1975 (9) TMI 39 - HC - Income Tax

Summary

Issues:
1. Interpretation of section 9(2) of the Agricultural Income-tax Act, 1950 regarding assessment of income arising from properties gifted to minor daughters.
2. Determination of whether the assessee can be considered a 'person' as defined in section 2(m) of the Act.

Analysis:
The judgment emanates from reference cases arising from the Kerala Agricultural Income-tax Appellate Tribunal's order concerning the assessment years 1968-69 and 1969-70. The assessee contended that he had no income as he had gifted all his properties to his minor daughters, challenging the assessment under section 9(2) of the Act. The Tribunal set aside the assessment orders, stating that the appellant, having gifted away all properties, did not qualify as a 'person' under section 2(m) and thus was not liable for assessment under section 3 of the Act.

The Tribunal referred two questions to the High Court, questioning the liability of the appellant under section 9(2) and the Tribunal's justification in holding that the appellant is not a 'person' as per section 2(m). The Tribunal's stance was that the assessee, having no agricultural income, could not be deemed a 'Person' under the Act, thereby excluding income from gifted properties to his minor daughters from his total agricultural income.

The High Court delved into the definitions under the Act, particularly section 2(m) defining 'person' and section 3 as the charging section. The Court emphasized that the purpose was to include income from properties gifted to minor daughters in computing the income of any person liable for assessment under section 3. The Court opined that the term 'person' under section 2(m) should be read as an 'individual' owning or holding property for assessment under section 3, even if the individual had gifted away all properties.

Citing the Supreme Court's judgment in Vanguard Fire and General Insurance Co. Ltd. v. Fraser and Ross, the High Court stressed the importance of interpreting statutory definitions in light of the subject and context. Consequently, the Court answered the referred questions in the negative, favoring the department and rejecting the assessee's contentions.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the inclusive nature of assessing income under the Act and the interpretation of 'person' in the context of property ownership or holding. The judgment was forwarded to the Kerala Agricultural Income-tax Appellate Tribunal, with appreciation to counsel for assistance and no order as to costs.