JAGADISAN J. - These revision petitions arise out of proceedings under the Madras Agricultural Income-tax Act. The petitions filed applications before the Agricultural Income-tax officer, Ooatacamund, under section 65 of the Act for composition of the tax on their agricultural income and levy of the appropriate fee in lieu of regular assessment to tax. These applications were rejected by the officer and the petitioners preferred revision petitions before the Commissioner of Agricultural Income-tax, Madras. These revision petitions also were dismissed as the Commissioner agreed with the view taken by the subordinate officer. In this batch of revision petitions the petitions urge the contention that they are entitled to the benefit of composition under the Act and that the competent authorities failed to exercise their statutory jurisdiction properly.
These petitions can be dealt with and disposed of together as they raise a common question of law.
A block of property consisting of tea plantations in Ooatacamund called the Doddabetta Tea Plantations and another block of arecanut plantations in Odathurai village belonged originally to six sharers, H. A. Rangaswami, H. N. Nanjiah, H. N. Kepiah, H. B. Nanjiah, H. M. Lingiah and H. S. Siddiah. Each of them had on one-sixth share in these properties. Each of them was permitted to compound the agricultural income-tax payable in respect of their respective shares for the account year ended March 31, 1959, relevant to the assessment year 1959-60 in terms of standard acres. The particulars of the holding of the shares were as set out below :
The petitioner in T. C. No. 13 of 1962 - AC. 68-83
The petitioner in T. C. No. 26 of 1962 - AC. 70-91.
The petitioner in T. C. No. 27 OF 1962 - AC. 65-09
The petitioner in T. C. No. 28 of 1962 - AC. 68-06.
The petitioner in T. C. No. 29 OF 1962 - AC. 67-86 and
The petitioner in T. C. No. 30 of 1962 - AC. 69-40.
The petitioners held the tea and arecanut plantations as tenants-in-common without division by metes and bounds. Each of them also owned, besides plantations, wet and dry lands. The total extent of the standard acres set out above comprise their shares in the plantations as well as their separate holdings. In or about December, 1959, each sharer effected a division by a registered partition deed between the members of their respective families. Rangaswami effected a partition between himself and his two brothers, Nanjiah, between himself and his four sons, Siddiah, between himself and his two sons, Lingiah, between himself and his two sons, H. B. Nanjiah, between himself and his two, sons, and Kempiah between himself and his two sons. The result was that one-sixth share of each of the sharers in turn became disintegrated and divided. It was on the basis of this division that applications were preferred before the Agricultural Income-tax officer for composition for the assessment year 1960-61. It is not necessary to specify the share of each one of the applications for composition as nothing turns upon the extent of holding of each sharer.
The Agricultural Income-tax officer rejected the applications on the following grounds :
(1) The properties have not been separately sub-divided and registered in the revenue accounts.
(2) No separate accounts have been maintained by the parties.
(3) No separate tea quota certificates have been obtained.
(4) All the persons are living in one and the same house.
The officer observed that he was not convinced that a real partition had taken place. In revision the Commissioner no doubt affirmed the view of the Income-tax Officer, but was also of the opinion that physical division of the plantations was necessary before an application for composition under section 65 could be sustained. It does not appear that the Commissioner disbelieved the truth of the partition. The substantial ground on which the Commissioner negatived the relief to the petitioner is thus stated in his order :
'In these batch of revision cases the only point for consideration is whether the composition applications filed under section 65 were properly rejected on the grounds that the revision petitioners have railed to prove partition of the holdings held by them. In these cases, the property involved lends itself to physical division or division by metes and bounds. Such division is necessary to hold that a definite partition has taken place. It has to be decided by the facts and circumstances of each case as to whether such division has been effected.'
We must observe even at the outset that the learned counsel for the department did not contend that the partition deeds, which are registered documents, are instruments created without intending to give effect to them. Though the observations of the officer in his order that he was not convinced that a real partition had taken place might be construed as a finding that the partition was not true, as stated already, there is nothing in the order of the Commissioner showing that he was inclined to accept that view. There is no reason to suppose that the partition deeds were brought into existence nominally without intending to give effect to them and to disrupt the joint status of the members of the family of each sharer. Assuming that the object and purpose of these partition deeds were to bring about a reduction of the incidence of taxation under the Act that would not militate against the truth or genuineness of the transactions. We shall therefore deal with the revision on the basis of an effective and subsisting division brought about between the members of the family of each one-sixth sharer.
Section 3(3) of the Act read along with section 65 would seem to apply and govern the rights of parties in the present case. Section 3(3) is part of the charging section and it clearly lays down that :
'3. (3) In the case of persons holdings property as tenants-in-common and deriving agricultural income, the tax shall be assessed at the rate applicable to the agricultural income of each tenant-in-common.'
The tax liability in regard to agricultural income of a tenant-in-common holding property is only in regard to his share of the total income. Section 65, the provision for composition of agricultural income-tax, is an enabling provisions by which the assessee may seek permission to compound the tax payable by him at the rate or rates specified in Part II of the Schedule in lieu of a regular assessment. The right of a tenant-in-common to obtain the benefit of composition under the Act has been considered by a division bench of this court, to which one of us was a party, reported as Ramaswami v. Commissioner of Agricultural Income-tax. In that case a tenant-in-common applied under section 65 of the Act for composition of the agricultural income-tax payable by him. The Commissioner of Income-tax refused to grant the permission. It was urged by the department that a tenant-in-common was not a person in possession or enjoyment of the state and that therefore he was not within the definition of the word 'person' in the Act. The Division Bench held that z tenant-in-common cannot be said to be a person not in possession or enjoyment of the estate and that when the interest of each tenant is specified and determined there can be no objection for holding that he is entitled to possess and enjoy such fractional interest in the estate or holding though no distinct part of it might be set apart for his exclusive enjoyment. In view of this decision, and, having regard to the plain terms of the statutory provisions already referred to, section 3(3) and section 65, We have no doubt that the application of each one of the petitioners claiming to be a tenant-in-common by reason of the partition deeds executed in December, 1959, should have been ordered.
When the Commissioner of Agricultural Income-tax referred to a physical division in his order, obviously he had in mind section 29 of the Act. We have now to consider the question as to whether section 29 of the Act would apply and whether a physical division of the properties by metes and bounds is a sine qua non for a claim under section 65 of the Act. Section 29 of the Act, in so far as it is relevant for the present discussion, may now be extracted :
'Section 29(1) : Where at the time of making an assessment under section 17, it is claimed by or or behalf of any member of a Hindu undivided family,.... hitherto assessed as undivided that a partition has taken place among the members or groups of members of such family,... the Agricultural Income-tax officer shall make such inquiry therinto as he may think fit, and if he is satisfied that the joint family property has been partitioned among the various members... in definite portions, he shall record an order to that effect : ....
(2) Where such an order has been passed, the Agricultural Income-tax officer shall make an assessment of the total agricultural income received by or on behalf of the family... as if no partition had taken place, and each member or group of members shall, in addition to any agricultural income-tax for which he or it may be separately liable,... be liable for a share of the tax on the income so assessed according to the portion of the family,.... allotted to him or it, and the Agricultural Income-tax Officer shall make assessments accordingly on the various members.... in accordance with the provisions of section 17 : ...
(3) Where such an order has not been passed in respect of a Hindu family,... hitherto assessed as undivided, such family,... shall be deemed for the purpose of this Act to continue to be an undivided family,...'
Even a cursory look at this provisions clearly reveals that there are at least two essential ingredients which must be present for its operation. One is that the claim should be preferred at the time of assessment under section 17 of the Act, and the other is that there must have been a family which must have suffered assessment in its status as an undivided family. Section 17 of the Act is the assessment section by which the total agricultural income of the assessee is computed and assessed to tax. This is the ordinary or normal machinery of assessment. The composition prescribed under section 65 of the Act is a substitute for the assessment under section 17, and it is something in the nature of a commutation by the department of the tax liability of the assessee on a graduated scale of payment depending on the extent of holding without reference to the actual income derived. The scheme of Act is sufficiently clear to draw a distinction between an assessment proceeding under section 17 and a proceeding for composition under section 65. It cannot possibly be contended that a composition arrangement is also a mode of assessment to tax. In fact, such a contention was raised in the case reported as Commissioner of Agricultural Income-tax v. A. Subbiah Gounder, and we repelled it. The point raised in that case was whether an order of composition under section 65 was appealable under section 31 of the Act. We held that in a proceeding under section 65 there is no 'assessment' of the income of the assessee or an assessment of tax as such within the meaning of section 31. We were of opinion that such an order was not appealable and did not fall within the ambit of section 31. At page 525, we observed as follows :
'It seems to us that an order granting permission to compound and fixing the amounts to be paid by a person holding agricultural land in lieu of the agricultural income-tax does not amount to an order of assessment.'
It is, therefore, perfectly plain that section 29 cannot stand in the way of the petitioners as they did not put forward a plea for separate assessment based upon a division, in the course of an assessment proceeding under section 17, but only invoked the jurisdiction of the officer for the levying of a composition fee under an independent proceeding under section 65 of the Act. It is of course true that the division contemplated in section 29 is not a national division in status, but a physical division by metes and bounds. But section 29 has no application in the present context and nothing contained in that section can defeat the petitioners claim for composition.
We do not agree with the view of the Commissioner that the absence of a division by metes and bounds of the tea and arecanut plantations is fatal to the maintainability of the application under section 65. There is also another circumstances which would render section 29 inapplicable. It is conceded on behalf of the department that in the prior years of assessment each one-sixth sharer was assessed only in the status of an individual and not in the status of a Hindu undivided family. As pointed out already, one of the essential conditions for the operation of section 29 is that the family, in respect of which a division is put forward, and a claim for separate assessment is made by the quondam members of the family, should have been assessed as such family previously. We do not think that it would be permissible for the department to contend that although the assessee was described as an individual in regard to his status he must be deemed to have been assessed as the karta of a Hindu undivided family.
We are, therefore, of opinion that the Commissioner was not right in rejecting the applications for composition on the ground that division by metes and bounds had not been proved or established. There is no legal impediment in the way of the petitioners in obtaining relief by way of composition under section 65 of the Act.
In the result, these revision petitions are allowed and the orders of the subordinate Tribunals are hereby set aside and the applications for composition are directed to be dealt with by the Agricultural Income-tax officer as proper and valid applications preferred under section 65 of the Act. The department will pay the petitioner in T.C. No. 13 of 1962 his costs. Counsels fee Rs. 100. There will be no order as to costs in the other revision petitions.