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Amarendra Lal Khan Vs. Commissioner of Income-tax, West Bengal - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Ref. No. 75 of 1953
Reported inAIR1958Cal579,62CWN670,[1959]36ITR288(Cal)
ActsBengal Agricultural Income-tax Act, 1944 - Sections 4, 7, 7(1), 63(1) and 63(2); ;Income-tax Act, 1922 - Section 66; ;Bengal Agricultural Income-tax Rules, 1944 - Rule 4(2)
AppellantAmarendra Lal Khan
RespondentCommissioner of Income-tax, West Bengal
Appellant AdvocateSomes Bose, Adv.
Respondent AdvocatePal and ;Asoke Chundra Sen, Advs.
Cases ReferredDewar v. Commissioner
- p. chakravartti, c.j. 1. this is a reference under section 63 (2) of the bengal agricultural income-tax act of two questions of law, made by the agricultural income-tax 'appellate tribunal in compliance with an order passed by this court on an application made by the nssessee. the date of that order, as given in the statement of the case, appears to he wrong, because if the order was made on 23-7-1954 and received by the tribunal on 17-11-l954, as stated, the statement of the case could not have been prepared and signed on 14-12-1953. 2. the facts have not been very fully or clearly set out in the statement of the case. nor do they appear from the appellate order which begins by stating the two grounds of law urged by the assessee and ends with an expression of the tribunal's views upon.....

P. Chakravartti, C.J.

1. This is a reference under Section 63 (2) of the Bengal Agricultural Income-tax Act of two questions of law, made by the Agricultural Income-tax 'Appellate Tribunal in compliance with an order passed by this Court on an application made by the nssessee. The date of that order, as given in the Statement of the Case, appears to he wrong, because if the order was made on 23-7-1954 and received by the Tribunal on 17-11-l954, as stated, the Statement of the Case could not have been prepared and signed on 14-12-1953.

2. The facts have not been very fully or clearly set out in the Statement of the Case. Nor do they appear from the appellate order which begins by stating the two grounds of law urged by the assessee and ends with an expression of the Tribunal's views upon them. It is said in the Statement of the Case that in order to enable the Tribunal to prepare it, 'the parties were given an opportunity of collating the necessary materials centering round the two questions of law.' Nothing could have been less correct. The Tribunal ought to know that the findings of fact made by it, if properly made, are final; that those findings are to be made in the appellate order; that only the facts so found are to be set out in the Statement of the Case and submitted to the Court; that findings made at the appellate stage cannot be added to or varied at the stage of making a reference, except the clerical errors may be corrected or some necessary clarification supplied;' and that this Court's opinion can be sought only on the basis of the facts found by the appellate order and only on questions of law arising out of them. The Tribunal should therefore always find all the necessary facts by their appellate order, so that they may state them to this Court in case they have to make a reference under Section 63 (1) or they are asked to make a reference under Section 63 (2). It is altogether wrong not to find and set out all the necessary facts in the appellate order and to ask the parties to collate them at the reference stage.

3. So far as they may be ascertained the facts appear to be as follows. The assessec has a fairly extensive area of khas lands which he cultivates through bargadars. The lands appear to be paddy lands. The terms of the engagement with the bargadars have not been stated either in the Statement of the Case or in the appellate order, but it would appear from the order of the Income-tax Officer, which speaks of the asscssce's share of the yield from the lands as 'his half share', that the bargadars were to take one-half of the produce and the assessee was to take the other half. There was again, a special system for determining the quantum of the produce raised from the land. The system was that every year, before the harvesting, a list, called the Kuth list, was prepared, in which were entered estimates of the probable yield from the lands under barga cultivation, Tehsil by Tehsil. In the case of each hargadar, the estimate was made by an officer of the assesses, the bargadar himself and some responsible persons of the locality, all of whom signed the list and on the same being approved by the assessee's sadar office, collections were made from the bargadars according to the entries in the list, as finalised. The list was binding on both the assessee and the bargadars which obviously meant that the assessee could not say that more crops had been grown on the lands and, likewise, the bargadars could not say that less had been grown. The present reference relates to the assessment for the accounting year 1356 B. Section , relative to the assessment year 1950-51. In that year, the assessee's share of the paddy raised from his barga lands was 2,414 maunds but, actually, he was able to realise only 1,615 maunds, 25 seers and 6 chitaks. Of that quantity, he sold 46 maunds and 19 seers during the accounting year to a private party for Rs. 354 and 6 annas. The balance was consumed by the members of his family and his staff. The open market rate during the accounting year was Rs. 9/12/- per maund, but the procurement rate, i. e., the rate at which Government paid for the paddy, caused to be compulsorily sold to them, was lower, being Rs. 7/8/- per maund.

4. The Income-tax Officer found that a system of preparing an estimate of the probable yield from the lands and making collections only according to that estimate did exist, as alleged by the assessee. He also found that the entries made in Kuth list produced before him were correct, although he thought that the estimate, which gave only 4 maunds per acre, was ridiculously low. But while accepting the assessee's case that the estimated yield of paddy in his half-share during the accounting year was 2,414 maunds, to which he was limited, the Income-tax Officer held that the as-sessce's receipt also must be taken to have been the same quantity, irrespective of what he had been able to collect. He, therefore, made an assessment on 2,414 maunds of paddy, together with a certain quantity of straw. In doing so, he took the market value of the 46 maunds and 19 seers of paddy, sold by the asscssee, to be the price for which the quantity had been actually sola, but he treated the balance of 2,367 maunds and 21 seers, which was taken to have been the quantity consumed by the assessee, as 'not sold in the market' and valued it at the open market rate of Rs. 9/12/-per maund.

5. On an appeal by the assessee, the Assistant Commissioner expressed his dissent from the Income-tax Officer's view that the assessee's share of the estimated yield should be taken as his receipt as well. He thought that the Act purported to tax all agricultural income on a receipt basis and therefore it was only on the paddy actually collected by the assessee that he was liable to be assessed. He was, however, not prepared to accept 1615 maunds, 25 seers and 6 chitraks as the actual collection of the assessee or, at any rate, as his collection on account of the dues of the accounting year and thought that further investigation was necessary. At the same time, he rejected the as-sessce's contention that the paddy consumed by the members of his family and staff ought to have been valued at the procurement rate. As, however, he held that the assessee could be taxed on only his actual collections but the figure of collections, given by him, could not be accepted & as he found several other irregularities in the assessment order, he set it aside and directed a fresh assessment.

6. On a further appeal by the assessee, the Tribunal, in agreement with the authorities below, rejected his contention that the paddy consumed by him ought to have been valued at the procurement rate. As regards the basis of assessment, the Tribunal held that the correct basis would be neither the assessee's share of the estimated yield, nor his actual collection, but the actual yield of the year. Having thus laid down the basis, the Accountant Member, with whom the remaining members of the Tribunal agreed, proceeded to observe as follows:

'Having regard to the particular circumstances of the ease, 4,828 maunds appear to me to be actual gross yield of the year under review and after deducting 50 per cent., under proviso to Section 7 (1), the balance is assessable in the hands of the appellant.'

7. With the above findings, the Tribunal dismissed the assessee's appeal.

8. Thereafter, the assessee made an application under Section 63 (1) of the Act and put forward four questions for a reference to this Court. At the hearing of the application, only two of the questions were pressed. One of them was based on the contention that the assessee was liable to be assessed only on the paddy actually received by him, but it was sought to be supported on a new ground which was that since the promulgation of the West Bengal Bargadars Ordinance, 1949, subsequently enacted into a statute as Act II of 1950, bargadars had virtually become tenants and therefore the share of produce received from them should now be treated as rent in kind and assessed under Section 6, instead of Section 7, on the basis of actual receipt. The other question related to the applicability of the procurement rate to the paddy consumed by the assessee. The Tribunal held that the first question was concluded by a previous decision of this Court, while the second could not possibly be sustained in the face of Rule 4 (2) (a) and accordingly they declined to make a reference. The assessee then applied to this Court under Section 63 (2) of the Act and obtained an order on the Tribunal to refer the two following questions:

1. Whether, in the facts and circumstances, the actual receipt should be the basis of assessment under Section 7 of the Bengal Agricultural Income-tax Act:

2. Whether, in the facts and circumstances of the case, the procurement rate fixed by the Government in the locality should be taken as the basis of valuation of the unsold stock of paddy. In compliance with the direction of this Court, the present reference has been made.

9. Before taking up the question, I would make two observations on the appellate order of the Tribunal. I am unable to understand how the appeal to the Tribunal could be said to have wholly failed, as it was and how the Assistant Commissioner's order could be sustained in toto. The Assistant Commissioner had held that the assessee was liable to be assessed only on his actual receipt and since the figure of the actual receipt, as given, by the assessee, did not appear to him to be correct, he had remanded the case for, inter alia, further investigation as to what the actual receipt was. The Tribunal reversed the Assistant Commissioner's order on the question of the basis of assessment and held that the assessee was liable to be assessed on the actual yield from the lands. Not stopping there, the Tribunal went on to find that the actual gross yield of the year had been 4,828 maunds. There could not therefore be any question of any further investigation as to the actual receipt by the assessee and, therefore, to that extent, the Assistant Commissioner's order stood varied although the order for remand was to be sustained in view of the other errors found in the assessment order.

10. The other observation I would make is about the method of computation, as distinguished from the rate applied, adopted by both the Income-tax Officer and the Tribunal. In making his assessment of the income from the Schedule B sources, tlie Income-tax Officer completely ignored the bargadars' share of the paddy. He took merely the assessee's share of 2414 maunds under the Kuth list, which he also took as the assessee's receipt and proceeded to determine its market value, on the basis that the bargadars' share was not required to be taken into account at all. The Tribunal corrected him, as also the Assistant Commissioner, but while holding that the assessment was to be made on the total yield of the year and determining such yield at 4,828 maunds, comprising both the assessee's and the bargadars' share, they also held that 50 per cent., of the yield was first to be deducted under the proviso to Section 7 (1), and that only the balance was assessable in the liands of the assessee. In proceeding as they did, both the Income-tax Officer and the Tribunal were in complete error. The Tribunal held rightly that since bargadars had no interest in the lands cultivated by them and their status was only that of labourers who received remuneration for their work in the form of a share of the produce paid to them, the share, paid to bargadars, was also received by the owner of the lands and it was liable to be included in his income. But in computing that income, there could be no question of excluding 50 per cent, of the total yield at the very outset. What the proviso to Section 7 (I) lays down is that in cases coming under it, the allowance admissible to the assessee shall be, not 50 per cent., of the produce raised from the land but 50 per cent., of its market value. Where the market value of the whole quantity of the produce falls to be computed at the same rate, initial exclusion of one-half of the produce would lead to the same result as a subsequent deduction of one-half of the market value. But where the market value of different portions of the whole produce falls to be determined at different rates and the total market value of the total yield is more or, as in the present case, less than what such market value would be, if the rate applicable to the bargadar's half-share were applicable to the whole, an initial exclusion of 50 per cent., of the produce would obviously make a difference. Since this point is not involved in either of the questions referred and since the application of the correct method would place, the asscssee in a worse position in the facts of the present case, I need not enlarge upon it further. But to leave out the bargadar's share altogether in computing the income of the owner of the lands, as was done by the Income-tax Officer, or to deduct 50 per cent., of the total yield at the very outset, as was done by the Tribunal, is to proceed on a complete misunderstanding of the proviso to Section 7 (1).

11. Coming now to the first of the questions referred, the assessee's contention is that in assessing him on income derived from land by agriculture, only the paddy which he had actually collected from his bargadars should have been taken as the income received by him. In Kanmull Dugar v. Commissioner of Agricultural Income-tax, West Bengal IT Ref No. 133 of 1954 : ( : [1959]36ITR249(Cal) ) (A), the judgment in which also is being delivered today, the contention of the assessee was that adhiar's share of the paddy, not having been received by him, ought to have been left out of account altogether. I have given my reasons in that judgment for rejecting that contention and need not repeat them here in detail. The contention in the present case goes further, for, the claim is that not merely should the bargadar's share be excluded from the computation, but of the assessee's own share also, not the whole but only what he had actually collected, should be taken into account. In my view, the second branch of this contention is correct.

12. Except in the rare case where he has been admitted to be a tenant in or through a document or where a Court holds or has held him to be so, a bargadar was not a tenant under the Bengal Tenancy Act, nor has he been made one by the Bargadars Act of 1950. The latter Art has undoubtedly given him a greater security of tenure and a statutory share of the produce where there is no agreement as to the division thereof in writing, but it has been careful to maintain the distinction between him and a tenant and has indeed said by the definition that, except in the two cases specifically mentioned, he is not a tenant. Nor has the new Act given him any of a tenant's rights. His status remains that of a labourer, receiving his wages in kind, either in the shape of the stipulated share of the produce or in the shape of the share prescribed by the statute. If the share of the produce received by him is received as wages, it is obviously paid to him by his employer, the owner of the lands, and, obviously, the latter cannot pay it unless it is his property and he has first received it as such. The bargadar's share must therefore be treated as received by the owner even when, in actual fact, it is simply retained by the bargadar instead of being first handed over to the owner and then received back, because the application of this portion of the payment of the bargadar's remuneration presupposes and involves its prior receipt by the owner. This portion was undoubtedly derived from the land and if it was also received by the owner, it must obviously be included in the computation of his income by reason of the provisions of Sections 4 and 7 of the Act.

13. I may point out, however, that while the West Bengal Bargadars Act of 1950 distinguishes a bargadar from a tenant, it appears to distinguish him also from a labourer. Section 5 (1) of the Act empowers the owner of any land to terminate its cultivation by the bargadar, if he desires to cultivate it by, inter alia, 'servants or labourers'; and Section 5 (2) provides that if after terminating the cultivation of any land by a bargadar, the owner does not cultivate it 'himself or by members of his family or by servants or labourers' within one year or has it cultivated by another bargadar within five years, the previous bargadar shall be entitled to be restored to the cultivation of the land, clearly, in the eye of this Act, a bargadar is not a labourer. It may also be pointed out that the proviso to Section 7 (1) of the Bengal Agricultural Income-tax Act speaks of 'hired labourers' which might be said to suggest that only casual labourers or labourers specifically hired for the purpose were contemplated. I think, however, that the word 'labourers', as used in the Agricultural Income-tax Act, carries a wider meaning and included bargadars and other crop-sharers who are not tenants. That meaning is in accord with the concept of a bargadar under the Bengal Tenancy Act which was the only Act relating to bargadars in existence when the Agricultural Income-tax Act was enacted. The Bargadars Act is a later Act.

14. In computing the income of an assessee derived by him from lands cultivated through bargadars, the bargadar's share of the produce cannot thus be treated as not received by him & cannot be excluded on any such ground. To that extent, the assessee cannot be heard to say that the computation should be based on his 'actual receipt', if by 'actual receipt' is meant only what he was able to collect for himself in his own share. The bargadar's share was also received by him in the sense already explained and therefore it must be included in the computation in any event. But as regards the assessee's own share, the question whether the whole of it is liable to be included in the computation, even when a part of it was not realised, falls to be determined by other considerations.

15. There can be no question that the Act provides for the taxation of agricultural income only on the receipt basis. Unlike the Indian Income-tax Act, it contains no provision for the taxation of income which has merely accrued or arisen. Where receipt is the sole basis of taxability, 'receivability' without receipt, as Rowlatt J., said in a well-known case, 'is nothing.' Under an Act which lays the charge of tax only on income which has been received, no tax can be levied on any income which has not been realised, whether the reason for the non-realisation be that the person, bound to pay, has defaulted or that the person, entitled to receive the income has taken no steps to exercise his right.

Where, however, the omission to exercise the right was on account of a voluntary foregoing of the claim, the case will be one of an application of the income and, necessarily, receipt will be presumed; but, otherwise, when an Act charges income to tax only on a receipt basis, no one can be taxed on income which he did not in fact receive, on 'the footing that he might have received it but for his wilful default. Receipt, however, may be actual as well as constructive. One of the forms of constructive receipt is an adjustment of cross-claims. These propositions are weft-settled and reference for authority in their support may be made to Leigh V. Commissioner, Inland Revenue, (1928) 1 KB 73 (B); Dewar v. Commissioner, Inland Revenue, (1935) 19 Tax Gas 561 (C), and cases on 'income received' under the Indian Income-tax Act.

16. In the case of land cultivated through bargadars, the latter have no independent or proprietary right to the produce. The share received by them is paid as remuneration for their labours or, under the Bargadars Act in cases where there is no written contract, partly for their labour and partly by way of re-imbursement for the cost incurred by them in supplying agricultural implements, manure and ploughing cattle, as also providing for the protection and irrigation of the land. As the produce belongs to the owner who can claim it from the bargadar and the bargadar can, in his turn, claim from the owner payment for his labour and reimbursement for the cost incurred by him, the share paid to the bargadar is obviously paid in satisfaction of his claims. Where the entire produce is first delivered at the owner's Khamar and then divided, the bargadar being given in his share which he then takes away, there is initially an actual receipt by the owner of the bargadar's share as much as of his own. But even in the case where the bargadar retains his share from the beginning, there is an application of income by the owner or an adjustment of cross-claim both of which involve a constructive receipt or the bargadar's share 'by the owner. Such receipt is not even a fiction, but a proper construction of the facts. No violence is therefore done to either any fact or any legal concept by treating the bargadar's share of the produce as received by the owner, whether or not it is physically received. But the case of the owner's own share is different. If he does not succeed in realising from the bargadar or even does not realise it, without, however, granting a remission, it can by no means be said that it is received by him, either actually or constructively. The Tribunal say that the

'Bargadars having no interest in the land, the crop that is raised or harvested, belongs to the appellant (i. e., the owner) and as such it is receipt by him in the eye of law.'

The produce raised from the land undoubtedly belongs to the owner, but tie Tribunal's proposition would have been correct in the sense of the produce income becoming chargeable in the hands of the owner as soon as the crop was harvested, only if the Act had charged income on an accrual basis. The Act, however, insists on receipt. It is true that there is no reference to receipt either in the definition of agricultural income, as contained in Section 2 or in the enumeration of the chargeable heads, as contained in Section 5; but the charging section, Section 3, lays the charge on 'total agricultural income' and Section 4, by which total agricultural income is defined, and Ss. 6 and 7, which provide respectively for the computation of agricultural income from rent or revenue and agricultural income from agriculture, all lay down two requirements of chargeability, viz., 'derived from land' and 'received' or 'received during the previous year.' If mere acquisition of the income or accrual of the right to it was intended to attract the tax, 'derived from land during the previous year' would suffice and there was no reason to add the word 'received'.

17. It may, however, be said that cultivation through bargadars is the owner's own cultivation, the bargadars being mere labourers, and since no man can receive anything from himself, the concept, and necessarily the requirement, of receipt is inapplicable to income derived by agriculture from land cultivated through bargadars. To hold that bargadars are labourers, cultivating the land on the owner's behalf and to hold at the same time that the produce raised from the land may be received by the owner from his bargadars is, it may be said, inconsistent. The argument is plausible, but the words of the Act cannot be ignored. I may point out further, in support of the argument, that Section 7 does not apply only to income from lands cultivated with the aid of labourers, but it applies also to income from lands cultivated by the assessee himself or itself, whether the assessee be an individual or Hindu undivided family or any other 'person'. It may therefore be said that the word 'received' has not been used in the Act or at least in Section 7, in its ordinary sense and that, in applying the Act, collection from a different person, whether actual or constructive, should not be sought for in the facts.

18. I concede that some difficulty is caused by the case where the assessee cultivates the land himself, but I find it impossible to hold that the Act does not intend to limit its operation to income which has come into the assessee's hands and become available to him for appropriation and use. The requirement that in order to be assessable to tax, the income must not only be 'derived from the land', but also 'received' has been laid down for both rent or revenue income and income from agriculture. Some meaning must be given to the word in the latter case as well. In Sections 6 and 7, which are concerned with computation of the income, the expression used is 'received during the previous year' and it may not unreasonably be said that the object of that expression is only to indicate the period which is to be taken into consideration in computing the income. But the charging section is Section 3 which makes the tax leviable on the 'total agricultural income' of an assessee, read with Section 4 which defines his 'total agricultural income' as comprising 'all agricultural income derived from land situated within West Bengal and received by him within or without West Bengal', It is true that the words 'within or without West Bengal' are there, but the primary meaning of the second part of the definition is that the income must be received by the assessee. In the case of income from agriculture, it must be received, that is to say, actually obtained, from the land where the cultivation is by the assessee himself and it must be received, that is to say, got, from bargadars, adhiars or bhagchasis, where the cultivation is by such labourers, whether actually or constructively.

19. I do not think that it is correct to say that even where land is cultivated through bargadars, the produce, and the whole of it, is received by the owner as soon as it is harvested. It is true that the strict legal status of a bargadar is still that of a labourer, since he is not yet a tenant, but it appears to me that the factual position now is that he occupies an intermediate status between that of a tenant and that of a casual labourer employed on hire. The owner of land cultivated through a bargadar can now terminate the arrangement on very limited grounds, so that the bargadar has a right of a very substantial character to hold the land. The crop, when' grown and harvested, is in his possession & under his control & there is no question of its passing automatically to the possession of the owner. Nor does there appear to be any obligation on the bargadar to bring the whole produce to the landlord's khamar for the purpose of division Physically, the disposing power with regard to the crop harvested is in his hands. He runs a risk of ejectment from the land only if he fails to deliver to the owner even that share of the produce to wliich the owner is entitled under Section 3(2) (b) of the Bargadars Act, but he runs no such risk if he fails to deliver other shares due to the owner under Clause (e) of the sub-section am! under Clause (a) where it applies, Default in regard to the delivery of those shares would only create for him the liability of a debtor. Since, as a ground for terminating the cultivation by a bargadar, default in delivering the owner's share is limited to default with respect to the share mentioned in Section 3 (2) (b) of the Act, it would seem that where there is an agreement in writing as to the mode of division so that Section 3 (2) is not applicable at all, the bargadar would run no risk of ejectment from cultivation of the land even if he failed to deliver anything to the owner. The owner can recover his share from the bargadar only as a debt. Such being the present status of a bargadar, to say that crops grown by a bargadar on land cultivated by him as such are received by the owner as soon as they are harvested is plainly unrealistic. The theory of an automatic receipt by the owner can rest only on the basis that the bargadar being only a labourer in the employ of the owner, cultivation by him is cultivation by the owner himself, so that when the crops are harvested, they are harvested for the owner; but it appears to me that the Bargadars Act creates a sufficient degree of duality between the bargadar and the owner to make a delivery of the crops necessary in order that they may come into the possession of the owner and to make a receipt of such crops by the owner, though grown on his own lands by bargadars, legally possible as receipt from a different person. Indeed, the Act, as I have already pointed out, distinguishes between a bargadar and a labourer and although a bargadar must, as I have also pointed out, be held to be a 'hired labourer' within the meaning of the proviso to Section 7 (1) of the Agricultural Income-tax Act, he is not a labourer working under the owner as directed by him, but is a special type of labourer with many independent rights of his own. I am accordingly of opinion that the notion of a receipt from the bargadar is not an impossible notion as involving a receipt by the owner from himself. In relation to income derived by agriculture from land cultivated by bargadars, the word 'received' is thus not redundant, but lays down a requirement of a real character. It makes receipt of the income, whether actual or constructive, necessary, if liability to tax is to be attracted to it. By virtue of that word, the owner's share of produce from land cultivated by bargadars is liable to agricultural income-tax only to the extent that it is actually received, that is to say, realised and collected, provided of course that the unrealised portion has not been remitted. It is a satisfaction to be able to feel that this construction of the Act leads to a just result, because it would be very unjust if it were to be held that although one State Act had practically removed the bargadar from the control of the owner and placed it in his power to continnue his cultivation of the land without paying to the owner his share of the produce except, where Section 3 (2) of the Act applied, a small portion of it and, where it did not apply, anything at all, yet, under another State Act, the owner was liable to be taxed on the whole of his own share whether, actually, he got anything from the bargadar or not. No such injustice, on the other hand, is caused by treating the bargadar's share as received by the owner, because although he receives nothing in the physical sense, the share is applied to the discharge of one of his just obligations.

20. It may, however, be said that if, in a case, the owner receives nothing from the bargadar at all or receives less than his due share, it will be equally unjust to make him liable to tax on the whole of the bargadar's share on the basis that it was constructively received by him and then applied to the payment of the bargadar's remuneration, because the bargadar's share is really the owner's cost of cultivation and therefore where he does not receive his share or full share of the produce, it cannot be just to make him liable for the whole of the cost. Where the proviso to Section 7 (1) does not apply, there need be no difficulty, because the allowance admissible under the main part of the section may be adjusted to the income taken into the computation so as to bring about a result in accordance with reality. Where the proviso applies and the bargadar's share is one-half, there will again be no difficulty where nothing is received by the owner on account of his own share. What will be brought in as income will have to be taken out as an allowance. In other cases governed by the proviso too, e. g., where the owner receives a part only of his share or where the bargadar's share is less than one-half, it does not appear that the assessee will ordinarily be at a disadvantage by reason of the inclusion of the bargadar's share in his gross income, provided, of his own share, only what he actually receives is taken into the computation.

21. It may also be said that if the construction of the word 'received', in its application to the owner's share of the produce, which I have suggested be accepted, there may be an injustice to the Revenue in cases where the proviso to Section 7 (1) applies, but the owner receives only a part of his share, because, in such a case, the gross income of the owner will be the market value of the bargadar's share, added to the market value of what the owner has actually received in his own share, whereas he will be entitled to a deduction of one half of the. market value of the entire produce raised from the land as the allowance admissible to him. The Act, however, seems to contemplate such a disparity as a possibility even where the owner receives the whole of his share and the whole of it is brought into the computation. For example, where the bargadar's share is less than one-half, the owner's cost of cultivation will be only the market value of that share, because that is all that he pays, but he will be entitled to an allowance of one-half of the market value of the whole of the produce. There will ho a disparity in such a case, unless it is avoided by reason of a difference in the rates of market value, applicable to the different portions of the produce. In any event, we must place a fair and rational construction on the words of the Act and if such construction results in any advantage to the assesses, such advantage must go to him. The question of justice or injustice is really irrelevant. If I have referred to it, it is only for the purpose of ascertaining the true intention of the Legislature from the words used, because the Legislature must be presumed to have had an intention to deal justly with all parties concerned and a fair construction of its words will be that construction accords with justice, provided in adopting it, no violence is done to the language used.

22. The second question does not appear, to me to present any difficulty. Under Rule 4(2)(a) of the Rules, the market value of produce not sold in the market must be taken to be the average price at which such produce has been so sold in the locality during the previous year. The question of the rate of market value was raised in this case only in regard to the produce consumed by the assessee, be-cause both the Income-tax Officer and the Tribunal wrongly excluded fifty per cent of the produce, which in this case was equivalent to the bargadar's share at the very outset. The paddy consumed by the assessee was not sold in the market and therefore its market value would have to be determined in accordance with Rule 4(2)(a). That does not appear to have been disputed, but what was said was that the procurement rate at which Government had purchased the local produce of paddy during the previous year ought to have been taken as the average price at which paddy had been sold in the locality. There is absolutely no justification for that contention. It was not proved, nor was it even alleged, that all the paddy in the locality had been requisitioned during the relevant previous year and purchased at the procurement rate and that there was no open market at all. On the other hand, the fact found is that there was an open and free market. Nor had the assessee been compelled to sell any part of his paddy at the procurement rate, so that it could not be said that the same rate ought to have been applied to the balance. The ossessee required paddy for his own consumption and consumed the paddy he had received from his bargadars instead of selling it in the market and thus he could meet his needs without having to buy what he required. If he had not the paddy he had received from his bargadars, he would have to buy paddy for his consumption and for that paddy he would have to go to the open market and pay the open market price. The value to him of the paddy he had in his hands was thus its value at the open market rate and it is that market value which it represented. He could not have purchased the paddy, if he had been required to purchase it, at the procurement rate. In those circumstances, there could he no question of applying the procurement rate to the determination of the market value of the paddy consumed by the members of the assessee's family and his staff:

23. For the foregoing reasons, the answers to the questions referred should , in my opinion, be as follows:

Question ]. Yes, so far as the assessee's own share of the produce was concerned, unless it was found that the portion, not received, had been remitted in which case the portion remitted should be included in 'the computation.

Question 2. No.

24. As success is equally divided, there will be no order for costs.

B.K. Guha, J.

25. I agree.

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