S. RAMACHANDRA IYER C.J. - The assessee owns a sizable extent of agricultural lands in the Thanjavur District. Besides what stands in his name, there are agricultural lands standing in the names of his wife and those of his sons. The assessee head also a leasehold interest in about 950 acres of land, which belonged to the Dharmapuram and Tiruvaduthurai mutts. It is not disputed that the matathipathis concerned were in possession of such lands either under a trust or other legal obligation wholly for religious or charitable purposes.
For the assessment year 1958-59, the assessee filed an application under section 65 of the Madras Agricultural Income-tax (Amendment) Act, 1958, for permission to compound the agricultural income payable by him on his total agricultural income. His application was granted by the Agricultural Income-tax Officer. Thereafter, the assessee realised that the compounding of all the categories of lands into a single unit would attract a higher tax by reason of the slabs prescribed under the Act. He, therefore, filed a revision petition before the Commissioner of Agricultural Income-tax seeking to exclude in the computation the income from lands standing in the names of his wife and sons. He further claimed that the lands taken on lease by him from the two mutts having been held by the matathipathis for the purpose of a religious trust, the income realised therefrom could not be taken into account for the purpose of tax. The Commissioner gave the assessee partial relief by setting aside the order of the Agricultural Income-tax Officer to the extent he included the income form the lands standing the names of the his major sons, and directing a revised assessment in accordance with therewith.
In this revision case, the assessee complains that the Commissioner erred in not giving relief to him with respect to the lands taken on lease from the two mutts aforesaid. Section 4 of the Act, which provides for the computation of the total agricultural income of an assessee, says that it will not, inter alia, include :
'...... any agricultural income derived from property to held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied thereto.'
Mr. R. Ramamurthi Iyer appearing for the assessee contend that the effect of this clause will be to totally exclude from the purview of taxation, income from lands dedicated to a religious or charitable institution, in whosoever possession such lands might be. In other words, it is said that where once a particular land is found to be owned by a trust, the income therefrom, whether it be received by the trustee or by his lessee or other person would not be liable for tax as the object of the legislature is to exclude such lands themselves from the purview of taxation. There is a fallacy underlying the contention. What the Madras Agricultural Income-tax Act purports to do is to tax the income from agricultural lands. Section 4(b) makes it clear that if the income is derived from property which is held in trust or impressed by a legal obligation wholly for religious or charitable purposes, that should be excluded while computing the income of the assessee for purposes of taxation. That implies first that the exclusion is of the income and, secondly, that the assessee must be holding that the land subject to the trust or obligation aforesaid. The section cannot obviously be construed as giving exemption to any person in whose lands the income received from the property is not subject to the obligation aforesaid. What we mean in this. Now, the property which belonged to the mutt will, undoubtedly, be subject to the legal obligation of the kind mentioned in the section. If agricultural income-tax is to be levied on the matathipathi the income from these lands will not be included in his other income, which would be liable to tax under the act. Therefore, what cannot be included will be the lease amount or rent received by the matathipathi form the assessee in the instant case. But, so far as the assessee is concerned, his interest in the land is only a leasehold interest, that is, not subject to any trust or obligation. The income which he realises from the land leased out to him minus the rent that the agreed to pay under the lease to the matathipathi will be his income which he will be entitled to appropriate for himself. He cannot, therefore, claim an exclusion of that income from the computation of tax due by him. To reiterate the point, we may say, there is a distinction between the interests possessed by the matathipathi and his lessee in the lands now in question. The former owns the lands subject to the obligation for religious or charitable purposes, for which they were dedicated. So far as the latter is concerned, his interest is a mere leasehold interest, which is not subject to any trust or legal obligation. He is a mere party to a contract with the matathipathi, under which he has to pay rent for the benefit of the trust. What he receives, therefore, cannot be regarded as income derived from property held for religious or charitable purposes.
It is evident from the terms of Section 4(b) that the intention of the legislature in excluding the income from property impressed with a legal obligation for religious charitable purposes is to benefit the charity and not to exclude a particular category of lands from the operation of the statute, regardless of the person who is enjoying the benefit thereof. If the contention of the learned counsel were to be accepted, even a trespasser, who gets into possession of the property dedicated to a religious or charitable purpose, will be entitled to claim the exemption. It could hardly be claimed that the legislature wanted to benefit such a person who would be claiming adverse to the trust. We are of opinion that the assessee, who is a mere lessee of lands dedicated for a charity, would not be entitled to exclude the income which he receives from the leasehold properties from his total income.
The petition fails and is dismissed with costs.
Counsels fee Rs. 100.