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TMI Blog2003 (9) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 13 of the Kerala Agricultural Income-tax Act, 1991 (for short "the Act"), inserted by the Kerala Finance Act, 1994, are illegal, arbitrary and unconstitutional. She has further sought to quash exhibit P4 proceedings of the first respondent and also for direction to the said respondent to consider the appellant's eligibility for compounding without reference to other co-tenants' eligibility or otherwise for payment of tax at the compounded rate. Mrs. Thara Peter, Mr. Dilip Oommen, and the appellant are jointly holding 51.25 hectares of agricultural land planted with rubber. All the three had obtained the said property under exhibit P1 transfer deed dated March 1, 1982. The appellant has got 30 per cent, of rights in the property. The income from the property has been assessed under the Agricultural Income-tax Act, 1950, as tenants-in-common under the name and style of "Mrs. Thara Peter and others". After the insertion of sub-section (9B) by the Kerala Finance Act, 1994, with effect from April 1, 1994, tenants-in-common are specifically given the right to opt for compounding of agricultural income-tax under section 13(9B), provided the landed property held by that person withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of agricultural income is as provided under sections 5 to 12 of the Act and that there is no compulsion to pay the tax at the compounded rate as provided under section 13 of the Act. He further submitted that if the tenants-in-common want the benefit of section 13, they have to satisfy the conditions provided in sub-section (9B) of the said section. The Government Pleader also submitted that the observation made by this court in K.G. Keshava Bhat v. State of Kerala [1999] 240 ITR 313 with regard to the introduction of sub-section (9B) as unnecessary must only be treated as an obiter. He further submitted that but for the provisions of sub-section (9B) of section 13, the appellant would not have been entitled to apply for compounding. We have considered the rival submissions. Section 3 is the charging section, as per which tax at the rate or rates specified in the Schedule to the Act shall be charged for each assessment year in accordance with and subject to the provisions of this Act on the total agricultural income of the previous year of every person. Sub-section (2) provides that subject to the provisions of this Act in the case of persons holding property as tenants-in-commo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of the said Act during the period of such permission. As already noted, we are concerned with the validity of the provisions of sub-section (9B) of section 13 inserted by the Finance Act, 1994, with effect from April 1, 1994. The question as to whether the tenants-in-common are entitled to the benefit of compounded payment of tax for the period prior to April 1, 1994, came up for consideration before a Division Bench of this court in K.G. Keshava Bhat v. State of Kerala [1999] 240 ITR 313. The Division Bench observed that from the scheme of the Act, the only inference that could be drawn is that sub-section (9B) of section 13 is merely explanatory in nature and the argument that for the first time the benefit of compounding was conferred on tenants-in-common only by the insertion of sub-section (9B) does not seem to be correct and that the scheme clearly indicates that tenants-in-common were entitled to the benefit of compounding even prior to the insertion of sub-section (9B) which is merely clarificatory. The Division Bench also rejected the contention of the Government Pleader that but for sub-section (9B) the benefit of compounding cannot be availed of by tenants-in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As already noted the charging provision is section 3 and sub-section (2) of section 3 provides for the mode of assessment of tenants-in-common. The normal mode of assessment under the Act is provided in sections 5 to 12 of the Act. Section 13 is a special provision giving an option to the assessees therein to pay the tax at the compounded rate, provided the conditions stipulated therein are satisfied. By virtue of the decision of the Division Bench of this court in K.G. Keshava Bhat's case [1999] 240 ITR 313, the position is that even prior to the introduction of sub-section (9B) with effect from April 1, 1994, tenants-in-common were entitled to opt for compounding under section 13(1). Even under section 13(1) compounding can be had only if each of the tenants-in-common who opt for compounding holds agricultural property having an extent of 20 hectares and below. By the insertion of sub-section (9B) in section 13, the tenants-in-common are entitled to compounding under section 13(1) only if the twin conditions specified in sub-section (9B) are satisfied. We find there is logic in prescribing the condition that in order to enable a member of the tenants-in-common to opt for compound ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny assessee to opt for the method of taxation provided under section 13(1) of the Act. It is entirely left to the choice and absolute discretion of the assessee. If the assessee thinks that it is beneficial for him to so opt, he can opt for it; otherwise he will be governed by the normal method of taxation provided under sections 5 to 12 of the Act. The Supreme Court repelled a similar challenge in the context of the provisions of section 5(1)(iv), section 7(7) and sub-section (7A) of section 7 of the Kerala General Sales Tax Act and rule 22A of the Rules made in State of Kerala v. Builders Association of India [1997] 104 STC 134, contending that sub-sections are beyond the legislative competence of the State Legislature or violative of clause (29A) of article 366 of the Constitution of India stating that sub-sections (7) and (7A) of section 7 of the said Act are only optional and that there is no compulsion on any contractor to opt for the method of taxation provided under the said sub-sections. It is also observed that the Legislature has evolved a convenient, hassle-free and simple method of assessment and that by opting for this alternate method, the contractor saves himself, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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