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TMI Blog1965 (12) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner in W.P. No. 541 of 1964, the former of which he has filed as karta of the Hindu undivided family consisting of himself and his two minor sons, and the latter as individual. Writ Petition No. 1540 of 1964 is by the minor son of the petitioner in Writ Petitions Nos. 539 and 540 of 1964. In all these petitions, the petitioners challenge the notice and the proposed reopening of the assessment of the interim payments made by the Government under the Estates Abolition Act (hereinafter called the Abolition Act). For the purposes of these writ petitions, I have ignored the amounts paid to each of the petitioners or the dates of the notices, as these are not relevant or material for the determination of the question before me. It is contended on behalf of the petitioners that after the estate was notified and taken over by the State, the Government deposited in the office of the Estates Abolition Tribunal advance compensation in respect of the shares of each of them under section 4A of the Abolition Act. They have also further deposited interim payments in respect of the above estate for the years commencing from 1950 onwards. It is averred that the advance compensation, interim pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer, Karaikudi, has not taken into consideration the provisions of the Abolition Act, which, if taken into consideration, would show that the interim payments are income liable to assessment under the Income-tax Act. It is further contended by him that the basis of the decision of their Lordships of the Supreme Court in Raja Rameshwara Rao v. Commissioner of Income-tax, which was an appeal from a judgment of the Division Bench of this court consisting of Chandra Reddy C. J. (as he then was) and Srinivasa Chari J., in construing payments made by way of interim allowances under the Hyderabad (Abolition of Jagirs) Regulation, 1358 Fasli, should be applied in determining the nature of the payments under the provisions of the Act, in which case, there will be no difficulty in arriving at the conclusion that these interim payments are income liable to assessment under the Income-tax Act. It may be stated that in the above case before their Lordships of the Supreme Court, the decision of the Madras High Court already cited (Shanmugha Rajeswara Sethupathi v. Income-tax Officer, Karaikudi) was referred to in support of the view that the interim maintenance allowance was not income, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully analysed, would show that there is a difference between interim payments and compensation, advance compensation, and additional compensation. Further, the Abolition Act as amended and applied to the Andhra area would show that there is a difference between section 3(e) of that Act, and the Madras Act which was amended by Madras Act 54 of 1956, with retrospective effect as from April 19, 1949, and, consequently, the construction placed on that definition by the Madras Benches is not applicable to these cases. I will presently deal with the effect of the variation in the two definitions and the several provisions of the Abolition Act, but before I do so, it must be observed that in Shanmugha Rajeswara's case Srinivasan J. delivering the judgment made certain observations, which indicate the basis of the approach of the Bench in determining the question whether interim pay ments are income or capital. He observed at page 866 : " What we are at present dealing with is whether these payments constitute part of the compensation which a person obtains for the loss of a capital asset for purposes of the application of the Indian Income-tax Act. We must repel the suggestion that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of the jagir would depend on the provisions of the jagir Abolition Regulation and Jagir Commutation Regulation, and not on the provisions of the Indian Income-tax Act. A similar approach was made in Commissioners of Inland Revenue v. Butterley Co. Ltd., which was referred to by the Supreme Court. Lord Radcliffe in his speech in the House of Lords, after considering the question whether the use of the words " interim income " payable to the company under the Coal Industry Nationalisation Act, 1946, and the Coal Industry (No. 2) Act, 1949, can be said to arise from trade, business or investment or some other piece of property that admits of use or enjoyment, or whether under section 22(2)(a) of the 1946 Act, was paid as " a money payment of an amount 'equal to' interest for that period " on each amount of compensation that came to be satisfied, or whether all such payments 'equal to' interest on a future sum covering the period until it was paid was not income from an investment or interest on a loan but an indemnity against loss suffered by the deferment of the payment, held that in fact, the bulk of the money received was received as ' revenue payments ' under section 22(3) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 3 of the Abolition Act provides in clause (b) that the entire estate including minor imams included in the assets of the zamindari estate at the permanent settlement of that estate detailed in the section shall stand transferred to the Government and vest in them, free of all encumbrances. Clause (c) of the same section further deals with all rights and interest created in or over the estate before the notified date by the principal or any other landholder. Clause (e) of the Abolition Act as well as the said provision after the Madras amendment in 1956 is given in juxtaposition below: Andhra Act: - The principal or any other landholder and any other person whose rights stand transferred under clause (b) or cease and determine under clause (e) shall be entitled only to compensation from the Government as provided in this Act. Madras Act: - The principal or any other landholder and any other person whose rights stand transferred under clause (b) or cease and determine under clause (c) shall be entitled only to such rights and privileges as are recognised or conferred on him by or under this Act. Be it noted that the words " compensation from the Government as provided in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal as advance payment on account of compensation. It is unnecessary to deal with the other provisions relating to the ascertainment of ryotwari demand or the carrying out of the ryotwari settlement of the estate or the manner of determination of land revenue before the settlement was brought in force. I only mention this to point out that compensation could not be accurately ascertained till after the survey and settlement had taken place, and the precise quantum of the basic annual sum had been computed, and since this would take a long time, the Government provided for making interim payments under section 50 of the Abolition Act, the relevant provisions of which may be read as below : "50. (1) The provisions of this section shall apply in every case not governed by section 38. (2) After the notified date and before the compensation has been finally determined and paid in pursuance of this Act, interim payments shall be made by the Government every Fasli year to the principal landholder and to the other persons referred to in section 44, sub-section (1), as follows : (3) In respect of the Fasli year in which the estate is notified, they shall together be entitled to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned under section 39, in case the deposit in pursuance of section 54A is made in the final year in which the estate is notified. (b) In respect of each of the subsequent Fasli years, the basic annual sum as finally determined under section 39 after deducting therefrom an amount bearing to the basic annual sum the same proportion as the amount of the advance compensation referred to in section 54A together with any further instalment or instalments of compensation deposited up to the end of the Fasli year concerned bears to the compensation as finally determined under section 39. (c) If the aggregate interim payment thus determined less the deductions already made under sub-sections (3) and (4) exceeds, or is less than the aggregate of the amounts already deposited under sub-section (5), the balance with interest thereon at three per cent. per annum shall be deposited by the Government with the Tribunal after deducting the amounts of the nature specified in the proviso to sub-section (3) and still due to the Government or, as the case may be, the amount of deficiency shall be intimated by the Government to the Tribunal. Explanation.- Any amount collected by the Government on b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance of the interim payments is deposited in the office of the Tribunal. A careful analysis of the provisions of section 50 of the Abolition Act would show that the Government has to pay interim payments to every landholder and other persons referred to in section 44, sub-section (1), till the compensation has been finally determined, and paid in pursuance of the Act. It is only on the basis of an estimate that these interim payments are made so that there are provisions dealing with what has to be done if there are excess payments or under-payments of this interim payment. Sub-section (4) says that the excess or deficiency in respect of the amount already deposited in the previous Fasli or Faslis shall either be adjusted towards the interim payments due for that Fasli or subsequent Faslis, or deposited in addition, as the case may be. Sub-section (4A), which is added in 1958, relates to amounts deposited under section 54A and provides that where on subsequent calculation it is found that the amount deposited is in excess of the amount that should properly have been deposited, such excess shall also be deducted out of the amounts to be deposited under sub-section (3) or (4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m payments decrease as the amount of compensation payable is being decreased by the payment from time to time. I cannot, with great respect, agree with Srinivasan J. in Shanmugha Rajeswara Sethupathi v. Income-tax Officer, Karaikudi that " no distinction is made in this regard between the interim payments and compensation " While no doubt, reliance by the Advocate-General placed on section 50(8) was considered, the other provisions to which I have made a reference, have not been taken into account. With respect to the argument of the Advocate General, it was pointed out that in the Bil, as it was originally published, sub-section (8) did not appear, though interim payment was provided for. It was according to the learned judge, therefore, doubtful if these payments would be adjusted against the total compensation payable to the landholder. This provision, according to him, seems to have been inserted in order to remove any such doubts, and to make it clear that these payments were in addition to the compensation determined under section 39 of the Act ; as such, it was held in that case that the fact that it was not part of compensation so computed under section 39 of the Act, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear pronouncement of the law, we hold that there is no substance in the contention of the learned counsel for the respondent ". On a careful analysis of the observations of Rajamannar, Chief Justice, I find that no assistance can be derived therefrom in support of the contention that interim payments are part of compensation. The question whether the mortgagee is entitled to have recourse against interim payments as well as compensation depended upon whether the mortgagors, who are the landholders, are entitled to these amounts, and not whether interim payments are part of compensation. Sub-section (2) of section 50 clearly envisages interim payments to the principal landholder and to the other persons referred to in sub-section (1) of section 44. Sub-section (1) of section 44 says that the Tribunal shall apportion the compensation among the principal landholder and any other persons whose rights or interests in the estate stand transferred to the Government under section 3, clause (b), or cease and determine under section 3, clause (c), including persons who are entitled to be maintained from the estate and its income, as far as possible, in accordance with the value of their re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (4A) of section 50 was there any need or necessity providing for contingency of any excess amount being deposited by mistake. Whether sub-section (8) of section 50 of the Abolition Act was there or not in the Bill in the initial stages, and was only added by the legislature subsequently, with great respect, makes little difference. In my view, full meaning and import must be given to that sub-section. Whenever the draftsman wishes to lay emphasis on any inhibition or with respect to any interdiction, he has recourse to negatives. When the provision categorically says that no interim payment shall be deemed to constitute any part of the compensation or to any extent to be in lieu of such compensation, I presume it was added for the benefit of the landholder, lest by any mischance it could, in the remotest sense, be construed to include interim payment as part of compensation. It was intended to clarify and leave beyond doubt that interim payment is something different and apart from the compensation for depriving him of his estate that sub-section (8) was added. Section 41(2) of the Abolition Act clarifies the position beyond doubt. It provides that on the making of deposit as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers conferred by the legislature by items 9 and 21 of List II read with section 299 of the Government of India Act. He submits that there was no provision under that Act, as there is no provision under article 31 of the Constitution for the payment of an amount which can be construed as income, but these powers are only confined to payment of compensation for deprivation of property. I am unable to appreciate this argument because the power to make such amounts, whether of a revenue nature or of interest for the non-payment of compensation immediately on the deprivation of property, are incidental and consequential. It could not be said that the power to pay interest under the Land Acquisition Act on the market value of the property acquired till such time as the compensation is not deposited is ultra vires the powers of the legislature. In the result, these petitions are dismissed with costs. Advocate's fee Rs. 50 in each. Mr. Kondaiah states that he has filed counters on February 19, 1965, but these counters have not been placed before me. Mr. K. Ramachandrarao also says that he has not got them. Be that as it may, this fact is mentioned merely to record the same as they are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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