Indian Income-Tax Act:
'Whether in the circumstances of the case, the assessee was entitled to a rebate on the entire sum of Rs. 10,000/- paid to an institution approved under Section 15-B of the Indian Income-tax Act and not on Rs. 1754/- deemed to be the proportionate amount paid out of non-agricultural income'.
2. From the statement of the case submitted by the Appellate Tribunal, it appears that the appeal before them pertained to the assessment year 1953-54 the relevant previous year being the financial year 1952-53. The petitioner assessee derived agricultural and non-agricultural income. He maintained one composite cash book for his agricultural as well as non-agricultural receipts and disbursements. The agricultural income was found by the Income-tax Officer to be about Rs. 5,00,000/- and the non-agricultural income about Rs. 91,000/-. During the financial year 1952-53 the petitioner assessee contributed Rs. 10,000/- as a donation to the Bhadrak College, an institution approved under Section 15-B of the Indian Income-tax Act, In the Cash book referred to above, the said sum of Rs. 10,000/- was simply debited without stating whether it came out of the agricultural or non-agricultural income. Before the Income-tax authorities, the petitioner-assessee claimed that he was entitled to a rebate on the saidsum of Rs. 10,000/- under Section 15-B. As there was no proof that the contribution was made solely from and out of the non-agricultural income, the Income-tax Department allowed only a rebate on Rs. 1754/- taking the proportion between the agricultural and non-agricultural income,
3. The Appellate Tribunal in regard to the above matter observed as follows:
'What was required was the proof that the amount of Rs 10,000/- was paid out of the taxable income -- The assessee has no record to show that it was paid out of the non-agricultural income taxable under the Indian Income-tax Act. In our opinion, therefore, the Income-tax Department was right to assume that a portion of the donation had been paid out of non-agricultural income of the assessee. There was no such proof and it may very well be said that the entire amount was paid even out of the agricultural income, which was not subject to the Indian Income-tax Act. We, therefore, find no reason to interfere in this matter'.
4. In their appellate order rejecting this contention, the Appellate Tribunal relied upon a decision of the Calcutta High Court in the case of Commissioner of Income-tax, West Bengal v. Samnugger Jute Factory Co., Ltd. : 24ITR265(Cal) in which it was held by a Division Bench consisting of Chief justice Chakravartti and Mr. Justice Lahiri,
'The words 'any sums' in Section 15-B(1) of the Indian Income Tax Act, 1922 must be sums assessable in their nature being parts of the assessable income of the relative accounting year and sums brought into the assessment and about to be brought to charge. Consequently there can be no question of gracing an exemption under Section 15B in respect of a contribution to the Gandhi National Memorial Fund, if the sum representing the contribution is not a part of the income assessable for the year at all.
Where the total assessable income of the assessee determined for a particular year does not include a sum contributed by it to the Gandhi National Fund because such sum was contributed by it from the savings not of the relevant previous year but of a year prior to the previous year, the assessee would not be entitled to the exemption under Section 15-B'.
In the course of the judgment, Chief Justice Chakravartti observed,
'It is but common sense that sums in respect of which an exemption from tax is granted must be sums which would be liable to taxation but for the exemption. Exemption from tax in respect of sums not assessable to tax at all is something wholly meaningless. That the sums, in respect of which exemptions are provided for by Section 14 onwards, are and must be parts of the assessable income of the assessee, is placed beyond doubt by the provisions of Section 16(1)(a) of the Act, which lays down how the total income is to be computed. That section provides that any sum exempted under a number of sections, of which Section 15-B is one, shall be included in computing the total income of an assessee, although such inclusion will be only for purposes of rate and for purposes of super-tax. I am stating the effect of Section 18 (1) (a) broadly, because so far as super-tax is concerned there is a further exemption in favour of sums covered by Section 15A, but the broad point to notice is that the sums concerned are all sums which are assessable to tax and must be brought into the computation for the purpose of determining the assessable income, although in levying tax after the rate has been determined an exemption from income tax but not from super-tax will be granted in respect of them. There can be no question whatsoever of bringing any sum into computation or granting any exemption in respect of it, if it is not a part of the income assessable for the year at all. Indeed, noquestion could arise of charging super-tax on it, which, under the second proviso to Section 15-B (1) itself, must be done in respect of sums exempted from income-tax under the section'.
In this case', the two sums of Rs. 12,078/- and Rs. 10,764/- in respect of which exemption was claimed were not sums forming part of the income of the accounting year. But in the case before us, the amount of Rs. 10,000/- on which a rebate was claimed by the assessee formed part of the income of the accounting year for which the assessment in question was made. Consequently, this decision relied upon by the Appellate Tribunal does not apply to the facts of the case.
5. The question to be determined is whether the Income-tax Department is entitled to apportion the donation of Rs. 10,000/- made by the assessee between the agricultural and non-agricultural income. The relevant portion of the section applicable to the facts of this case is as follows:
'15-B. (1) The Tax shall not he payable by an assessee in respect of any sums paid by him on or after the first day of April 1948 as donation to any institution or fund which is established in the taxable territories for a charitable purpose and is approved by the Central Government for the purpose of this section:X X X X '
According to the statement of the case, this sum of Rs'. 10,000/- was paid by the assessee to an approved charitable institution from out of the income assessable for the assessment year. Both the agricultural income and non-agricultural income were shown in the same account book. All the charities made were also shown in the same account book --The Department held that the assessee had no record to show that it was paid out of the non-agricultural income taxable under the Indian Income-tax Act. The non-agricultural income is admittedly about Rs. 91,000/-. The assessed claimed a rebate on Rs. 10,000/- only.
6. On the above facts, the learned counsel for the petitioner-assessee contends that under Section 15-B no tax is payable in respect of this sum of Rs. 10,000/-and consequently a rebate should be granted; and that the Income-tax Department is not entitled under Section 15-B to apportion the said contribution to charity in proportion to the agricultural and non-agricultural income and allow a rebate only to the extent of the proportion to non-agricultural income.
7. In the case of the Province of Bihar v. Kamakhya Narayan Singh : 15ITR346(Patna) , which was a case under the Agricultural Income-tax Act, the majority of a Special Bench held,
'There is no jurisdiction for adding the word 'wholly' before the words 'for the benefit of the land........or for the purpose of deriving such agricultural income' in Section 6(1) of the Act and that the assessee was entitled to claim the full depreciation allowance for the buildings'.
In the course of judgment, Manohar Lall J. observed:
'The assessee has constructed a building for the benefit of the land. It is immaterial to consider whether the land also produces non-agricultural income and it is also immaterial to consider that upon the plain construction of the provisions of Section 6(1), the assessee might be getting a double advantage not under the Agricultural Income Tax Act but when he is being assessed on his non-agricultural income under some other statute'.
In the case of Rajendra Narayan Bhanja Deo v. Commissioner of Income Tax, B. & O. AIR 1929 Pat 449, a Full Bench of Patna High Court consisting of five Judges held;
'It is open to the Income-tax authorities to hold that a particular building on account of its size or situation is not a building which the receiver of rent or revenue does require by reason of his connexion with the land as a dwelling house, and in that case it would be open to them to assess the income from the entire building, but the moment they find that the house is required by the receiver of the rent or revenue by reason of his connexion with the land as a dwelling house or a store-house or other out-building, it is beyond their jurisdiction to determine what portion of the building is or should be required by the assessee as such receiver of the rent or revenue'.
This was a case under the Indian Income-tax Act where the assessee claimed exemption of the income arising out of a building as being maintained for collection of agricultural income which is not taxable under Section 2(1)(c) of the Indian Income Tax Act. It was held by the Full Bench that the Department cannot apportion and say that only a proportionate income from a portion of the building necessary for agricultural purposes would be exempted.
8. In the case of Central Provinces and Berar Provincial Co-operative Bank Ltd. v. Commissioner of Income-Tax, C. P. and U. P , the Nagpur High Court held:
'In computing the income under Section 8 of the Income-tax Act, the department was not justified in splitting up and apportioning the interest on the borrowed capital between the taxable and tax-free securities in proportion to the amount spent on the purchase of each kind of security and allowing deduction only in respect of the interest so apportioned to taxable securities'.
It was argued before the learned Judges that if the contention of the assessee was accepted, the assessee would be obtaining a double advantage. But the learned Judges repelled this argument by observing:
'We consider it idle to enquire whether the assessee obtains a 'double advantage' upon this interpretation or that, or whether the Central Government stands to gain or lose. That is the wrong approach to the problem. The question of advantage or loss depends upon the rules, not the rules upon the outcome of the result, because we are not concerned here with abstract logic or the principles of pure reason. The Income-tax is a fiscal measure and as such many of the provisions are of necessity arbitrary, and in almost any set of arbitrary rules an advantage here or a drawback there are almost certain to occur, nor indeed is there anything to prevent the legislature from desiring and prescribing for just such a result. Our duty is to interpret the provisions of the Act, if they are plain, to give effect to them regardless of the consequences; and if there is ambiguity, to construe the provision in favour of the subject and this even if it results in his obtaining a 'double advantage'. That is how all fiscal enactments are to be construed. --There is no reason why the assessee should not get a double advantage if the Act can be so construed. If the language is plain, there is nothing more to be said. If it is ambiguous, then, being a fiscal enactment, it must be so construed because that is the construction which most favours the subject'
They also observed:
'Agricultural income is exempt under Section 4(3)(viii). But say a man's business is partly agricultural and partly commercial, the commercial end of it being mixed up with the agricultural. Say he runs one office and one staff to supervise both sections. Would he have to apportion the office expenses which are permissible as a good deduction under Section 10(2)(xii) between the two kinds? We can hardly think that that would be the case'.
9. Applying the principles deducible from these decisions, I am of opinion, that the Income Tax Department is not entitled to apportion the contribution to charity between the agricultural income and the non-agricultural income. According to the plain meaning of Section 15-B, the Department is not entitled to apportion. The petitioner assessee filed an affidavit on 10-12-58 that as per his accounts his agricultural income was Rs. 5,21,710/- during the year 1-4-52 to 31-3-53 and his non-agricultural income was Rs. 1,15,515/-: and that he paid donations to various institutions, the total amount being Rs. 74,065-4-3 out of which Rs. 10,000/- were paid to the approved institution from out of the non-agricultural income receipts and the balance out of the other income receipts. The accounts produced before the Department also showed the respective agricultural and non-agricultural incomes and the respective donations. The non-agricultural income was Rs. 91,000/-. The assessee claimed a rebate on the charity made to an approved institution in a sum of Rs. 10,000/-. By making that claim before the Income Tax Department, he clearly indicated that he paid Rs. 10,000- from out of non-agricultural income-There is nothing absurd in this.
It is quite reasonable that if the non-agricultural income is Rs. 91,000/- the assessee can pay Rs. 10,000/- out of it towards charity to an approved institution and in the- affidavit filed before us also he clearly stated that this charity was paid out of the non-agricultural income. The remaining amount of Rs. 64,000/- paid towards charity is stated to have been paid out of the agricultural income which was about Rs. 5,00,000/-. The Department can say that he did not pay the charity or that ho did not pay it out of the non-agricultural income. But having accepted the payment as true, it is not entitled to apportion that charity paid to an approved institution between the agricultural income and the non-agricultural income.
According to his statement in the affidavit he has not claimed any exemption on this amount of Rs. 10,000/- under the Agricultural Income Tax Act. As I find, that there is no authority on the part of the Department to apportion the said contribution between the agricultural income and the non-agricultural income, I am of opinion that the petitioner-assessee can claim a rebate on the entire sum of Rs. 10,000/- under Section 15-B of the Indian Income Tax Act. I would therefore answer the question referred to this Court that in the circumstances of this case the assessee was entitled to a rebate on the entire sum of Rs. 10,000/- paid to the institution approved under Section 15-B of the Indian Income Tax Act and not on Rs. 1754/- deemed to be the proportionate amount paid out of the non-agricultural income.
10. The reference is answered accordingly. But in the circumstances of the case, there will be no order as to costs.
11. I agree.