D.N. Sinha, J.
1. This application and a number of other applications have been heard together and acommon set of arguments have been made. The point involved in all these applications is the constitutionality of certain provisions of the Bengal Agricultural Income Tax Act, 1944 (Bengal Act IV of 1944) (hereinafter referred to as the Act) and of the Rules made thereunder. So far as this application is concerned, the facts are shortly as follows:
2. The petitioner is interested in certain agricultural lands situate in the district of Midnapore. She is the administratix pendente lite of her deceased husband's estate. There is included in the estate of the deceased, about 787.88 acres of khas land. It is the agricultural income-tax payable in respect of this land that has given rise to the dispute in this case. The petitioner filed a return of agricultural income for the accounting period 1361 B. S. showing a total income amounting to Rs. 30,585-0-10 1/2. On 30-6-1956 the respondent No. 1, the Agricultural Income-tax Officer, Calcutta Range II made an assessment of the petitioner's income at Rs. 56,888-4-0. A demand notice was issued for a sum of Rs. 11339-3-0 and a penalty has been imposed under Section 32(1)(a) of the said Act. The petitioner has not filed an appeal, but has come up straight to this Court. Had the matter rested there, the application would have been liable to summary dismissal because the petitioner had an alternative legal remedy but did not avail of it. The point agitated before me, however, is that certain provisions of the said Act are ultra vires, inasmuch as it was beyond the competence of the State Legislature. It is not correct that such a point cannot be gone into by the courts below. But in the long run it is bound to come back to the High Court, and it is better to deal with it now rather than dismiss the application on this preliminary point.
3. The points originally taken in the petition were many and varied. While issuing the Rule, only a limited Rule was issued confined to certain points. When the matter came up for hearing, certain other points were raised and the petition was allowed to be amended. At the final hearing, however, only one point was raised andthis is in relation to Section 7(1) of the said Act. A challenge was also thrown at Rule 4(2) (a) of the Rules framed under the Act but very little was heard of it during the arguments. Incidentally, it was stated that Sections 2(14) and 2 (16) of the Act were also bad inasmuch as there was an attempt to extend the scope of the Agricultural Income-tax Act beyond the permissible limits. Mr. Das appearing on behalf of the petitioner has formulated the challenge under Section 7(1) of the Act, as follows: Reference is first made to Article 366(1) of the Constitution, which defines the words 'agricultural income' as meaning agricultural income as defined for the purposes of the enactments relating to Indian Income-tax. Thus, the words 'agricultural income' as used in the Constitution must be given that meaning. Under the 7th Schedule annexed to the Constitution, the relevant item fa item 46 in List II, that is to say, the State List. The item reads as 'Tax on agricultural income'. Article 246(3) gives exclusive right to the legislature o any state to make laws of such state or any part thereof with respcct to any of the matters enumerated in List II under the 7th Schedule. Thus, there can be no doubt that the State Legislature has the exclusive right to legislate on the matter of taxation in respect of agricultural income. What is argued is that the words 'agricultural income' are defined in the Constitution. Therefore, the State Legislature can legislate under this heading on a subject which comes within the four corners of the definition. It cannot, of its own motion, extend the meaning, thereby extending its own jurisdiction. That this proposition is sound is not even contested by the other side. It is therefore perhaps not necessary to refer to certain Supreme Court decisions which have been cited, but I may just make a passing mention of one of them. In Commissioner of Income-tax, West Bengal v. Be-noy Kumar Sahas Roy, : 32ITR466(SC) Bhagwati, J. said as follows:
'It was also pointed out that 'Taxes on agricultural income' formed a head of legislation specified in item 46 of List II of the seventh Schedule to the Constitution and should be liberally construed, with the result that agriculture should be understood in the wider significance of the term and all agricultural income derived from agriculture or so understood should be included within the category.
There was authority for the proposition that the expression 'agricultural land' mentioned in Entry 21 of List II of the seventh schedule to the Government of India Act, 1935, should be interpreted in its wider significance as including lands which are used or an; capable of being used for raising any valuable plants or trees or for any other purpose of husbandry. (See Sarojini Devi v. Shri Kistna : AIR1944Mad401 ; Megh Raj v. Allah Rakhia, (1942) FCR 53, at p. 62): (AIR 1942 FC 27 at p. 31) (C).
While recognizing the force of the above expressions of opinion we cannot press them into service in favour of the assessee for the simple reason that 'agricultural income' has been defined in the Constitution itself in Article 366(1) to mean agricultural income as defined for the purposes of enactments relating to Indian Income-tax and there is a definition of 'agricultural income' to be found in Section 2(1) of the Indian Income-tax Act.
We have therefore got to look to the terms of the definition itself and construe the same regardless of any other consideration.....'
4. As I have mentioned above, Article 366(1) of the Constitution defines 'agricultural income' by reference to the definition given in the Indian Income-tax Act. That definition is to be found in the Indian Income-tax Act, 1922, Section 2(1). The same definition is virtually reproduced in Section 3(1) of the Bengal Agricultural Income-tax Act 1944. Up to this stage no objection has been rais-ed. It is argued, however, that in the Act an attempt has been made to increase the scope of the term 'agricultural income' beyond what is to be found in the Indian Income-tax Act. For example, agricultural income' includes the concept of a receipt of 'rent-in-kind'. Section 2(14) of the Act attempts to define the word 'received' and includes the receipt by an agent or a servant on behalf of a principal or master respectively, as also receipts by other persons, which are deemed to be his receipts under the provisions of the said Act, and shall also include receipts of agricultural income by way of adjustment of accounts with any other person. Section 2(16) defines the words 'total agricultural income'. It means the total amount of agricultural income referred to in Section 4 of the Act and computed in the manner laid down in the Act. It is argued that by introducing these definitions and by making the calculations dependent on whatever rules the authorities were pleased to make under the Act, the scope of the term 'agricultural income' has been sought to be extended. I have pointed out above that it is not at all disputed that the State Legislature could not by arbitrarily extending the meaning of the words 'agricultural income' extend its own jurisdiction. It has however been argued by the learned Advocate General on behalf of the respondents that-there has been no attempt to extend the definition of the term 'agricultural income'. He has argued that Sub-sections (14) and (16) of Section 2 are not extensions of that definition but are merely explanatory, and are natural corollaries which are within the permissible limits of legislation. He said that so far as Sub-section (14) is concerned, it has nothing whatever to do with Section 2(1) and as regards Sub-section (16), the total agricultural income has to be calculated on some basis and the Rules lay down the manner of computation and cannot be said to be beyond legislative competence.
5. The real and substantial attack that has been made in these applications is directed against the proviso to Section 7(1) of the Act. In order to understand it, it is necessary to consider that provision of law which runs as follows:
'7. Agricultural income-tax shall be payable by an assessee under the head 'Agricultural income from agriculture' in respect of all agricultural income derived from land referred to in Sub-clause (b) of Clause (1) of Section 2 included in his total agricultural income and received by him in the previous year subject to the following allowances, namely:
(1) the cost incurred by the assessee in the previous year:
(i) in cultivating such land or raising live-stock thereon; (ii) in performing any process contemplated in item (ii) of Sub-clause (b) of Clause (1) of Section 2 for rendering the produce of such land fit to be taken to market;
(iii) In transporting such produce or livestock to market; and
(iv) in maintaining agricultural implements and machinery in good repair and in providing for the upkeep of, for the purpose of such cultivation, process, or transport.
Provided that in the case of an agricultural income derived from land possessed by an individual or a Hindu undivided family and cultivated by suchindividual or by the members of such family with or without the aid of servants or hired labourers or of both, the allowance admissible under this clause shall, instead of such cost, be a sum equal to fifty per centum of the market value of the produce raised from such land.'
6. It will thus be seen, that in the computation of the tax, allowance is made for the cost of cultivation. The method of calculation may be divided into two parts. In the case of land possessed by an individual or a Hindu undivided family and cultivated by such individual or by the members of such family with or without the aid of servants or hired labourers or of both, the method of calculation is to be found in the proviso. All other assessees come under the heading contained in Sub-section (i) of Section 7. In the case of those who are struck by the proviso, the allowance admissible for cost of cultivation etc. is calculated upon a rule-of-thumb basis, and amounts to a sum equal to fifty per centum of the market value of the total produce raised on the land. In the case cf others, the allowance to be given is the actual cost or expense incurred. The petitioner in this case comes under the proviso, being an individual. It is argued that the allowance given to those who are not struck by the proviso is upon a real and rational basis. Unlike the word 'income' as used in the Indian Income-tax Act, income under the Agricultural Income-tax Act is said to be the actual income which is received by the assessee. Reference is made to Section 4 of the Act which defines the total agricultural income of an assessee and which comprises all agricultural income derived from land situated within West Bengal and 'received' by him within or without West Bengal etc. It is argued that if agricultural income is actual receipt of income, then the cost charges and expenses that are to be allowed should be the actual cost charges and expenses, as arc allowed to persons who do not come under the proviso to Section 7.
7. Coming to the proviso, the complaint that is made is as follows:
8. It is said that under the proviso, a rule-of-thumb is followed and the allowance admissible is a sum equal to fifty per centum of the market value of the produce. It is pointed out that in West Bengal most lands are let out to bargadars and in any event the land in question of the petitioner is so let out, or has been under cultivation of the bargadar at all relevant times. It is said that under the West Bengal Bargadars Act, 1950 unless otherwise agreed in writing, the produce had to be divided between the bargadar and the owner in the share of 2/3rds and l/3rd. under Section 3 of that Act, the division was to be in the following manner: At first an amount was to be set apart, equivalent to the quantity of seeds supplied; then the bargadar and the owner each was to have l/3rd of the balance of the produce, and the remainder of the produce was to be divided between the bargadar and the owner, in such proportion as would be fair and reasonable, having regard to their respective contribution towards the cost of cultivation. Under Section 4, however, the bargadar has the prior right to supply plough, cattle etc., and bear other expenses of cultivation. It is said that taking advantage of this provision it is the bargadar who always gets 2/3rd share and not the owner. Under Section 16 of the West Bengal Land Reforms Act, 1955 the provision has been slightly changed. Where plough, cattle, manure etc. are supplied by the owner, the division is in the proportion of 50:50,whereas in other cases it is in the proportion of 60: 40. The complaint therefore is this: that under the Bargadars Act of 1950 or the Land Reforms Act of 1955 the Bargadar is getting more than half the share of the produce, that is to say, the owner is actually receiving less than half the share of the produce, and yet, under the proviso he gets an arbitrary allowance of only half the market value of the produce. Thus, it is argued that the assessee is as-sessed on a fictitious income, that is to say, upon the income from the whole land less half, that is to say the income from the whole land, whereas he actually receives much less than the half. It is true that under the proviso what is to be considered is the market value of the produce and not the amount of produce, but naturally in most cases there is a relation between the value of the produce and the amount of the produce. Divested of all complications, the position amounts to this: Where a matter comes under the proviso, then the method of computation is to find out the income from the whole land and then give credit for a sum equal to 50 per cent of the market value of half the produce. The net result is, that in every case an individual assessee will be deemed to be assessable on half of the income from the whole. Where there is a bargadar, it is argued that the actual income that is received by the owner is not half but less than half and that is fixed by a statute. It is true that under the Bargardars Act of 1950 the parties could agree to the contrary, but it is pointed out that very few persons in Bengal had agreements in writing with their bargadars because that was not the prevailing custom. Under the Land Reforms Act, there is no scope for agreement because the division is 60:40. It is argued that the law has intervened and laid down that the assessee shall get less than half the income. Then how could it be said that he is in actual receipt of half of the income, which must be the foundation of his liability to pay agricultural income-tax thereon? Mr. Das has argued that under the Agricultural Income-tax Act, what is to be considered is actual receipt. Therefore, only actual receipt' can ever form the basis of computation under that Act. In other words, the 'income' under the Agricultural Income-tax Act must be net and not gross income, or any fanciful calculation with regard to the computation of it. Mr. Das has cited the Supreme Court decision in Navin Chandra Mafatlal, Bombay v. Commissioner of Income-tax, Bombay City, : 26ITR758(SC) , This was, a case which involved the interpretation of the word 'income' in Entry 54 of the Seventh Schedule List I and it was held that the word should be given its widest connotation. It was held that the cardinal rule of interpretation was that the words should be read in their ordinary, natural and grammatical meaning, subject to this rider, that in construing words in a constitutional enactment conferring legislative power, the most liberal construction should be put upon the words so that the same may have effect in their widest amplitude. Discussing the various authorities where the term 'income' has been defined, Das (as he then was) said as follows:
'The relevant observations of learned Judges deciding those cases which have been quoted in the judgment of Tendolkar, J. quite clearly indicate that such wide meaning was put upon the word 'income' not because of any particular legislative practice either in the United States or in the Commonwealth of Australia but because such was the normal concept and connotation of the ordinary English word 'income'. Its natural meaning embrances any pro-fit or gain which is actually received. This is in consonance with the observations of Lord Wright to which reference has already been made'.
9. Mr. Das argues that the foundation for the assessment under the Agricultural Income-tax Act must be actual receipt which also agrees with the dictionary meaning of the term 'income'. The argument put forward is certainly attractive and cannot be lightly brushed aside. If 'income' under the Agricultural Income-tax Act is actual income, then it does not seem to be permissible to enter into calculations which are divorced from reality. There can be no doubt that under the law, the owner is getting less than half of the total income. While under the Bargadars Act 1950 he could do something about it by entering into an agreement with his Bargadar, he is helpless under the Land Reforms Act. It is, therefore, a cogent argument that while he is getting only 40 per cent or less of the income he is assessed on 50 per cent. Therefore, to the extent of 10 per cent or more which is not actually received, the calculation is arbitrary. Before I proceed to consider whether the matter, is still open, or whether I am bound by authority, it would be interesting to refer to the proceedings in the Legislative Assembly which preceded the introduction of these two kinds of calculation for different classes of assessees. I am aware of the fact that proceedings in the Legislature arc not relevant for the interpretation or statutes. I am merely ascertaining the background, that is to say, the reasons which impelled the legislature to divide it into two classifications. When the matter came up before the Legislature, it appears that the Maharajadhiraja of Burdwan took the very same objection that is now being taken. It was stated that in all cases the actual cost of collection should be deducted in the matter of ascertaining the income. No fixed per-centage should be laid down, as displaying bias on the part of the Government against any particular category of income. It is not the person but the income that is taxed, and therefore all income should be taxed upon an equal footing, This objection was opposed on the ground that the agriculturists in West Bengal are generally illiterate persons and as they do not keep accounts they cannot tell what is the actual cost incurred. 50 per centum was considered to be a fair percentage because it was well known that throughout Bengal when land was let out in barga, the actual cost was taken as 50 per cent of the annual profit, and the owner of the land got half of the annual profit. This, therefore, was not discriminatory legislation, rather it showed a real state of things, Member after member rose to repeat that if illiterate cultivators were called upon to show actual expenses it would cause them great harassment. As I have stated above, these proceedings cannot be utilised for the purposes of interpreting the Statute, but they throw light on the background and gives us the reason why these two classifications were made. So far as the proviso is concerned it has been challenged before me on two grounds. Firstly, that there is an attempt here to extend the meaning of the term 'agricultural income' and thus to tax income which is not agricultural income as defined by the Constitution, and therefore to this extent the provision is ultra vires of the powers of the local legislatures. Secondly, it is said that these two classifications are based on no reasonable or rational basis and consequently, there is an infringement of Article 14 of the Constitution. The background which I have stated above, shows why this classification was ever made. Before me also, affidavits have been filed and it is stated that under Section 7(1) of the Act, only companies or partnerships will come in. Withregard to them, the position is said to be different because companies and partnership firms keep regular books of account and it was therefore possible for Government officials to check what was claimed to be the actual expenses. But with regard to individual agriculturists, there was no possibility of checking the actual expenses, because illiterate agriculturists kept no accounts and it would be merely harassing them to demand proof of their actual expenses. Mr. Das argued that this is no reasonable classification at all. He invites me to consider the case of a Hindu undivided family. Supposing two brothers were members of a Hindu undivided family. They would come under the proviso. But supposing that they effected a partition, on the next day, they could then constitute a partnership and would automatically go into the other class. He says that this was no reasonable classification at all. The learned Advocate General has pointed out that so far as a Hindu undivided family of the Daya-bhaga School was concerned, it would be in any event considered as the income of an individual, because under that school if the father is alive, sons have no share, and if there are co-sharers, then under the proviso to Section 3 they will not be considered as au association of persons. He also points out that while the proviso to Section 7 introduced a more rigid computation in the case of individuals, it is quite obvious from the schedule to the Act that the rates at which individuals are charged arc much more reasonable than the rates at which companies, firms or associations of persons are charged. That appears to be so because under the schedule so far as individuals or Hindu undivided families are concerned the first slab of Rs. 1500/- is totally exempted and then we have a graded rate which only comes up to 4 annas in the rupee on income in excess of Rs. 20,000/-, whereas in the case of companies or firms or other association of persons, it is calculated at the flat rate of 4 annas in the rupee. Analysing the position, the following conclusions may be reached:
1. Agricultural income-tax is to be calculated upon receipt of income, and not upon the income which might have been received or should have been received. Of course, this will not include any voluntary relinquishment of income.
2. What is 'agricultural income' has been defined under the Constitution, read with the Indian Income-tax Act and it is not open to the State Legislature to enlarge the definition.
3. So far as Section 7 of the Act is concerned, it divides asscssecs into two broad classifications for the purpose of finding out or computing the tax and deciding as to what allowance should be given for costs, charges and expenses of cultivation etc. The first class includes individuals and a Hindu undivided family where the individual or such family cultivate themselves or through members of such family with or without the aid of servants or hired labourers. In such a case, the allowance admissible is a sum equal to 50 per centum of the market value of the produce raised from such land. The second class consists of all others, and in such a case the actual cost incurred is allowed.
4. The classification is based on the ground that so far as individual cultivators in West Bengal are concerned, they are illiterate and keep no accounts and under the circumstances it would be harassing to compel them to prove what their actual expenses were. Also, because in the case of lands let out in Barga, the customary division of produce was On a fifty-fifty basis.
5. While the calculation of allowances in the case of individuals or Hindu undivided family might or might not turn out to be more stringent than in the case of others like companies or firms, it is clear that the rate of taxation is much less in their case.
6. Where land is let out to a bargadar in the State of West Bengal, the law as it was prior to the passing of the Land Reforms Act, 1955 enabledowners to enter into agreements in writing in respect of the allocation of shares in the produce, but in practice such agreements were rare and therefore the statutory provision applied and in most cases the Bargadars got 2/3rds and the owner got l/3rd of the share in the produce. Under the Land Reforms Act, there is now a flat rate of division, that is to say, 50:50 in case where plough, cattle etc., are supplied by the owner but in other cases it is 60: 40. The fact is that it is the bargadar who supplies the Same and therefore normally the allocation of produce is 60 per cent for the bargadar and 40 per cent for the owner.
7. In most cases, therefore, and in cases with which we are dealing with, the position is that the bargadar was entitled under the old Act to 2/3rd share in the produce and under the new Act to 60 per cent of the produce. It follows, therefore, that under the old Act the owner got 1/3rd of the produce and under the new Act he gets 40 per cent of the produce. Thus in either case, be gets less than half of the total produce of the land.
8. Although the owner gets, or is entitled to get less than half the produce of the land, under the proviso to Section 7(1) of the Act his income is deemed to be 50 per cent of the market value of the total produce of the land. Assuming that there is some connection between the produce and its market value, the result is that if the share of the produce which is taken by the bargadar is to be left out of consideration and if the income of the owner is the income he receives in respect of the share of the produce that lie gets after deducting the share of the bargadar, then there can be no doubt that he is being assessed for a sum which is in excess of his actual receipt of income.
10. Bearing the above analysis in mind, the point next to be considered is as to whether in assessing or computing the income of the owner, that is to say, his agricultural income, should we include the income in respect of the share of the produce received by the bargadar or should we not do so? In other words, if in computing the agricultural income of the owner, we are to take the total produce of the land, then of course it is irrelevant as to whether the bargadar takes more or takes less. In such a case, the income of the owner would necessarily be more than 50 per cent, unless of course by some natural calamity there has been no income at all. On the other hand, if we exclude the income in respect of the share of produce taken by the bargadar, then equally we must come to the conclusion that the income of the owner is less than half although he is being assessed for an income of 50 per rent. Upon this crucial point, my attention has been drawn to two unreported decisions of the court of appeal, both delivered by Chakravarty C. J., and these two decisions I must proceed to consider as in my opinion the matter is no longer one of first impression but a matter covered by authority binding on me.
11. The first decision is Amarendra Lal Khan v. Commr. of Income-tax, West Bengal, I. T. Ref. No. 75 of 1953 D/-5-12-1957 : ( : 36ITR288(Cal) ) (E). This was a reference under Section 63(2) of the Bengal Agricultural Income-tax Act. The questions that were referred were as follows:
'(1) Whether, in the facts and circumstances of the case, 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''.
It will be seen that the questions that we are concerned with in this case, were not specifically referred in the form that we have been considering. However, it will be seen presently that the answer given by the learned Chief Justice covers the point that has been raised in this case. The facts of the case were as follows: The assesses was the owner of fairly extensive areas of khas lands which he cultivated through bargadars. The lands were paddy lands although the terms of the contract of cultivation were not stated, it appeared from the record that the division was on a 50:50 basis. The reference related to the assessment for the accounting year 1356 B. S. corresponding to 1950-51. In that year, the assessee's share of the paddy raised from the land was 2414 maunds but actually he realised from the bargadar only approximately 1615 maunds. The Income-tax Officer held that the assessee's receipt should be estimated at 2414 maunds irrespective of what he had been able to realise from his Bargadar. On appeal by the assessee, the Assistant Commissioner dissented from this view and held that the assessee's share of the estimated yield should not be taken as his receipt, because the Agricultural Income-tax Act purports to tax all 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. On further appeal, the Income-tax 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. The calculation was therefore done on the following basis: The actual gross yield of the year was 4828 maunds and after deducting 50 per cent under the proviso to Section 7(1), the balance was held to be assessable in the hands of the appellants. Thereafter the assessee applied for a reference which was refused, but subsequently an order was made by the High Court directing the Tribunal to refer the two questions mentioned above for determination by it. It is clear that the points that arose for determination in the reference are not identical with what we are called upon to consider in this case. But the point that had inter alia to be determined in the reference and which is relevant for our purposes relates to the question as to what is to be considered as the income of the owner or the assessee, where the land is let out to bargadars. Upon this point, the learned Chief Justice held as follows:
(1) That the Tribunal had rightly held that since the bargadar had no interest in the land cultivated by him and his status was only that of a labourer who received remuneration for his work, in the form of a share of the produce paid to him, the share paid to a bargadar must be deemed to be received by the owner of the land and it was liable to be included in his income.
(2) So far as the share payable by the bargadar to the owner is concerned, what must be taken into account is not the total share payable or deliverable but only that which the owner was actually able to collect. This of course would not include any amount which was voluntarily remitted.
(3) With regard to the share that is receivable by the bargadar, the question for consideration was as to whether this is to be considered as receipt of income by the bargadar or by the owner. This involves a determination of the status of the bargadar and the learned Chief Justice states as follows:
'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 the Bargadar Act of 1950. The latter Act has undoubtedly given him a greater security of tenure and a statutory share of the produce where there is no agreement as regards 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 share of the stipulated share of the produce or in the share of the share prescribed by the statute. It 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 produce to 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.
I may point, 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 theword, 'labourers', as used in the Agricultural Income Tax Act, carries a wider meaning and includes 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 was enacted. The Bargadars Act is a later Act.
In computing the income of an assesses derived by him from lands cultivated through bargadars, the bargadar's share of the produce cannot thus be treated as not received by him and 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 ..... There can be no question thatthe 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, however, the omission to exercisethe right was on account of a voluntary forgoing 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 ..... In the case of land cultivated through bargadars, the latter have no independent or proprietary right to the produce. The shave received by them is paid as remuneration for their labour 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 re-imbursement for the cost incurred by him, the share paid to bargadar is obviously paid in satisfaction of his claim. 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 of 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.....'
12. I have quoted the above extract in extenso because, in my opinion, this is decisive of the matter which arises for consideration herein. The question is as to whether in computing the income under Section 7 we are to take the income arising from the entire produce of the whole land or only the share of the produce that is made over by the bargadar. If the above be a correct view of the law, then, there can be no escape from the conclusion that the income of the assessee is the income in respect of the produce of the whole land irrespective of what is taken by the bargadar as his share, although so-far as the share of the produce payable to the assessee by the bargadar is concerned, there is room for the contention that only the actual produce delivered will fall to be considered. In his judgment, the learned Chief Justice, after having laid down that the receipt by the bargadar of his share should be considered as receipt by the assessee, went on to say that where the bargadar's share was one-half or less, then the construction was in accord with justice. Unfortunately the learned Chief Justice did not! consider the case where the share received by the owner was less than one-half. In such a case, injustice is plainly being done. The learned Chief Justice however points out that we must place a fair and rational construction on the words of the Act and if such construction results in an advantage to the assessee, such an advantage must go to him. The question of justice or injustice was really irrelevant. I suppose it follows that if such a construction results in any disadvantage to the assessee, then also the question of justice or injustice would be equally irrelevant, and this is precisely what has happened in the present case. The whole case of Mr. Das is that injustice is being done to his client who received less than one-half but still has to pay tax on the half. Although that is correct, if for purposes of computing his client's income, the share taken by the bargadar is included, then the question is at once solved, however unjust the solution may be. It is true that under the Agricultural Income Taxi Act what is to be considered is receipt. But as pointed out by the learned Chief Justice, that can either be actual or constructive.
13. The next case to be considered is a decision, also of the learned Chief Justice, in Kanmull Dugar v. Commissioner of Agricultural Income Tax, West Bengal, I. T. Ref No. 113 of 1954, D/-5-12-1957 : ( : 36ITR249(Cal) ) (F). This was a reference under Section 63 (1) of the Bengal Agricultural Income Tax Act, of a single question of law relating to the computation of income derived from land by agriculture through cultivation thereof by Adhiars. The short facts were as follows: The assessee held some agricultural lands in Cooch Behar, which he cultivated through Adhiars. The Adhiars, as their names imply, received for their labour one-half share of the produce, while the other half was received by the assessee. The Assistant Commissioner took the view that in computing the assessee's income from the lands, at first the market value of the total yield of paddy should be determined comprising both the share paid to the adhiars and the share received by the assessee. After such computation, he allowed a reduction of half the value in accordance with the proviso to Section 7(1) of the Act. This was upheld by the Tribunal, whereupon the assessee applied and the following question was referred to the High Court:
'Whether on the facts and in the circumstances of the case, the basis and the method of computation adopted by the Assistant Commissioner, for the purpose of granting allowances for costs of production, and confirmed by the Tribunal, are in accordance with the provisions of the Bengal Agricultural Income-tax Act, 1944, and Rule 4 framed thereunder'.
14. It will be seen that in this case there was only one point raised and that corresponds to the point that is to be determined in the present case, if we substitute the word 'bargadars' in stead of the word 'adhiars'. The learned Chief Justice heldas follows:
'The only point raised by the question referred is whether in computing the assessee's income from agriculture, it was right to include the adhiars' share of the paddy grown on the lands and to grant the allowance admissible under Section 7(1) of the Act on the basis of such computation. The assessee's-contention is that in describing the agricultural income chargeable to tax, the opening paragraph of Section 7 uses two expressions, viz., 'derived from the land' and 'received in the previous year' and therefore unless an income, besides being derived from laud, was also received by the assesses, it would not be liable to be included in his taxable income and no tax would be payable on it. The share of the paddy paid to the adhiars, it is said, may have been derived from the assessee's lands, but it was not received by him. Accordingly it is contended that in computing the agricultural income of the assessee, that share ought to have been excluded ..... Thecontention that in order to be taxable, income derived from land by agriculture must be received by the assessee, is correct, because that is the clear import of Section 4 of the Act, which defines 'total agricultural income' made taxable by Section 3. Under that definition, the total agricultural income of a person which is chargeable to tax under Section 3 is 'income derived from land' and 'received by him'. The assessee therefore says rightly that 2250 mauncls of paddy taken by the adhiars cannot be included in his taxable income, unless it can be shown that he received it. But his further contention that he did not receive that paddy does not appear to be correct.
If the special plea based on the alleged incidentsof cultivation by adhiars under the Cooch Behar Tenancy Act be excluded, as it must be, no room is left in this case for a contention that the assessee's adhairs were not his servants or labourers. Indeed it was not contended that they were not servants or labourers, even if their status was the same as that of adhairs under the Bengal Tenancy Act. If they were the assessee's servants or labourers, the share oft paddy paid to them was only wages for their labour and the payment was an application by the assessee of his income and not a diversion of the paddy by some overriding title before it could become income in his hands. One pays his workmen with his own money and not with money belonging to the workmen themselves; and no mere workman can say that the wages received by him come to him directly by virtue of his own independent right to the money and not by way of payment made to him by his employer. In law, therefore, the position with regard to the share of crops paid to an adhiar or bargadar or other labourer is that it is received by the owner of the lands as a part of the total yield and then it is paid to the labourer as his remuneration and such is the position even when the labourer retains his share of the crops instead of physically handing it over in the first instance to the owner along with the latter's share and then receiving it back from him. In the present case, the adhiar's half share of the 4500 maunds of paddy was thus also received by the assessee. It was therefore correct to include it in the taxable income of the assessee and then grant him an allowance to the extent of 50 per cent of the market value of the whole 4500 maunds'.
15. In my opinion, these two decisions which are binding on me, are quite decisive o the point raised in this application. As I have pointed out above, the only substantial point agitated herein is the unconstitutionality of the proviso to Section 7(1) of the Act. It is stated that agricultural income must be actual receipt and since the bargadar is not a labourer but a tenant or something very like a tenant, the receipt by the bargadar cannot be considered as the income of the owner. It is abundantly clear that the result of this application must depend upon the question as to whether this submission is correct or not. In other words, if the entire produce of the land is to be taken into consideration in computing the income of the assessee, irrespective of the fact as to whether it is let out to bargadar or not, then the question of constitutionality does not arise at, all because the income must necessarily be more than 50 per cent, in cases where land is let out in barga, it being admitted that under the Bargadars Act the bargadar gets 2/3rd share and under the Land Reforms Act he gets 60 per cent. If all this is included in the income of the assessee, then the question does not arise at all. Mr. Das has complained that the learned Chief Justice has not been consistent in his finding as to whether a bargadar or adhiar is a labourer or not and where he was considering the justness of the law, he considered the case where the bargadar gets one-half or less than one-half but omitted to consider a case like the present one, where the bargadar gets more than one-half. It is true that the learned Chief Justice did not consider a case like the present where the bargadar gets more than one-half and consequently some injustice was being done to the assessee, but he pointed out that in such a case justice or injustice of the law is quite irrelevant. So far as his finding as to the status of the bargadar is concerned, he has found that under the Bengal Tenancy Act the position is that of a labourer but under the Bargadar Act, the concept is much wider.
16. If the matter was of first impression, then with great respect I would have felt some hesitation in holding the produce taken by the bargadar should be considered as the produce taken by the owner and computed as his income. Even the Learned Chief Justice was constrained to hold that the position of a bargadar under the Bargadars Act was different from that under the Bengal Tenancy Act, and that it is not purely that of a labourer. Considering the progressive legislation which has consolidated the rights of the bargadars, it would, I think, neither accord with the facts nor would it be just, to give the bargadar a status akin to a tenant, and yet con-sider him to be so identified with the owner, as to deem his income to be that of the owner, with the result that the owner is called upon to pay tax upon an income which he does not actually receive. If the owner could possibly contract out of it, it might have been just to import the concept of constructive receipt. But if the law intervenes and takes away the rights of the owner, and gives it to the bargadar, then it certainly is unjust to identify the bargadarso much with the owner as to consider the income of the former to be the income of the latter. But then, I am bound by the decisions abovemen-tioned and regard being had to the principles adumbrated therein, I must hold that the receipt of the bargadar is to be computed as receipt by the owner of income and as such the point of unconstitution-ality fails because in that event it cannot be established that the Agricultural Income-tax Act by proviso to Section 7(1) or by any other provision, increases the jurisdiction of the Legislature which it does not possess. In other words it then cannot be established that the Legislature has provided for the assessment of an income which is not agricultural income. It remains for me only to deal with the point that has been taken about discrimination under Article 14 of the Constitution. It is said that the classifications under Section 7(1) are discriminatory. I have already mentioned above the background against which this classification was introduced by the Legislature. I do not think that the classification is unreasonable or unconnected with the object of the Act. It is a fact that agriculturists in West Bengal and everywhere else in India are illiterate and would find it very difficult indeed to establish what the actual expenses of cultivation etc. were. In the absence of books or any system of accounting, it would require an army or officials to go into such questions in the case o each single individual cultivator. The averment made in the affidavits, namely, that partnerships and companies keep accounts and therefore it was possible to check their actual expenses is, I think, quite acceptable. In my opinion, the classifications are reasonable and are related to the object of the Act and the point as to discrimination fails.
17. The result is that this application as a whole must fail. The Rule is discharged. Interim order, if any, is vacated. There will be no order as to costs.
18. The operation of this order will remain stayed for 4 weeks from date in order to enable the petitioner to prefer an appeal. Any further stay must be obtained from the Court of Appeal in case an appeal is filed.