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TMI Blog1930 (5) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... . The question so submitted were three in number, and (as amended in the course of the hearing) they were in the following terms "1. Whether the following sources of income are agricultural and therefore exempted from assessment to Income-tax under S.4 (3) (viii) of the Act. [Then follow ten Items which it is unnecessary to set out here.] 2. Whether income derived from such of the above sources as were not taken into consideration at the time of fixing the jama at the Permanent Settlement is assessable for Income-tax purposes ? 3. Whether, having regard to the terms of the Permanent Settlement Regulation, Income derived from land in permanently settled states, subject to the exemptions provided by the Legislature, is liable to assessment to Income-tax? In view of a diversity of judicial opinion already existing in regard to the proper answer returnable to the third question, both questions 2 and 3 were, by an order of the 21st May 1926, referred for decision of the Full Bench, the consideration of question 1 being in the meantime deferred. The case was argued before the Full Bench consisting of five Judges of the High Court, with the result that Ghose, Buckland and Panton, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to impose a tax on the income of a zamindar derived from his zamindari; and that if such a tax could be said to be imposed under or by virtue of the language used in the Act, nevertheless the language used was not so clear and explicit as to operate as a repeal of the legislative provisions of the Regulation. Such an outline was the appellant's contention. Incidentally to this argument the Board was invited to consider and indeed pronounce upon the question, mainly historical, of the position of the governing authority immediately before the Permanent Settlement in regard to ownership of the land or of some proprietary interest therein. The attention of their Lordships was called to the various views expressed in such works and documents as Field's "Regulations of the Bengal Code," Phillips's "Land Tenures of Lower Bengal" and Shore's Minutes. Their Lordships were also referred to certain reported decisions of the Courts. Their Lordships, however, are of opinion that there is here no occasion for any pronouncement by them upon the question of the exact nature of the rights and interests in relation to the land which existed in the governing aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following heads of income, profits and gains shall be chargeable to income-tax, in the manner hereinafter appearing, namely: (1) Salaries. (ii) Interest on securities, (iii) Property. (iv) Business, (v) Professional earnings, (vi) Other sources." Each of the next following six sections deals severally with each of the six heads of income, profits and gains specified in S. 6, and states with greater particularity the items in respect of which the tax shall be payable by the assessee under the particular "head," and gives details of allowances and exemptions in regard to the different heads, S. 9 accordingly deals with the head "property," and a perusal of it makes it clear that the "income, profits and gains" charged under the head "property" are confined to the annual value of "buildings or lands appurtenant thereto," in other words to the annual value of what may be conveniently called house property. The income of a zamindar derived from his zamindari would not be chargeable under that head. If chargeable in the result it would be under the head "other sources." Section 12 deals with that head, and requires clo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mindari. The tax is upon ' income, profits and gains." It is not a tax on gross receipts. With this fact in view, each section which deals with one of the first five ' heads " specified in S. 6 contains, where proper, specific provisions for the necessary deductions and allowances to be made for the purpose of arriving at the taxable balance. S. 12, which deals with the general residuary group, is necessarily framed in general terms and authorizes the allowance of any "expenditure (not being in the nature of capital expenditure) incurred solely for the purpose of making or earning such income, profits or gains." Their Lordships were unable to ascertain upon what footing the appellant had been assessed in respect of the income derived from his zamindari, i.e., whether on the gross income or after some allowance had been made in respect of the jama assessed and paid upon the lands. Their Lordships are of opinion that, in assessing the appellant to income tax in respect of the income derived from his zamindari, his income, profits and gains from that source should be computed after making proper allowance in respect of the jama assessed and paid. Their L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars to their Lordships to embody the legislative statements and provisions which are most favorable to the arguments advanced on behalf of the appellant. The first sentence recites as facts well known in Bengal: (1) that the public assessment upon the land has never been fixed; (2) that the rulers have from time to time demanded an increase of assessment from the proprietors of land; (3) that for the purpose of obtaining this increase, not only have frequent investigations been made to ascertain the actual produce of the estate, but it has been the practice to deprive the proprietors of the management of their lands. The second sentence of Art. 6 recites that the Court of Directors considers these usages and measures detrimental to the prosperity of the country, and states that the zamindars with whom a settlement has been or may be, concluded, are to consider the orders fixing the amount of the assessment as irrevocable and not liable to alteration. The third sentence runs as follows : "The Governor-General in Council trusts that the proprietors of land, sensible of the benefits conferred upon them by the public assessment being fixed for ever, will exert themselves in culti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fruits of your improvements without fear of the Government claiming that, because the revenue produced by the estate has increased the payment you make to Government as a condition of holding that estate shall be increased also." Their Lordships have ventured to paraphrase Art. 6, but they think that their paraphrase expresses with sufficient accuracy the true intent and meaning of the article. In their Lordships' opinion, while the Regulations contain assurances against any claim to an increase of the jama, based on an increase of the zamindari income, they contain no promise that a zamindar shall in respect of the income which he derives from his zamindari be exempt from liability to any future general scheme of property taxation, or that the income of a zamindari shall not be subjected with other incomes to any future general taxation of incomes. Their Lordships agree with the views expressed by Ghose, J., in the following passage from his judgment : "There was no promise or engagement of any description whatsoever by which, the Government of the day surrendered their right to levy a general tax upon incomes of all persons irrespective of the fact whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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