RAMAKRISHNAN, J. - These revision cases are filed by the State against the decision of the Agricultural Income-tax Appellate Tribunal in Appeals Nos. 24, 25 and 26 of 1962. The revision cases arise in the following circumstances. For each of the three years of assessment 1958-59, 1959-60 and 1960-61, the Agricultural Income-tax Officer, Kumbakonam, assessed five persons who were the beneficiaries under five distinct settlement deeds, as having formed an association of individuals within the meaning of section 2(c) read with the charging section 3 of the Madras Agricultural Income-tax Act. The Assistant Commissioner of Agricultural Income-tax on appeal confirmed the order of the assessing officer, and on further appeal to the Agricultural Income-tax Appellate Tribunal, the Tribunal held that there was no association of individuals, in the circumstances of the case, and set aside the assessment orders on the basis of that finding. The State has filed these revision cases against the orders of the Tribunal.
The facts of the case are briefly the following. One Pattammal who appears to have been a lady owning extensive properties, executed five settlement deeds settling different extents of properties on five different persons in the following manner :
Date on which the properties were transferred to others by documents
Nature of transfer
A Marriage settlement trust in favour of her first grand-daughter, R. Kanaka, appointing one B. R. Srinivasa Iyengar, brother-in-law of N. T. Raghunathachariar, as trustee. Land in Ammangudi village ... 25-19
Lands in Subbayyansethi village ... 25-71
A Marriage settlement trust in favour of second grand-daughter, R. Hemalatha, with her mother, Smt. Padmavathi Ammal (2nd petitioner here) as trustee.
Land in Ammangudi village ... 25-16
Lands in Subbayyansethi village ... 25-39
A Marriage settlement trust in favour of her third grand-daughter, R. Indira, appointing the father, Sri. N. T. Raghunathachariar (third petitioner) as trustee.
Lands in Ammangudi village ... 25-18
Lands in Subbayyansethi village ... 24-33
A Stridhana gift to her married daughter, R. Padmavalli. Lands in Ammangudi village ... 12-34
Lands in Subbayyansethi village ... 17-74
Gift in favour of her brothers son, Sri N. T. Ramanujam Iyengar (seventh respondent here)
Lands in Ammangudi village ... 2-35
Lands in Subbayyansethi village ... 22-50
When the matter came up before the Assistant Commissioner of Income-tax, he noticed that even after the settlement under the gifts referred to, all the lands continued to be managed and cultivated as usual with the same agents by Pattammal, some lands under pannai cultivation and some on waram. The waram was received in common from all the lands; and the income was pooled together and brought to the common day book and ledger. According to the Assistant Commissioner of Agricultural Income-tax, it was not possible to find out from the accounts the income from the lands given to each minor grand-daughter or others. All the income arising as per the account books (of the agents) was deposited in the Urban Co-operative Central Bank at Kumbakonam in the joint names of Pattammal and N. T. Raghunathachariar who operated jointly and severally on the bank. The Assistant Commissioner found that there was nothing in the accounts to show that the profits were ever distributed to the daughter (one of the settlers) or to the trustees for the three grand-daughters or deposited in the banks in the names of trustees on behalf of the minors. From these circumstances, the assessing officer as well as the Assistant Commissioner of Agricultural Income-tax came to the conclusion that the several settles under the five documents were liable to be assessed as an association of individuals on their agricultural income.
The Tribunal observed, after perusal of the original documents, that the settlor had undertaken the responsibility for the grand-daughters marriages and, to facilitate the same, had made the settlements to augment the resources with which the marriages could be performed for the grand-daughters with suitable bridegrooms. In the opinion of the Tribunal, there was nothing to show that the documents were not genuine or that they had not been acted upon, for the appellants (respondents here) had produced the account books showing their paddy and expenses separately debited for the account year 1954-55 to 1961-62 for R. Kanaka, R. Hemalatha and R. Indira. They had produced the account books showing the receipt of paddy and expenses separately for the account years 1955-56 to 1960-61 for Padma and N. T. Ramanujam. They had also filed statements showing the receipts of each beneficiary and the appropriation of expenses. In the view of the Tribunal, all those could not be ignored, for they furnished evidence about the documents having been acted upon. The Tribunal also observed that there could not be any inference about an association of individuals through the mere fact of common management. The documentary evidence showed that the documents had been acted upon and that the trust ensured to the beneficiaries inescapably and there was nothing to show that the respondents engaged themselves in a joint enterprise for the purpose of producing income from the lands.
The finding arrived at by the Tribunal, as stated above, on an examination of the evidence in the case, is adequate for the conclusion that the several deeds of settlement were acted upon, and that the income of each beneficiary was shown separately in the appropriate account. However, there was an observation that the income from all the properties, at a particular stage, was deposited in the Kumbakonam Bank to the credit of the settler as well as her son-in-law, Raghunathachariar, and since we had a doubt about this aspect of the case, we permitted the respondents to file an affidavit explaining the circumstances under which such a deposit was made. A copy of the affidavit was supplied to the learned Government Pleader. From this affidavit it would appear that there were two persons by name Narayana Iyengar and Srinivasagopalachari who were residents of the villages, and who looked after the lands of the different settles after making their own arrangement either for pannai cultivation or cultivation by lessees on warm. But those agents took care to show the income from each settlers lands separately. The settles were absentee landlords and did not care to leave large sums of money in the possession of the above two agents in the village. When the paddy was sold, an account was opened in the Kumbakonam Co-operative Urban Bank in the joint names of Pattammal and her son-in-law and the amounts were immediately deposited there. But the amounts so deposited were duly remitted to the different beneficiaries at the earliest opportunity. Thus the amount due to Ramanujam, one of the settles, who is the brothers son of Pattammal and brother of Raghunathachari, was sent by bank draft to his address. The amounts due to the minor grand-daughter of Pattammal represented by their father and mother as trustees were remitted to a separate account opened in the joint names of Pattammals daughter and her son-in-law in the Indian Bank. The affidavit proceeds to state that for the amounts thus due to the minor grand-daughters, National Savings Certificates had been purchased. This statement in the affidavit is in accord with the finding of the Tribunal that the different settlement deeds were fully acted upon and the fact that the settles had two common agents to look after the lands in the village (they being absentee landlords) did not make any difference to their getting from their own lands the appropriate income due in respect of these lands. The fact that different owners of properties, who were absents landlords, for their own convenience, secured the help of two residents in the village for looking after their lands and cultivating them, would not ipso facto constitute them as an association of individuals within the special meaning given to that term for the purpose of assessment under the Agricultural Income-tax Act. This aspect of the matter was considered by us recently in T. Cs. Nos. 49, 52 and 59 of 1963.
There we observed (page 623) :
'It is a common experience in this part of the country, where the system of absentee landlords prevails, that different owners of agricultural lands give them for cultivation to one lessee or manager or agent. The lessee or manager or agent thereafter, for the purpose of his convenience, uses the same set of ploughs and bulls and common pannai servants for cultivation, and after collecting the produce, he apportions it among the different owners in proportion to the yields from their lands. There is no scope for construing such owners as having formed an association solely by reason of their having engaged one and the same lessee or manager or agent for the purpose of cultivation. The fact that, in the present case, the different owners of the land formed members of one family or acquired their properties by settlement or partition from one person could not by itself lead to any alteration to this principle. Even in such a case it is necessary to prove the essential requirement, viz., that as between themselves they had associated together and decided upon the common exploitation of their lands for common benefit and that it was only in pursuance of that agreement a single person was selected to carry out the common purpose of joint cultivation. This essential requirement is absent in this case.'
The same principles apply to these cases and we, therefore, hold that the view of the Tribunal is right. The revision cases are dismissed. No order as to costs.