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TMI Blog1979 (2) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... eader and various learned Advocates and the learned State Representative It is in these circumstances that we consider these appeals. 2. We may straight away have a look at s. 4 (b) as it stood both before and after the amendment: BEFORE THE AMENDMENT "4. Total Agrl. income: Subject to the provisions of this Act, the total agricultural income of the previous year of any person comprises all agricultural income derived from land situated within the State which is received by him or which accrues to him within or without the State, but does not include xx xx xx (b) any agricultural income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied thereto........." AFTER THE AMENDMENT: "4. Subject to the provisions of this Act, the total agricultural income of any previous year of any person comprises all agricultural income derived from land situated within the State which is received by him or which accrues to him within or without the State, but does not include xx xx xx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) some income derived from property held under trust, it could only mean the income derived from non-agricultural property. This is the only way to construe harmoniously all the sections. Therefore the learned additional Government Pleader is well founded in his submission. Consequently I hold that my judgement in (Rajan Chettiar Annadhana etc. Charities vs. The Agrl. ITO. Mannargudi, does not lay down the correct law." 5. In the light of this decision, the appellants learned counsels did not lay much stress on this aspect though they did not totally abandon it. What is urged before us is that the expression "to the same extent" occurring in s.4(b) should receive a strict or reasonable interpretation. In this context, it is pointed out that the word "extent" according to English Dictionary means "dimension" range etc. And so considered it would appear that the taxability of agricultural income in respect of a religious or charitable trust will have something necessarily to do with the taxability of the non-agricultural income of that trust under the Central IT Act. 6. Before we deal with the rival claims we should decide the general norms which we should adopt in interpreting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has specifically has the expression "is not included" and not the expression "is not included" and not the expression "is not includible". This only goes to buttress our earlier view that the statute has spared the Agrl. ITO from the trouble of finding out for himself whether the provisions of ss.11 to 13 of the Central Act have been complied with so far as agricultural income is concerned. The legislature, in its wisdom, did not choose to burden the Agrl. IT authorities in interpreting ss.11 to 13 of the Central Act, a subject about which they cannot be expected to be very familiar. This should cause no surprise when we recall that the Direct Taxes Laws Committee in its interim report (Chapter-II) in Dec., 1977 had this much to say on charitable trusts: "2.1: The provision relating to the assessment of charitable and religious trusts are one of the most complicated group of sections in the ITA. 2.2: ss.11 to 13 enjoy the unique distinction of having received almost continuous attention in successive Finance Acts. Between 1971 and 1976, not less than 27 amendments have been made to these sections." 10. There is another important aspect to be considered regarding the objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his effect under the Agrl. ITA is to expect them to do the impossible. 12. The expression "to the same extent" provides a further clue that the income which is not taxed under the Agrl. ITA is the same proportion of non-taxable non-agricultural income under the Central ITA. In other words what is sought to be taxed under the Agrl. ITA is the same proportion or agricultural income, which the taxable non-agricultural income bears to the total non-agricultural income. 13. This view of our has also been projected on behalf of the Revenue in the decision of the Madras High Court in H.H. Silasri Kasivasi Thambiran Avl. others vs. Agrl. ITA(1) which we had adverted to earlier. In this decision the following passage occurs indicating the line taken by the learned Government Pleader on behalf of the Revenue. It was stated by him that "having regard to the language of s. 4(B) of the Act, namely 'to the same extent' to which income derived from property held under trust wholly or partly for charitable or religious purposes", it should have reference only to the non-agricultural income. In other words, what has to be found out is how under the ITA, income derived from non-agricultural pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment. This procedure, besides being in accordance with law, will not result in any undue delay or impose any insuperable difficulty as an assessment under the Central ITA has to be completed within two years from the end of the assessment year in normal circumstances. The Agrl. ITO will then first determine the agricultural income, and then consider the proportion which the taxable non-agricultural income bears to the whole non-agricultural income as fixed by the Central Officer. He will then apply the same proportion and then determine the taxable agricultural income. It is only when he adopts such a course, it can be said that the agricultural income of a trust has been taxed to the same extent to which the non-agricultural income has been taxed under the Central ITA. 16. The following principles finally emerge:1. If a religious or charitable trust has been held to be exempt under the Central Act for a particular year then no assessment is possible under the State Act in respect of agricultural income of that year. 2. If the agricultural income is found to be exempt in part under the Central Act, then the Agricultural Income will also be exempt to the same extent i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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