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Alipurduar Tea Co. Ltd. Vs. Agricultural Income-tax Officer and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberMatter No. 382 of 1973
Judge
Reported in80CWN404,[1978]112ITR878(Cal)
ActsIncome Tax Act; ;Bengal Agricultural Income Tax Act, 1944 - Sections 37 and 39; ;Income Tax Rules, 1962 - Rule 8
AppellantAlipurduar Tea Co. Ltd.
RespondentAgricultural Income-tax Officer and ors.
Cases ReferredJagdambika Pratap Narain Singh v. Central Board of Direct Taxes
Excerpt:
- .....sale during the relevant assessment year is taxable as representing agricultural income under the bengal agricultural income-tax act and the balance representing income from manufacturing process of tea is taxable as business income under the indian income-tax act. for the assessment years 1955-56 and 1956-57, the agricultural income-tax officer, jalpaiguri, being respondent no. 1, passed two separate orders both dated 25th july, 1960, and computed the agricultural income of the petitioner-company at rs. 3,71,128 and rs. 97,844, respectively, for the said assessment years based upon the certified copies of the corresponding assessment orders made under the provisions of the income-tax act. being aggrieved by the orders of assessment made under the provisions of the income-tax act the.....
Judgment:

Sabyasachi Mukharji, J.

1. This application under Article 226 of the Constitution relates to assessment for the assessment years 1955-56 and 1956-57 under the Bangal Agricultural Income-tax Act, 1944. The petitioner is a company which carries on the business of manufacture and saleof tea. Under Rule 8 of the Income-tax Rules, 1962, where an assessee himself grows tea leaves and manufactures tea, 60% of the income and/or profit on sale during the relevant assessment year is taxable as representing agricultural income under the Bengal Agricultural Income-tax Act and the balance representing income from manufacturing process of tea is taxable as business income under the Indian Income-tax Act. For the assessment years 1955-56 and 1956-57, the Agricultural Income-tax Officer, Jalpaiguri, being respondent No. 1, passed two separate orders both dated 25th July, 1960, and computed the agricultural income of the petitioner-company at Rs. 3,71,128 and Rs. 97,844, respectively, for the said assessment years based upon the certified copies of the corresponding assessment orders made under the provisions of the Income-tax Act. Being aggrieved by the orders of assessment made under the provisions of the Income-tax Act the petitioner preferred appeals before the Appellate Assistant Commissioner of Income-tax, Range Jalpaiguri. The said Appellate Assistant Commissioner by his order dated 10th January, 1967, which was received by the petitioner on the 8th March, 1967, had modified the said assessment. Thereafter, the petitioner made an application on the 28th March, 1968, before respondent No. 1 requesting him to revise the orders dated 25th July, 1960, as per the decision contained in the order of the Appellate Assistant Commissioner of Income-tax. The respondent No. 1 declined to do so on the ground that his power to modify or revise the assessment was only limited up to a period of four years from the date of the order of assessment. Thereafter, the petitioner preferred appeals before the Assistant Commissioner of Agricultural Income-tax. The Assistant Commissioner of Agricultural Income-tax by his order dated 13th September, 1968, rejected the appeal on the ground that no appeal lay against the order passed by the Agricultural Income-tax Officer under Section 39 of the Agricultural Income-tax Act, 1944. Thereafter, the petitioner made revision applications to the Commissioner of Agricultural Income-tax on 11th October, 1968, praying, inter alia, that orders be passed directing respondent No. 1 to give effect to the order of the appellate authority made under the provisions of the Income-tax Act for the assessment years 1955-56 and 1956-57. The said applications have been kept pending and have not been disposed of. This rule is directed against the failure on the part of respondent No. 3 to dispose of the said two revision applications directing the respondent No. 1, namely. Agricultural Income-tax Officer, Range I, to give relief to the petitioner on the basis of assessment orders passed by the Appellate Assistant Commissioner of Income-tax for the relevant assessment years.

2. Under the scheme of the Bengal Agricultural Income-tax Act, 1944, agricultural income arising out of manufacture of tea cannot be computed without assessment of the business income of the assessee being made under the provisions of the Indian Income-tax Act. For the purpose of agricultural income-tax, certified copies of the orders of the income-tax authorities are conclusive evidence of the contents of such orders. In this connection, reference may be made to the provisions of Section 8 of the Bengal Agricultural Income-tax Act, 1944, which deals with the computation of tax on mixed income. Sub-section (3) of Section 8 at the relevant time provided as follows :

' For the purpose of the assessment of agricultural income-tax under this section or any rule made thereunder a certified copy of an order of an assessment under the Indian Income-tax Act, 1922, or a certified copy of an order of any appellate or revising authority or of the High Court or of the Supreme Court altering or amending such order of assessment under the provisions of that Act shall be conclusive evidence of the contents of such order.'

3. Section 37 of the said Act deals with tht power of revision of the Commissioner and under Sub-section (2) of Section 37 the power of revision is limited to one year from the date of the order. Section 39 deals with rectification of mistake and the said power is limited to a period of four years from the date of the order to be rectified. For implementing the Act, rules have been framed and Rule 8 of the Bengal Agricultural Income-tax Rules, 1944, provides as follows :

'8. (1) The Agricultural Income-tax Officer after he is satisfied on examination of the accounts of a company earning income which is partially agricultural income assessable under the Act and partially income chargeable under the Indian Income-tax Act, 1922, or otherwise that the tax payable by the company has been or will be duly paid shall, on application made to him in this behalf by the principal officer of such company, grant the applicant a certificate in Form 2 specifying therein the percentage of the total agricultural income of the company to the aggregate of the income chargeable under the Indian Income-tax Act, 1922, as ascertained for the purpose of assessment of income-tax under the said Act and the total agricultural income.

(2) Every application for a certificate under Sub-rule (1) shall be accompanied by a certified copy of the final order assessing the company to income-tax under the Indian Income-tax Act, 1922.'

4. In this case as mentioned hereinbefore the original assessment showed the total income from tea as computed by the Income-tax Officer was Rs. 6,18,548 for the assessment year 1955-56 of which 40% was under the rules computed as business income under the Indian Income-tax Act and the remaining 60% being Rs, 3,71,128 was computed as agricultural income and was taxed accordingly. Similarly, for the assessment year 1956-57, total income from tea as computed by the Income-tax Officer was Rs. 1,63,073 and 40% of the same being business income taxable under the Indian Income-tax Act came to Rs. 65,229 and the balance 60% amounting to Rs. 97,844 was taxable under the Bengal Agricultural Income-tax Act, 1944. As a result of the decision of the Appellate Assistant Commissioner, the Income-tax Officer, 'B' Ward, Jalpaiguri, reduced the total business income from Rs. 6,18,548 for the assessment year 1955-56 to Rs. 5,63,609, and taxed 40% of the said income under the provisions of the Indian Income-tax Act. Similarly, for the assessment year 1956-57, he reduced the business income from Rs. 1,63,073 to Rs. 1,05,351 and taxed 40% of the same under the Indian Income-tax Act,

5. The question is, whether the assessee is entitled in these circumstances to claim from the authorities under the Bengal Agricultural Income-tax Act that his tax computation under the said Act should be rectified in view of the orders passed by the Appellate Assistant Commissioner of Income-tax for the two relevant years. As mentioned hereinbefore, under the scheme of the Bengal Agricultural Income-tax Act, in case of composite income from the manufacture of tea, is dependent upon the assessment under the Indian Income-tax Act and computation of the total income made under the Indian Income-tax Act (sic). As I have noticed before, under Sub-section (3) of Section 8 for the purpose of assessment of agricultural income-tax a certified copy of the order of assessment under the Income-tax Act or a certified copy of the order of the appellate or revisional authority would be conclusive evidence of the contents of such orders. In this case the order of the Appellate Assistant Commissioner of Income-tax was passed beyond the period of four years during which the Agricultural Income-tax Officer has jurisdiction to revise his own order under the provisions of the Bengal Agricultural Income-tax Act. There seems to be a lacuna in the Bengal Agricultural Income-tax Act. The Act should have provided power to revise the order of assessment by the Agricultural Income-tax Officer consequent upon the appellate or revisional order passed under the scheme of Indian Income-tax Act because the taxability under the Bengal Agricultural Income-tax Act, 1944, depends upon the computation of income made under the Indian Income-tax Act. When there is variation of such computation under the scheme of the Indian Income-tax Act, provision should have been made in the Bengal Agricultural Income-tax Act, 1944, for altering such assessment or determination of liability under the Bengal Agricultural Income-tax Act. Such provision obviously has not been made if one looks at the precise terms of the various sections of the Act. It is, however, the duty of the State and its machinery for collection of revenue to realise all legal dues from all concerned. It is, however, also the obligation of the State, to ensure that persons are not made liable for payment of anything exceptwhat is legally due from them. No tax which is not leviable by the authority of law should be collected or realised by the State and, if realised by the State, should be refunded by the State. The scheme of fiscal statutes should be looked into from that point of view and, in case of injustice, in my opinion, the court should ensure that such injustice in these matters is rectified as far as practicable unless the same is contrary to the expressed legislative intent. The Supreme Court observed in the case of Raj* Jagdambika Pratap Narain Singh v. Central Board of Direct Taxes : [1975]100ITR698(SC) that the judiciary should play a creative role in a developing economy to ensure justice without doing violence to the norms set by the legislature. I find the legislative intent manifested in the scheme of the Bengal Agricultural Income-tax Act that the tax for agricultural income should be computed on the basis of the income computed under the Indian Income-tax Act. I find also the legislative intent expressed in subsection (3) of Section 8 that such computation of the total income under the scheme of the Indian Income-tax Act must be the computation made by the Income-tax Officer as finally determined by the appellate and revisional authorities provided under the scheme of that Act. But there is no machinery providing for rectification of the order under the Agricultural Income-tax Act after the appellate or revisional authority has passed order under the Indian Income-tax Act. It is a defect in the machinery but the provisions should, in my opinion, be read attributing ancillary and incidental powers to the authorities concerned to implement and carry into effect the major legislative intent. Thus, the inarticulate legislative intent can be given effect to. In this case provisions have been made under Sub-section (2) of Section 39 for revising an order in case of certain mistakes. Provision has also been made by Section 37 for revision by the Commissioner in certain contingencies but there is no provision for revision by the Commissioner in a case of this nature. In my opinion, in such a situation when manifest injustice is being done to the taxpayer and where the legislative intent of taxing agricultural income on the basis of the computation made under the Indian Income-tax Act is being defeated, looking at the machinery it would be proper to read that the Commissioner has inherent power to direct the Agricultural Income-tax Officer to take into consideration the order passed by the Appellate Assistant Commissioner of Income-tax for computation of agricultural income. In the premises, I am of the opinion that the petitioner is entitled to ask the Commissioner to use his revisional power in such a manner and I accordingly direct that the Commissioner of Agricultural Income-tax will dispose of the pending applications before him by directing respondent No. 1 to recompute the agricultural income-tax payable by the petitioner for the assessment years 1955-56 and 1956-57 on the basis of the order passed by the Appellate Assistant Commissioner of Income-tax for the aforesaid two years provided the petitioner produces the certified copy of the order of the Appellate Assistant Commissioner of Income-tax and the consequential order of the Income-tax Officer and provided further the said order of the Appellate Assistant Commissioner of Income-tax has not been modified by further order of any appellate authorities under the Income-tax Act.

6. The rule is made absolute to the extent indicated above. There will be DO order as to costs.


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