1967 (1) TMI 37 - HC - Income Tax

Travancore-Cochin Agricultural Income Tax Act, 1950 - Whether the V.T.K. Estate is not assessable to agricultural income-tax and a writ of certiorari to quash notice, and order of the respondent

Issues Involved:
1. Assessability of the V.T.K. Estate to agricultural income-tax under the Agricultural Income-tax Act, 1950.
2. Locus standi of the petitioner to maintain the writ petition.
3. Validity and continuity of exemption under Exhibit P-1 notification.
4. Applicability of the exemption to agricultural income-tax introduced later by the 1122 amendment.
5. Alleged discrimination under the Constitution due to the exemption.

Issue-wise Detailed Analysis:

1. Assessability of the V.T.K. Estate to Agricultural Income-tax:
The primary issue in this case is whether the V.T.K. Estate is assessable to agricultural income-tax under the Agricultural Income-tax Act, 1950. The petitioner, the manager of the V.T.K. Estate, sought a declaration that the estate is not assessable and a writ of certiorari to quash the notice (Exhibit P-2) and order (Exhibit P-4) issued by the 1st respondent demanding a return of the estate's agricultural income for the year 1962-63. The court examined the historical context and legislative changes affecting the taxability of the estate.

2. Locus Standi of the Petitioner:
The court addressed a preliminary objection regarding the petitioner's locus standi. It was argued that the petitioner, as the manager of the estate, had no standing to file the writ petition. However, the court rejected this objection, citing the Cochin Proclamation 9 of 1124, which vested the management of the V.T.K. Estate in the Palace Administration Board. The court concluded that the petitioner had sufficient locus standi to maintain the writ petition, referencing the case of Gadde Venkateswara Rao v. Government of A.P.

3. Validity and Continuity of Exemption under Exhibit P-1 Notification:
The petitioner's claim of exemption from agricultural income-tax was based on Exhibit P-1, a notification issued under Section 59 of the Cochin Income-tax Act VIII of 1108, which exempted members of the Cochin Ruling Family from tax payment on all incomes except salaries, professional earnings, and business incomes. The court examined whether this exemption continued to be valid despite legislative changes. It was noted that the Cochin Income-tax Act of 1108 was repealed and re-enacted by subsequent statutes, but the exemption notification continued to be in force under the provisions of the Cochin General Clauses Act, 3 of 1079.

4. Applicability of the Exemption to Agricultural Income-tax Introduced Later by the 1122 Amendment:
The court considered whether the exemption granted by Exhibit P-1 applied to agricultural income-tax introduced by the 1122 amendment. The respondents argued that the exemption was a personal privilege and did not extend to new taxes introduced later. However, the court referred to the principles established in cases such as the Sion College case and the Mayor &c. of London v. Netherlands Steamboat Co., which indicated that statutory exemptions could include future taxes unless expressly repealed. The court concluded that the exemption covered not only existing taxes at the time of the grant but also agricultural income-tax introduced later.

5. Alleged Discrimination under the Constitution:
The respondents contended that the continuance of the exemption for members of the Cochin Ruling Family would be discriminatory under the Constitution. However, the court found the averments in this regard to be insufficiently substantiated. The court did not accept the argument that the classification of the Cochin Ruling Family for exemption purposes lacked a rational basis or intelligible differentia. The court also noted the petitioner's objection to the State's contention of its own action being discriminatory but did not express an opinion on this point.

Conclusion:
The court held that the exemption granted by Exhibit P-1 continued to be valid and applicable to the V.T.K. Estate for the period covered by Exhibit P-2 notice and Exhibit P-4 order. The exemption was not taken away by Section 3 of the Agricultural Income-tax Act, 1950. Consequently, the V.T.K. Estate was not assessable to agricultural income-tax for the assessment year 1962-63. The court allowed the writ petition and quashed Exhibits P-2 and P-4, awarding costs to the petitioner.

Judgment:
Petition allowed.

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