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TMI Blog1967 (8) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the interim payments made by the Government under the Madras Estates Abolition Act XXVI of 1948, were income and as such they had escaped assessment. Writ Petitions Nos. 539 and 540 of 1964 were filed by Kumara Raja of Venkatagiri, the son of the petitioner in Writ Petition No. 541/64. The former was 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 the aforesaid writ petitions, the petitioners had challenged the notice and the proposed reopening of the assessment of the interim payments made by the Government under the Madras Estates Abolition Act (hereinafter referred to as the Abolition Act). It was contended on behalf of the petitioner 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. The Government had also deposited interim payments in respect of the above estate for the years commencing from 1930 onwards. The petitioners averred tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als were posted along with R.C. 35/63 in which the same question had arisen. The learned advocate for the appellants herein adopted the argument advanced by the learned counsel for the assessee in R.C. 85/63 and also made certain additional submissions. Later on these writ appeals were separated from R.C. 35/63 as a further question was raised by the learned counsel for the appellants in these writ appeals, to which we will advert in due course. After consideration of the arguments advanced by the learned counsel for the assessee in R.C. 35/63 and the learned counsel for the appellants herein, we pronounced judgment in R.C. 35/63 on 2nd August, 1967. The question referred to us therein was whether, on the facts and circumstances of the case, interim compensation received by the assessee under section 50 of the Abolition Act was of a capital nature and not liable to tax. We expressed our opinion that the interim payments received by the assessee under section 50 of the Abolition Act were income receipts. In that opinion we have considered Shangaum Rajeswara Sethupathi v. Income-tax Officer and dissented from it. We have expressed our full agreement with the judgment under appeal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, there was no distinction with regard to the interim payments payable under the Abolition Act in respect of these estates. He therefore contended that the action of the income-tax department in seeking to levy income-tax on the interim payments payable in respect of Venkatagiri Estate treating the same as revenue receipts amount to invidious and unfair discrimination against the principal landholder and the shares of Venkatagiri Estate. It was not open to the income-tax department to treat the said interim payments as revenue receipts while similar payments in respect of similar estates were held to be capital receipts and not exigible to tax, under the Income-tax Act. The department cannot adopt and apply contradictory principles in respect of payments which are similar and which were paid or payable under the same or similar enactment. It was therefore contended that the action of the income-tax department was arbitrary and discriminatory and was violative of the rights guaranteed under article 14 of the Constitution. It was also contended that the distinction sought to be made by the department between the estates of Ramnad, Shivaganga and Bobbili on the one hand and estate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties on a mistaken impression of the view of the board have erroneously accorded the same treatment of the amounts received by the Raja of Bobbili, it is not correct. They further averred that, in any event, any wrong or erroneous view taken or opinion expressed either by the Central Board of Direct Taxes or by the Commissioner of Income-tax, Madras, relating to any other case, will not in any way disentitle the first respondent from assessing the interim payments in accordance with law. The view expressed by the Central Board of Direct Taxes to the Commissioner of Income-tax, Madras, is not binding on the Commissioner of Income-tax, Andhra Pradesh, and the 1st respondent. The counter affidavit also refers to the judgment delivered by our learned brother Jaganmohan Reddy J. (as he then was) and also to our opinion rendered in R.C. 35/63. It was, therefore, submitted that there was no discrimination nor the provisions of article 14 of the Constitution were attracted. A further plea was also taken that the classification is reasonable. It was also submitted that the Income-tax Officer who is the statutory authority has the right to come to the conclusion whether a particular receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Raja of Ramnad and Raja of Shivaganga, whether interim or final have to be treated as capital receipts, is of general nature and cannot be confined only to the special leave petitions that were then pending before the Supreme Court and which the Commissioner of Income-tax, Madras, was directed to withdraw. On the contrary, the contention of the learned counsel for the respondents is that this letter will have to be read in the context in which it was issued. The context is clear from the subject set out in the letter, i.e., special leave petitions the Supreme Court--Raja of Ramnad and Raja of Shivaganga. Further in paragraph 2, it is clearly stated that the special leave petitions in the Supreme Court in the case of Raja of Ramnad and Raja of Shivaganga are therefore to be withdrawn. The latter therefore means that the decision as to the payments of the kind mentioned in the special leave petitions in relation to the case of Raja of Ramnad and Raja of Shivaganga were capital receipts. There was no general decision by the second respondent as to the nature of interim payments made under section 50 of the Abolition Act. That being so, the direction issued by the second respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 119(1) are administrative directions which cannot in any manner fetter the discretion of the Income-tax Officer in making the assessment. This becomes more clear from the proviso to sub-section (1) of section 119 which says that no orders, instructions or directions shall be given by the Board so as to interfere with the discretion of the Appellate Assistant Commissioner in the exercise of his appellate function. The Appellate Assistant Commissioner's functions are not executive. They are only judicial and this proviso has been enacted to make it clear that the orders, instructions or directions of the Board will not interfere with the judicial or quasi-judicial functions. The question as to the nature of orders, instructions or directions issued by the Central Board of Direct Taxes came for consideration in S.B. Adityan v. First Income-tax Officer, Madras. This was a case where the trustees of a trust created by the proprietor of a Tamil newspaper claimed that the entire income derived from that trust and which according to them was applied only for the purposes of the trust, was exempt from being assessed to income-tax under section 4(3)(i) of the Indian Income-tax Act. The I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We are in respectful agreement with the aforesaid observations and in our opinion that decision is a complete answer to the contentions advanced by the learned counsel for the appellants and the petitioners. When it is conceded that the Income-tax Officer has to act judicially in the assessment proceedings, any order by his superior authority which is not the appellate authority or revisional authority, will not be binding on him. The learned counsel for the appellants tried to distinguish this case stating that there the question was whether the orders, directions or instructions issued by the Board in an individual case, could bind the Income-tax Officer. In that case, there was no general instruction issued by the Board and if the Madras High Court were to consider such general instructions, they might have come to a different decision. He relies upon K.A. Meera Sahib Tharaganar, In re, where a Division Bench of the Madras High Court consisting of Rajamannar C.J. and Venkatarama Ayyar J. held that section 5(8) does not contemplate orders, instructions and directions from the Central Revenue Board to the assessing authority in any particular case. According to them, what was con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eding with his proposals to reopen the appellants' assessment ; whereas in Writ Petitions Nos. 1479, 1536 and 1537 of 1957 the petitioner have prayed for a writ of mandamus or any other appropriate writ, order or direction under article 226 of the Constitution of India directing the respondent therein to forbear from proceeding with the proposal to reopen or to calculate and assess the interim payments received by the petitioners. As far as the question of issuance of writ prohibition is concerned, it has not been shown that the Income-tax Officer has no jurisdiction to issue the notices under section 34 of the 1922 Act. That being so, the appellants cannot ask for a writ of prohibition. For the purpose of issuing a writ of mandamus, it has to be shown that that there is a legal duty cast on the Income-tax Officer act in a particular manner. The argument was that the Income-tax Officer is legally bound to act in accordance with the directions issued by the Board by the letter dated December 3, 1965, addressed to the Commissioner of Income-tax, Madras. In our opinion, there is no legal duty cast upon the Income-tax Officer to act in accordance wit the letter because the directions o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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