DAVE J. - These are thirteen references made by the Rajasthan Agricultural Income-tax Appellate Tribunal, under section 86(2) of the Rajasthan Agricultural Income-tax Act, 1953, which will hereinafter be referred to as 'the Act'.
The facts giving rise to them are as follow :
On the formation of the United State of Rajasthan in the year 1948, an Ordinance, No. 27 of 1948, was enacted with a view to provide for the abolition of all judicial and police powers which vested in the jagirdars by that time. This was called the United State of Rajasthan Jagirdars (Abolition of Powers) Ordinance, 1948. This Ordinance was followed by Ordinance, No. 10 of 1949, called the United State of Rajasthan Jagirdars (Abolition of Powers) (Amendment) Ordinance, 1949. By virtue of section 4 of this Ordinance, a new section 8A was added after section 8 of the previous Ordinance. This section 8A ran as follow :
'8A. Without prejudice to the generality of the foregoing provisions, it is hereby enacted that the revenue which was heretofore collected by Jagirdars shall henceforward be collected by and paid to the Government; the Government will after deducting the collection and other expenses pay it to the Jagirdar concerned.'
The said Ordinance was again followed by Ordinance No. 15 of 1949 called the United State of Rajasthan jagirdars (Abolition of Powers) (Second Amendment) Ordinance, 1949. By section 3 thereof, section 8A, which was added by the Second Ordinance, was amended as follow :
'3. In section 8A of the said Ordinance, after the word revenue the words and signs (including taxes, cesses and other revenue from forests) shall be added.'
On the 20th August, 1949, the then Government of the United State of Rajasthan passed the following confidential orde :
'Confidential Order No. 1107 x 149 dated 20-8-49 -
In connection with the payments to be made to the Jagirdars under the Jagirdars Abolition of Revenue Powers Ordinance, Rajasthan Government has been pleased to order that pending final decision the following percentages of the amounts actually collected minus chathund chakri or tribute should be paid to the Jagirdars, subject to marginal adjustment whenever necessary -
(1) Rs. 2,000 or below
(2) Rs. 2,001 to 20,000
80% but not less than Rs. 1,900.
(3) Rs. 20,001 to 50,000
65% but not less than Rs. 16,000.
(4) Rs. 50,001 to 1,00,000
50% but not less than Rs. 32,500.
(5) Rs. above one lakh
40% but not less than Rs. 50,000.
This scale should be the basis of calculation but should be kept as secret. The orders going to the Jagirdars should only state the amount to be paid and not how it has been arrived at.'
The validity of the said Ordinances was challenged before this court in Manohar Singh Ji v. State of Rajasthan and it was held that 'section 8A, which was introduced in Ordinance No. XXVII of 1948, by section 4 of Ordinance No. X of 1949 and the amendment to section 8A, by section 3 of Ordinance No. XV of 1949, became void under article 13(1) of the Constitution of India read with article 14'. This view was upheld by their Lordships of the Supreme Court in State of Rajasthan v. Rao Manohar Singh Ji.
The assessees in all the thirteen references referred to above are jagirdars of what were known as jurisdictional thikanas in the former States of Udaipur and Kotah. After promulgation of the said Ordinances, the Government of the United State of Rajasthan started collecting rent and revenue of the thikanas and the jagirdars were paid net amount of income of the thikanas after deducting certain percentage out of the gross income. The Agricultural Income-tax Officer treated the total income inclusive of the amount of percentage which was withheld by the Government as assessable to agricultural income-tax, though he allowed a deduction at the rate of fifteen per cent. under clause (c) of section 6 of the Act. The assessees filed appeals against this order before the Assistant Commissioner, Agricultural Income-tax, Udaipur, but they were not successful. Thereafter, they filed second appeals before the Rajasthan Agricultural Income-tax Appellate Tribunal. The Appellate Tribunal held that the assessment should have been made on the basis of the net agricultural income of the assessee, that is, they should have been assessed on the amount which was actually paid to them by the State after deduction of the amount which was withheld by it out of the collections made by it during the assessment year 1954-55, the previous year being 1953-54 (from April 1, 1953, to March 31, 1954). At the same time, it was held by the Tribunal that since the collections were made by the Government and not by the jagirdars, the assessees were not entitled to a further deduction at the rate of 15% under section 6(c) of the Act out of the amount received by them. Aggrieved by this decision, applications were filed both by the State and the assessees before the Appellate Tribunal which was requested to make references to this court. It is on these applications that the present thirteen references have been made by the Appellate Tribunal. It has set out the following two questions for our decision :
'(1) Whether the percentage amount withheld by the Tehsil agency by way of collection and administrative charges while paying to the assessee the rent and revenue collected by said agency from the assessees jagir area is also to be included in computing the total agricultural income of the assessee under section 5 read with sections 2(20) and 6 of the Rajasthan Agricultural Income-tax Act, 1953?'
(2) If the answer to question No. 1 be in the negative, whether the assessee is entitled to a 15% deduction under section 6(c) of the Act over and above the percentage already deducted in lieu of collection and administrative charges?
It would be proper to first take up the first question, which has been referred on the application of the State. it is contended by the learned Government Advocate that the income of the assessees was collected in the relevant year by the State as an agent of the assessee and, therefore, it should be held that the entire income, which was collected by the State on behalf of a particular assessee, was received by him and as such the assessee should have been assessed on that income and not on the amount which was actually paid by the State to the assessee in that particular year. This argument is based on the definition of the term 'received' as given in section 2(20) of the Act, which runs as follow :
'2.(20) Received used with reference to the receipt of agriucltural income by a person shall include -
(i) receipt by an agent or servant on behalf of a principle or master respectively,
(ii) receipts by other persons which are deemed to be his receipts under the provisions of this Act,
and shall also include receipts of agricultural income by way of adjustment of accounts with any other person.'
It is conceded by the learned Government Advocate that clause (ii) does not come into play in the facts and circumstances of the present case. He has laid stress on the following words appearing in clause (i :
'receipt by an agent'
According to the learned Government Advocate, the State had started collecting the income on behalf of the assessee as statutory agent under the Ordinances referred to above. After section 8A was declared void by this court in Rao Sahib Manohar Singhs case, the State ceased to be a statutory agent, but it continued to functions as an agent on account of the implied consent given to it by the assessee. It is urged that the implied consent of the assessee should be inferred by their conduct, because the State continued to collect the income and the assessees continued to accept whatever amount was paid to them without demur.
In reply, it is urged by learned counsel for Amar Singh and Gopal Singh, assessees, that section 2, clause (20) of the Act did not contemplate statutory agents in the first instance. It is next contended that after section 8A was declared void by this court in Rao Sahib Manohar Singhs case, the assessees never appointed the State as their agent. The State continued to collect the income even though section 8A was declared void and the assessees accepted whatever income was paid to them by the State since they had no other alternative and it was not within their power to prevent the State from collecting the rent. It is contended that, under the circumstances, the amount which was never paid to them by the State could not be taken to have been received by them and that the view, which has been taken by the Appellate Tribunal, is just and proper.
We have given due consideration to the arguments advanced by learned counsel for both the parties. The question referred to us is not free from difficulty in view of the language of section 6 read with section 2(20) of the Act. The dispute between the parties hinges on the correct interpretation of the word 'received' noted above. It is true that under the description of the word 'received' given above, it includes receipt by an agent on behalf of a principle, but, in our opinion, the legislatu re never contemplated the kind of agency which is sought to be set up on behalf of the State in the present cases. We think that when the legislature used the word 'agent', it meant to convey the meaning which was given to it under section 182 of the Indian Contract Act. Section 182 defines an agent as a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented is called the 'principle'. In other words, the legislature envisaged contractual agents working under the control supervision of the principal and not the kind of the agency which is sought to be set up by the State. Learned counsel for the assessees is not wrong in saying that they had not employed the State as an agent and that the so called agency was only superimposed on them. The Appellate Tribunal did not commit any error in holding that the assessment should have been made on the basis of the actual income which was received by the assessee from the State and not on the total amount of collection made by the State from their jagirs. We may make it clear at this stage that we do not agree with the view of the Appellate Tribunal with regard to the application of section 6(a) or (j) of the Act which relates to deductions out of the income. It is neither the case of the assessees that the amount withheld by the State from the income of their jagirs was rightly deducted under clause (a) or (j) nor is it the case of the State that it had made deductions under these clause. On the contrary, it was urged by the learned Government Advocate that a part of the income of the relevant year which was withheld during the said assessment year has been subsequently paid to the assessees. Since the Appellate Tribunal did not enter into this question and no reference is made to this part of the case, we are not definite if any amount has been paid to the assessees. But even if such payments have been made subsequently, they may be added to the income of the assessees in the particular year in which they are made and they may be taxed along with other receipts in those particular years on receipt basis and not accrual basis, if they are assessable to income-tax under the Act.
Our reply to question No. 1, therefore, is that the amount withheld by the Tehsil or the State out of the total collections made during the assessment year is not to be included in computing the total agricultural income of the assessee under section 5 read with section 2(20) of the Act in the relevant year. The assessees should be assessed on that amount which was actually paid to them by the State in the relevant year.
Now, coming to question No. 2, it may be observed that learned counsel for Amarsingh himself says that he does not press for a reply to this question. It is very frankly conceded by him that under section 6(c) of the Act a sum equal to 15 per cent. of the total amount of rent or revenue or other dues which accrued to assessees in the previous year in respect of the cost of collection of such rent, or revenue or other dues, was allowed by law in those cases which the assessees were to make collections themselves. In the present case, the collections were made by the State and since it has to deduct reasonable percentage for the collections and the assessee are to receive the net income, a further percentage of fifteen per cent, deduction is not available to them.
Our reply to question No. 2 is, therefore, in the negative.
In the circumstances of the case, we leave the parties to bear their own costs.