1961 (1) TMI 14 - SC - Income Tax

Whether the appellant was liable to be assessed to pay agricultural income-tax for the year in which the estate was in the management of the court receiver? Held that - There is no substance in the contention raised by the appellant. The liability to pay tax is charged on the agricultural income of every person. The income though collected by the receiver was the income of the appellant. The taxing authorities may always proceed against the owner of the income and assess the tax against him. The definition in the connotation of person undoubtedly included a receiver trustee common manager administrator or executor and by such inclusion it is open to the taxing authorities to assess tax against any such persons; but on that account the income in the hands of the owner is not exempt from liability to assessment of tax. Appeal dismissed.

Summary

Issues:
- Whether the appellant could be legally assessed for the income of the estate when it was in the hands of the receiver?
- Interpretation of sections 3 and 13 of the Bihar Agricultural Income-tax Act.
- Liability of the appellant to pay agricultural income-tax for the year in question.
- Applicability of section 13 regarding assessment and payment of tax.

Analysis:
The Supreme Court addressed the issue of whether the appellant could be assessed for the income of the estate during the period it was managed by a court receiver. The appellant, Mahant of the Asthal Estate, submitted an income return for the Fasli year 1355 after the receiver handed over the estate to him. The Agricultural Income-tax Officer assessed the agricultural income and ordered the appellant to pay tax. The key question was the appellant's liability for tax during the receiver's management. The court examined sections 3 and 13 of the Act to determine the liability.

The court highlighted that section 3 charges agricultural income-tax on the total income of every person for each financial year. The appellant argued that as the receiver held the land and received the income, he should be deemed the assessee under section 13, absolving the appellant of tax liability. However, the court held that the receiver's inclusion as an assessee did not exempt the appellant from tax liability. Section 13 provides a mechanism for tax recovery but does not negate the owner's responsibility to pay tax on the income derived from the property.

Furthermore, the court rejected the appellant's argument that the income lost its agricultural character when received from the receiver, as this issue was not raised before the taxing authorities. The court emphasized that the character of the income as agricultural was accepted, and the only question referred was the appellant's liability for tax. Ultimately, the court dismissed the appeal, affirming the appellant's liability to pay agricultural income-tax for the relevant year, despite the receiver's involvement.

In conclusion, the judgment clarifies that the owner remains liable to pay agricultural income-tax on income derived from the property, even if managed by a receiver. Section 13 deems the receiver an assessee for tax recovery purposes but does not absolve the owner of tax liability. The court's decision underscores the importance of assessing tax obligations based on ownership, regardless of the intermediary management of the property.