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Puthutotam Estates (1943) Ltd. Vs. Agricutural Income-tax Officer. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberWrit Appeals Nos. 121 of 122 of 1957 and Writ Petitions Nos. 227, 228, and 236 to to 241 of 1958
Reported in[1962]45ITR86(Mad)
AppellantPuthutotam Estates (1943) Ltd.
RespondentAgricutural Income-tax Officer.
Cases ReferredSoundarapandian and Brothers v. Agricultural Income
Excerpt:
- rajamannar c.j. - the above two appeals are from the common judgment of rajagopalan j. disposing of two writ petitions, nos. 749 of 1956 and 48 of 1957. the appeals and the writ petitions which were directed to be heard along with the writ appeals involve common questions of law concerning the interpretation of the provisions of madras act v of 1955. this act was originally entitled the madras plantations agricultural income-tax act, 1955, but its title was changed by the amendment act of 1958 in to the madras agricultural income-tax act. the act received the assent of the governor on 27th march, 1955, but charging provisions of the act were to take effect as and from 1st april, 1955. the purpose of the act is to provide for the levy of a tax on agricultural income from land in the state.....
Judgment:

RAJAMANNAR C.J. - The above two appeals are from the common judgment of Rajagopalan J. disposing of two Writ Petitions, Nos. 749 of 1956 and 48 of 1957. The appeals and the writ petitions which were directed to be heard along with the Writ appeals involve common questions of law concerning the interpretation of the provisions of Madras Act V of 1955. This Act was originally entitled the Madras Plantations Agricultural Income-tax Act, 1955, but its title was changed by the Amendment Act of 1958 in to the Madras Agricultural Income-tax Act. The Act received the assent of the Governor on 27th March, 1955, but charging provisions of the Act were to take effect as and from 1st April, 1955. The purpose of the Act is to provide for the levy of a tax on agricultural income from land in the State of Madras. Section 2 contains the definitions.

Clause (x) defines 'total agricultural income' as follows :

'Total agricultural income means the aggregate of all agriculture income mentioned in section 4 computed in accordance with the provisions of section 5 and includes all income of the description specified in section 9 and all the receipts of the description specified in sub section (2) of section 10.'

Section 3 is the charging section. Sub-section (1) of section 3 runs thus :

'Agricultural income-tax at the rate or rates specified in Part 1 of the Schedule to this Act shall be charged for each financial year commencing from 1st April, 1955, in accordance with and subject to the provisions of this Act, on the total agricultural income of the previous year of every person.'

Section 4 declares that subject to the provisions of the Act, the total agricultural income of any previous year of any person comprises all agricultural income derived from land situated within the State which is received by him or which accrues to him with in or without the State but does not include certain categories of agricultural income which it is not necessary to mention for the purpose of the present cases. Section 5 enumerates the deductions which are permissible in computing the agricultural income of a person.

These include :

(a) any sums paid in the previous year on account of land revenue due to the Government, local rates and cesses and municipal taxes in respect of land;

(b) any rent paid in the previous year to the landlord or superior landlord, as the case may be, in respect of the land from which the agricultural income is derived;

(c) any expenses incurred in the previous year on the maintenance of any protective work constructed for the benefit of the land from which the agricultural income is derived;

(d) any expenses incurred in the previous year on maintenance and repairs in respect of any capital asset which was purchased or constructed for the benefit of the land from which the agricultural income is derived;

(e) any expenditure incurred in the previous year (not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of the land;

(f) expenses other than capital expenditure incurred in the previous year of cultivating the crop from which the agricultural income is derived and of transporting such crop to market, including the maintenance of agricultural implements and cattle required for such cultivation and transport or both.

There is an explanation at the end of the several clauses enumerated in the section which, inter alia, states that for the purpose of the section 'paid' means actually paid or incurred according to the method of accounting upon the basis of agricultural income as computed under the section. Section 7 provides that agricultural income shall be computed for the purpose of the Act in accordance with the method of accounting regularly employed by the assessee. Section 12 provides for the carrying forward of loss sustained in agricultural income in any year to the following year and setting it off against the agricultural income for that year and for further carrying forward to following years up to a limit of six years. In the case of loss sustained before the commencement of the Act, the section will apply only to such loss as was sustained in the previous year immediately before such commencement. Under section 16(1) of the Act every person who held land in excess of the exempted extent at any time during the previous year shall furnish to the Agricultural Income-tax Officer so as to reach him before the 1st June of every year a return in the prescribed form and verified in the prescribed manner setting forth his total agricultural income during the previous year. Section 17 relates to the assessment of the income. Section 31 confers a right of appeal to the Assistant Commissioner on any assessee objecting to the amount of income assessed or tax determined or loss computed or denying his liability to be assessed objecting to particular specified orders. Section 32 confers a right of appeal against an order passed by the Assistant Commissioner to the Appellate Tribunal. Section 34 provides for revision by the Commissioner in particular cases. Section 35 deals with income escaping assessment, and runs thus :

'If for any reason agricultural income chargeable to tax under this Act has escaped assessment in any financial year or has been assessed at too low a rate or has been under assessed, the Agricultural Income-tax Officer may, at any time, within five years of the end of that year serve on the person liable to pay the tax or, in the case of a company, on the principal officer therefore a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 16 and may proceed to assess or reassess such income, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section;

Provided that the tax shall be charged at the rate at which it would have been charged if such income had not escaped assessment or full assessment, as the case may be.'

Rectification of mistakes apparent from the record can be made under section 36 of the Act within the prescribed time. The Rules framed under the Act called the Madras Agricultural Income-tax Rules, 1955, came into force on 1st September, 1955. Rule 10 as it originally stood ran as follows :

'The agricultural income from coffee crop for a particular year for purposes of assessment shall be -

(a) The proceeds of the coffee crop of the previous year realised by the auction of the crop by the Indian Coffee Board, or

(b) Where this cannot be ascertained before the assessment, the Agricultural Income-tax officer shall adopt the market value of the coffee crop at the time of assessment as the actual price and in such cases if it is found at a later date that the price so valued is lower than the value fixed by the Coffee Board, then the assessment should be revised under section 35 by adopting the actual price realised. If on the other hand the actual income derived by the sale of coffee is found to be less than that computed for the levy of the tax on the basis of the market value, at the time of assessment, the excess tax shall be refunded. The proceeds of the coffee crop treated by the Indian Coffee Board as the crop of earlier years shall be excluded.'

By G. O. No. 1522, Revenue, dated 10th April, 1956, the Rules were amended by deletion of the above rule 10 with retrospective effect from 1st September, 1955

In Writ Appeals Nos. 121 and 122 of 1957, the appellant, the Puthutotam Estates (1943) Limited, as a public limited company cultivating coffee, cardamom, cinchona, tea, etc., in the Anamalais, Coimbatore district. The Agricultural Income-tax Officer, Coimbatore, within whose jurisdiction the appellants estates were situated, took proceeding for the year of assessment, 1955-56 (accounting period being the year ended 31st March, 1955), and completed the assessment by his order dated 21 March, 1956. In and by the said order the net taxable agricultural income of the appellant company was fixed at Rs. 3,13,335 and under section 17 of the Act the tax was fixed at Rs. 1,07,716. The said amount of tax was duly paid. There was no appeal against the order of assessment. On 1st May, 1956, the Agricultural Income-tax officer wrote to the appellant stating that as rule 10 of the Rules had been deleted with retrospective effect, he proposed to reassess the income of the appellant for the year 1955-1956 under section 35 of the Act and called for certain particulars. The appellant protested that the proposed action was illegal and invalid. But in spite of his protests the officer by his order dated 31st May, 1956, revised the assessment already made on 21st March, 1956, and added to the income already computed a further sum of Rs. 2,39,206-8-6, being the excess amount realised during the year ending 31st March, 1955 on prior years coffee crops. There was an additional tax demand for payment of Rs. 82,227. It is to quash this order that the appellant filed Writ Petition No. 749 of 1956 under Article 226 of the Constitution.

Two main grounds of objection were raised by the appellant as to the validity of the impugned order : (1) that the original assessment became final and concluded by the order of the Agricultural Income-tax Officer dated 21st March, 1956, and the same was not pending by way of appeal or otherwise on 10th April, 1956, when the G. O. amending the Rules by deleting rule 10 was passed. The deletion, therefore, could not affect the assessment which had already become final and (2) that what the Act can charge, and purports to charge is only the income of the assessee based on the value of the quantity of the produce raised in the accounting period and any receipt of surplus in relation to crops of years preceding the accounting period is not within the charge. In the case of the appellant the accounting period for the assessment year 1955-1956, is from April 1, 1954, to March 31, 1955, and it is only the crops relating to that period that can be taken into account and not an earlier period to which the agricultural income-tax does not apply. It may be mentioned that a technical plea was also raised that section 35 could not be invoked as there is not question of any escape of assessment.

The appellant filed another petition under article 226, Writ Petition No. 48 of 1957, in respect of the year of assessment 1956-57, the accounting year being the year ended 31st March, 1956. In this case there is no question of proceedings under section 35 of the Act. By order dated 23rd December, 1956, the Agricultural Income-tax Officer, Coimbatore, assessed the appellant company on a total income of Rs. 5,28,264. This total included two sums to which the appellant objects. The first is a sum of Rs. 68,827-6-6, being the excess amount realised during the year of account on the coffee crop for 1953-1954. The objection is based on the contention that the income relates to the Board as required by the Coffee Market Expansion Act prior to April 1, 1954, and the realisation in the year of account of a portion of the sale year of account, namely 1955-56. The officer cannot bring within the charge any receipt relating to a period prior to April 1, 1954, to which the Act of 1955 does not apply. The second item objected to is a sum of Rs. 1,06,061-7-1 being the Central income-tax claimed on coffee but disallowed. As this item does not form part of the subject-matter of the appeal it is not necessary to set out the contentions of the appellant regarding thereto. The appellant prayed that a writ of certiorari be issued to quash the order of the Agricultural Income-tax Officer, Coimbatore, dated 23rd December, 1956.

On behalf of the State counter-affidavits were filed in the two petitions. The view put forward in these affidavits was that under section 4, all agricultural income received during the previous year was taxable and there is no warrant for the assumption that only the income earned from the crops raised during the previous year can be taxed. All items of agricultural income realised by a person during the previous year could be taken into account irrespective of the year to which the crop relates. The assessee who is adopting the mercantile system of accounting should have brought into account income received during the year even though the income might have related to the crops of earlier years. As the income received by the company during the year relating to the crops of earlier years was not returned and therefore not assessed at the time of the original assessment, there was nothing illegal or improper in making a reassessment under section 35 of the Act. The existence or deletion of rule 10 does not affect the power of the Income-tax Officer to take proceedings under section 35. These were the submissions made on behalf of the State in their counter-affidavits besides a preliminary objection raised, namely, that as the assessee had filed an appeal against the order under section 35 of the Act, he was not entitled to any discretionary relief under article 226 of the Constitution.

In a further affidavit filed on behalf of the company it was stated that, under the provisions of the Coffee Marketing Expansion Act, 1942 (now called the Coffee Act), the entire coffee produced by the company had to be delivered to the Coffee Board. The company retained no rights in respect of such coffee except the right to receive the payments in accordance with section 34 of the said Act. The property in the coffee so delivered becomes the property of the Coffee Board in the years in which the coffee is delivered. In the year of account April 1, 1954, to March 31, 1955, the company had no coffee belonging to the previous years but it received during that year the sum of Rs. 2,39,206 odd from the Coffee Board relating to the coffee delivered in the years 1952-53 and 1953-54. As the assessee adopted the mercantile system, every transaction belongs to the year of delivery and the year of profits is the year of sale by such delivery and the profit and loss account of the company took credit under the heading 'proceeds of coffee' each year for the crop of the year and the price is tentatively estimated and entered, to be adjusted subsequently on the final determination by the Coffee Board. In a further counter-affidavit filed on behalf of the State it was denied that the assessee was adopting the mercantile basis of accounting and it was stated that, therefore, the company was rightly taxed on the basis of receipt of moneys from the Coffee Board during the year of account. The other contentions raised on behalf of the company were again refuted.

The two petitions were heard together by Rajagopalan J. The learned judge dismissed both the petitions. The common question which the learned judge first dealt with was whether the sale proceeds received by the company from the Coffee Board in the relevant years of account towards the price of coffee produced and sole before April 1, 1954, could be assessed to tax as agricultural income. After referring to the material provisions of the Agricultural Income-tax Act, the learned judge held that though the amounts in question were paid towards the produce of coffee gathered and sold prior to April 1, 1954, as the amounts were received only in the relevant years of account, namely, 1954-55 and 1955-56, they were liable to be taken into account for computing the total agricultural income of the company of those years. His decision rested on this, namely, that the receipt of income was the basis of liability to tax. The learned judge thought that it was not necessary for him to discuss or decide in these proceedings what constituted 'receipt', especially where the system of accounting is mercantile. The learned judge found himself unable to accept the contention that either section 5 or section 12 compelled the requirement that the agricultural income must have been derived in the previous year, in the sense that the income must relate to the produce of the previous year. Taking first the period subsequent to April 1, 1954, he held on what he considered to be the true scope of section 3 read with section 4 of the Act, that if the sale proceeds of agricultural produce raised and gathered in 1956-57 are received in the year of account 1957-58, they would be part of the total agricultural income to be assessed in 1958-59. In his opinion it would not make any difference if the produce was of a period anterior to April 1, 1954. He considered that the provisions of section 5 would not in any way control the liability declared by section 3 read with section 4. The learned judge then disposed of the contention that section 35 had no application to the case of the assessment of the year 1955-56. The learned judge held that the case did fall within the scope of that section. The learned judges reasoning may be thus set out in his own words :

'Within a month thereafter (after the original order of assessment) the law was changed, and rule 10 stood repealed. The basis of what really amounted to an exemption granted to coffee disappeared. It was as if that basis never existed in the eye of law, as rule 10 was repealed with retrospective effect. The sum was liable to be taxed as part of the total agricultural income of 1954-55, but factually it was not taxed. In that sense it did escape assessment. The reason for that escape was no doubt the application of rule 10, which subsequently was treated as never having had any existence. Did that come within the scope of for any reason is the question for determination. In my opinion it did.'

In the view he took on the main question the learned judge considered it was not necessary to deal with the preliminary objection raised on behalf of the State that as the appellant company had availed itself of the statutory right of appeal, it was not entitled to any relief under article 226 of the Constitution. The above two appeals are from this judgment of Rajagopalan J. The writ petitions were directed to be posted along with the writ appeals because they involve same or similar questions of law. It is, therefore, not necessary to set out the facts which led to the filing of those petitions.

Several contentions were raised on behalf of the assessee. We shall first dispose of briefly the contention raised on the deletion of rule 10 of the Madras Plantations Agricultural Income-tax Rules, 1955, with retrospective effect. It was not, and it cannot be, contended that the Government in exercise of the powers vested in them by section 61 of the Act could not amend the Rules by directing the deletion or repeal of the said rule, with retrospective effect from 1st September, 1955, that is, from the date the Rules originally came into force. All that was contended was that this undoubted retrospective operation will not have the effect of reopening closed assessments. In Writ Appeal No. 121 of 1957, for instance, the assessment was completed by March 21, 1956. The assessee did not file an appeal from the order of assessment. The amendment by which rule 10 was deleted was on 10th April, 1956, subsequent to the order of assessment. Even assuming that the amendment had retrospective effect, it could not disturb the assessment already made because it was a closed assessment. We are unable to accept this contention. It is impossible to treat any assessment as final or closed so long as the powers conferred on the Agricultural Income-tax Officer under sections 35 and 36 are outstanding and subsisting. Both the sections relate to what learned counsel for the assessee described as 'closed assessments'. The ruling of the Supreme Court in Venkatachalam v. Bombay Dyeing and Manufacturing Company Limited, is directly in point and negatives this contention of the assessee. Their Lordships dealing with a similar contention said :

'The same argument is put in another form by contending that the finality of the order passed by the Income-tax Officer cannot be impaired by the retrospective operation of the relevant provision. In our opinion, this argument does not really help the respondents case because the order passed by the Income-tax Officer under section 18A(5) cannot be said to be final in the literal sense of the word. This order was and continued to be liable to be modified under section 35 of the Act. What the Income-tax Officer has purported to do in the present case is not to revise his order in the light of the retrospective amendment made by section 13 of the Amendment Act alone, but to exercise his power under section 35 of the Act;...'

The basis of the decision of Rajagopalan J. on the main question relating to the construction of section 4 of the Act is that the liability for the tax arises from the receipt of amounts representing the price of the coffee in the relevant year of account. In one place the learned judge says : [1958]34ITR764(Mad) :

'Since receipt of income is made the basis of liability to be assessed, the receipt must necessarily be in the previous year to make the income taxable as the income of the previous year;...'

One of the learned counsel who appeared for the assessees, Mr. K. Srinivasan, submitted that the word 'received' in section 4 has a significance in the context from the point of view of the place, that is, whether it is within or without the State. We agree with him. Clearly 'received by him' is in contradistinction to 'accrues to him'. What that section says is that whether the income is received by the assessee within the State or without the State, and equally whether the income accrues to the assessee whether within or without the State, it is liable. Neither the word 'received' nor the word 'accrues' is of assistance in determining the main question raised in this case, namely, what is meant by the total agricultural income of the previous year. We may mention here that we are equally not impressed by the contention on behalf of the assessee that the term 'derived' in section 4 of the Act is of assistance in determining the question. We cannot accept the strained interpretation of Mr. Venugopal that the term 'derived' suggests that the income must be from the produce of the previous year.

Great reliance was placed on behalf of the assessee on the provisions of section 5 of the Act. As we have seen, that section enumerates the deductions which are permissible in computing the agricultural income of a person for a particular year. Learned counsel urged that deductions relate only to the sums spent in the previous year, that is, the year previous to the year of assessment, and so the income which is assessable must be the income derived from the produce raised in the previous year. In particular clause (g) was pressed upon us. Under that clause one of the deductions is the amount of expenses other than capital expenditure incurred in the previous year of cultivating the crop from which the agricultural income is derived. Attractive though the argument looked prima facie on a further analysis of the scheme of the Act regarding assessment, we think that the provisions of section 5 do not have a direct bearing in determining what is the agricultural income which is liable to tax under section 4 of the Act in any year of account. Nor do we think section 12 can have the effect of limiting the scope of section 4 except to the extent specified therein. In any event section 12 cannot indicate what exactly is the income of a particular year.

Much was said at the Bar regarding the two systems of accounting either of which an assessee may adopt, namely, the mercantile and cash systems. The incidents of these two systems have been thus described by the Supreme Court in Keshav Mills Limited v. Commissioner of Income-tax :

'The mercantile system of accounting or what is otherwise known as the double entry system is opposed to the cash system of book keeping under which a record is kept of actual cash receipts and actual cash payments, entries being made only when money is actually collected or disbursed. That system brings into credit what is due, immediately it becomes legally due and before it is actually received and it brings into debit expenditure the amount for which a legal liability had been incurred before it is actually disbursed. The profits or gains of the business which are thus credited are not realised but having been earned are treated as received though in fact there is nothing more than an accrual or arising of the profits at that stage. They are book profits. Receipt being not the sole test of chargeability and profits and gains that have accrued or arisen or are deemed to have accrued or arisen being also liable to be charged for income-tax the assessability of these profits which are thus credited in the books of account arises not because they are received but because they have accrued or arisen.'

Iqbal Ahmad C.J. thus describes the two systems in Commissioner of Income-tax v. Shrimati Singari Bai : 'Under this system (mercantile accountancy system) the net profit or loss is calculated after taking into account all the income and all the expenditure relating to the period, whether such income has been actually received or not and, whether such expenditure has been actually paid or not. That is to say, the profit computed under this system is the profit actually earned, though not necessarily realised in cash, or the loss computed under this system is the loss actually sustained, though not necessarily paid in cash. The distinguishing feature of this method of accountancy is that it brings into credit what is due immediately it becomes legally due and before it is actually received; and it brings into debit expenditure the amount for which a legal liability has been incurred before it is actually disbursed. The mercantile accountancy system is the opposite of the cash system of book-keeping under which a record is kept of actual cash receipts and actual cash payments, entries being made only when money is actually collected or disbursed.'

The cases now before us all relate to agricultural income from coffee plantations. Coffee is grown on the land and the berries collected and they are delivered to the Coffee Board. That delivery is in pursuance of a statutory sale. The sale proceeds therefore constitute the income. As the learned Advocate-General put it, the taxable event is the conversion of the coffee produce into money. This kind of income will fall under section 2(a) (2) (iii) of the Act, that is, it is income derived from land in the State by the sale by a cultivator of the produce raised by him. Now it is obvious that the transaction of sale takes place when the produce is delivered to the Coffee Board. The price is tentatively fixed at the time but it is liable to adjustment subsequently. Often it takes time before the entire sale price is realised. Keeping in mind these facts, if we take a particular accounting year, the computation of income will in a way depend upon the system of account keeping adopted by an assessee. If it is the mercantile system the income from the sale will be entered as income which has accrued, though the money might not have been actually paid either in whole or in part. But if it is the cash system which is adopted by the assessee, then though the transaction of sale might be in a particular year of account, yet only the actual amounts realised from the transaction would be entered in the books of account. If the balance is received in a succeeding year, then it would be entered in the account of the succeeding year. In such a case the actual money received during an accounting year would be the income which would be liable to tax. In the mercantile system, however, the actual receipt of the moneys would not be the decisive factor from the point of view of time.

In our opinion, whether it is the mercantile system or the cash system that is adopted by the assessee, there will be no practical difficulty at all in the computation of income except in the case of income relating to transactions completed before 1st April, 1954. The charge under the Act took effect as and from 1st April, 1955, and section 3, the charging section, makes the tax leviable for the financial year commencing from 1st April, 1955, on the total agricultural income of the previous year, that is, the year commencing 1st April, 1954. It follows that the Act does not make the agricultural income of any year prior to 1st April, 1954, subject to tax. While we agree with the learned Advocate-General that the fact that the crop was grown during a period prior to 1st April, 1954, would not by reason of that fact only take such crop away from the liability under the Act, we do not agree with him that even when the sale of the crop is completed before 1st April, 1954, nevertheless the income from such sale would be liable to tax merely because the whole or a part of it is actually realised after 1st April, 1954. We rest our decision on the following reasoning. Under the Act the first year of assessment is the year commencing from 1st April, 1955. The tax for that year is levied on the total agricultural income of the previous year, that is, the year commencing 1st April, 1954. There is, therefore, no liability to tax in respect of the agricultural income of any period prior to 1st April, 1954. In the instant cases relating to coffee, the income is derived by the sale of the produce. If the sale takes place prior to 1st April, 1954, then the income derived by such sale would be income derived by the assessee prior to 1st April, 1954. Such income does not fall within the scope of the Act. This would be so whatever system of accounting is adopted by the assessee, mercantile or cash.

To give a concrete illustration which will also show the anomaly of adopting any other interpretation : suppose the coffee crop grown in 1948 is sold in 1949 but the price or part of it is not realised till proceedings are taken for its recovery and eventually the amount is realised after 1st April, 1954, will such amount be taxable as the income of the previous year In our opinion, not.

At the same time we do not accept the contention raised on behalf of the assessees that merely because a crop is grown in whole or in part before 1st April, 1954, it will not be liable to the tax. The time of the sale is the governing factor because according to the very definition the income is derived by the sale of the produce. It is not a direct levy on a notional value of the crop. It is because rule 10(b) is based on the assumption that the liability attaches to the crop of a particular year that it had to be deleted as it would be inconsistent with the scheme of the Act.

Mr. Venugopal, one of the learned counsel for the assessees, urged that the income means net income. This is certainly well established, vide John T. Lawless v. James Sullivan (1881) 6 App. Cas. 373. This means that it is not the gross income that is taxable, but it is open to the legislature to prescribe how the net income has to be ascertained by providing for certain deductions from the gross income. Section 5 of the Act contains a list of such deductions. It is true that some of the deductions in respect of expenses may not relate to the raising of the crop by the sale of which the income has been derived. This is inevitable. The crop may be raised in a particular year and expenses incurred for it but the crop may not be gathered and sole till the next year. But in the next year again there will be expenses for growing the next crop. For convenience of assessment, the income derived by the sale of the crop during a particular year is taken as the gross income and expenses incurred during that year are deducted therefrom. In one sense this is notional but eventually the assessee is not prejudiced.

In two of the cases, Writ Petitions Nos. 227 and 28 of 1958, at an earlier stage this court held that section 36 had no application to the position created by the deletion of rule 10 with retrospective effect, vide Soundarapandian and Brothers v. Agricultural Income-tax Officer : (1957)2MLJ434 . Thereafter a fresh notice was given under section 35. In our opinion it would not make any difference whether it is section 35 or 36 under which the powers of the Income-tax Officer are invoked. Under either section the action taken is within time. There is one other point raised only in Writ Petitions Nos. 227 and 228 of 1958, regarding the validity of section 5(k). The second proviso to this clause is impugned as being harsh and discriminatory. Under that proviso the interest which is allowed under the clause is limited to 9 per cent. on an amount equivalent to twenty-five per cent. of the agricultural income from the land in the previous year. It was pointed out by Mr. Venugopal that the particular year may be a lean year and therefore a large amount of money may have to be borrowed but the deduction regarding interest will only be calculated on twenty-five per cent. of the income in that year, whereas in a year of plenty the interest allowable will be much more. We are not convinced that the grievance is substantial; even assuming it is, we cannot say that on that ground the proviso is unconstitutional. A valid law may work harshly in certain cases but such hardship in individual cases would not have the effect of rendering the law invalid. The remedy of the aggrieved party is not to be sought in a court of law.

We have given above our construction of the material provisions of the Madras Agricultural Income-tax Act, but we cannot ourselves modify assessments in accordance with such interpretation. Such revision can only be made by the Agricultural Income-tax Officer. This court cannot go into the details of each case to find out how far the income in respect of which tax has been levied includes income which arose prior to 1st April, 1954. The determination of such questions of fact must be left to the concerned officer. All that we can do is to allow Writ Appeals Nos. 121 and 122 of 1957 and to quash the orders passed by the Agricultural Income-tax Officer under section 35 of the Act and to direct that there may be a fresh assessment in accordance with this judgment. In the writ petitions there will be orders quashing the orders of the Agricultural Income-tax Officer passed under section 35 of the Act and directing a fresh assessment in the light of this judgment. There will be no order as to costs.

Appeals allowed.


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