SRINIVASAN J. - One Mr. Hight was the owner of certain coffee estates. These estates were sold by him to certain other persons on May 14, 1957. Under the terms of the sale, the coffee crop of the years 1956-57 and the earlier years was to belong to the vendor and that of 1957-58 to the vendees. During the account years relevant to the assessment years 1958-59 and 1959-60 the representatives of the vendor received form the India Coffee Board the price of the coffee delivered to the Board, the coffee being the crop of the account years 1954-55 to 1956-57 inclusive. The payments in respect of the coffee so delivered by the owner to the Coffee Board were however received on various dates from April 1, 1957, onwards. Since this owner Mr. Hight ceased to be the owner on and from May 14, 1957, the contention was advanced in relation to assessments under the Agricultural Income-tax Act that the receipts after May 14, 1957, constituted capital receipts and did not represent agricultural income. This contention was rejected by the Income-tax officer, who however purported to include in the assessable income a sum of Rs. 642 which related to the coffee crop of the year 1951-52. The gross agricultural income for the assessment year 1958-59 was computed at Rs. 10,25,755. Allowing for an expenditure of Rs. 23,857 the taxable income was computed at Rs. 10,01,897. The tax thereon came to Rs. 4,44,173. For the assessment year 1959-60, the quantum of receipts from the Coffee Board relating to 1956-57 and 1954-55 crops came to Rs. 1,16,057 on which the tax payable was assessed at Rs. 45,545.
Against these orders of assessment, appeals were taken to the Assistant Commissioner of Agricultural Income-tax by the representatives of the estate of the assessee. The only ground urged in the appeals was that the coffee pool payments received after the date of the sale of the estates cannot be regarded as income assessable under the Agricultural Income-tax Act. This contention was not accepted. Further appeals to the Tribunal also failed. The Tribunal however deleted the sum of Rs. 642 which related to the crop of the year 1951-52. The Tribunal relied upon a Bench decision of this court rendered in W. As. Nos. 121 and 122 of 1957 and held that the assessments were rightly made. The contention that the assessee should be a person owning the land on the date of the receipt of the income was repelled by the Appellate Tribunal.
It is against these orders of the Tribunal that these revision petitions have been field and the same ground that was advanced before the department and the Tribunal, namely, that the receipts after May 14, 1957, did not represent agricultural income assessable to tax has again been pressed before us. That is the question which we have to consider in these petitions.
Mr. K. Srinivasan, learned counsel for the assessee, presents the above contention and develop it in the following manner : Under section 3 of the Madras Agricultural Income-tax Act, the tax shall be charged for each financial year in accordance with and subject to the provisions of the Act on the total agricultural income of the previous year of every person. Under section 2(q) of the Act 'person' has been defined to mean 'any individual or association of individuals owning or holding property for himself or for any other...' Reading the two together, it is argued by learned counsel that the person sought to be assessed should be a person who holds land during the year of assessment. Reference is also made to section 10 of the Act by learned counsel which provides for exemption and which is in these terms :
10. 'Nothing contained in this Act shall apply to a person who holds land not exceeding 12. 1/2 standard acres :
Provided that no person who held or holds land during any part of a financial year in excess of the exempted extent shall be entitled to the exemption under this sub-section even though the extent of land held by him during the rest of that financial year may not be in excess of the exempted extent.'
Emphasis has been laid by learned counsel on the clause 'to a person who holds land' and the inference is sought to be made from the tense that the person should, before he becomes liable to a charge of agricultural income-tax, be a person who is holding land and not one who has parted with the land. It is also urged that section 23 of the Act, which deals with assessments in cases of transfer or right in land, provides that in the case of such transfers, the transferor and the transferee shall be each assessed in respect of his actual share, if any, of such agricultural income. It is from these provisions that the learned counsel seeks to reach the conclusion that a person, who might have been the owner of the land during the accounting year but who receives agricultural income from such land relevant to the period of his ownership but subsequent to the date when he parted with such ownership, cannot be assessed; the more so, when the method of accounting employed by such a person is on the cash basis. The question is whether this contention is correct.
It seems to us that process of reasoning by which such conclusion is sought to be reached is by no means very clear or cogent. The Act lays the charge on the total agricultural income of the previous year of every person. 'Agricultural income' has itself been defined to mean 'any income derived from land by agricultural or the performance by a cultivator of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to the market or the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him.' It is unnecessary to extract the provision in full. The total agricultural income of a person has to be computed in accordance with the other provisions of the Act. Whether or not a person has ceased to be the owner of the land, the income that he derived from the land during the time when he was the owner thereof must certainly fall within the scope of the definition of agricultural income. The expression 'total agricultural income of the previous year of every person', which finds place in the charging provision of the Act, does not carry any implication that at the time the income is brought to tax the person must continue to be the owner of the land which yielded that agricultural income. It is the income from the land that is brought to tax and the land must necessarily be in the ownership of some person or other, and the apparent meaning of the charging provision is clearly that when a person has become entitled to or has received the agricultural income from the land, his right to receive such income arising from one or other of the kinds of ownership mentioned in the definition of 'person' in section 2(q) of the Act, the charge attaches. It does not appear to be necessary, nor does the wording of section 3 of the Act justify such an interpretation, that at the time the income is brought to tax, that is, in the assessment year, the person should still continue to be the owner or to be a person entitled to receive the income from the land.
Far from supporting the contention of the learned counsel, section 23 seems to us to lead to the contrary conclusion. The very fact that where land has been transferred by one person to another, both the transferor and the transferee have been made liable by section 23 of the Act to tax on their respective shares of the agricultural income, undoubtedly establishes that so long as person, who was either the owner or was entitled to receive the income, did receive any part of such income, he is liable to be assessed thereon. It is not necessary that at the time of the assessment the person would still continue to be the owner of property. Nor can we find anything in section 10, which is an exemption provision which aids in the interpretation of the charging provision.
Coming to the facts of this case, undoubtedly the assessees or their predecessors-in-interest were the owners of the land and did realise or receive the agricultural income which arose during the period of such onwership. It is true that this income came into their hands only after the date of the sale, May 14, 1957. If for the reasons we have stated above such agricultural income is liable to tax, notwithstanding the cessation of ownership of the lands, there can be no doubt that the income was assessable in the assessment years in question.
What is necessary to our minds is only that a person should have derived agricultural income during the accounting year. Whether or not he subsequently ceased to be a person as defined in the Act cannot affect the incidence of charge to tax upon that agricultural income. That the assessment is made at a time when he is no longer a 'person' as defined in section 2(q) is not material and, in fact, is not a requirement of the charging provision.
It is unnecessary to refer to the decision relied upon the Tribunal. The assessments to our minds were rightly made. The petitions fail and are dismissed with costs. Counsels fee in T.C. No. 41 of 1961 - Rs. 100.