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TMI Blog1948 (7) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... the agricultural income of His Highness for the year 1939-40. The Am-Muktear filed an objection alleging that there was no necessity for a return to be made as the property of the Maharaja or of the Tripura State in Assam was part of the State property and, therefore, not assessable to the Assam Agricultural Income Tax. The property in question was a large zemindary known as the Chakla Roshanahad which was situate within the Province of Assam. It appears that the Income-tax officer accepted the contention of the Am-Muktear and no assessment was made. 2. By an order dated May 27, 1941, the Agricultural Income-Tax Officer, however, re-opened the matter under sec. 30 of the Act and issued a notice on the Assistant Manager of the Tripura Raj estate calling upon him to make a return of the income for the year 1939-40. The Am-Muktear of the Tripura State filed a return of the agricultural income under protest and eventually the Agricultural Income Tax Officer found the agricultural income to be ₹ 66,830 and assessed the tax at ₹ 4,639-1-0. The income was held to be that of the Tripura State which was assessed as an association of individuals. 3. No steps were taken for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se status of His Highness and the State of Tripura. The Registrar of the Court was accordingly instructed to write to the Secretary of the Crown Representative asking for answers to the following questions : 1. Is the State of Tripura an independent State? If not, what is its status with regard to the Crown? 2. Is His Highness the Maharaja of. Tripura the sovereign ruler of the State of Tripura? 9. The Court directed the Board of Agricultural Income Tax to re-state the case after answers had been obtained from the Crown Representative to the questions pro-pounded by the Court. 10. The reply was received from the Secretary to Excellency the Crown Representative on June 8, 1945, and it is in these terms: Lieutenant Colonel His Highness Maharaja Manikya Sir Bir Bikram Kishore Deb Barman Bahadur, K. C. S. I., Maharaja of Tripura. has been recognised by His Majesty as the Ruler of the Indian State of Tripura since the 13th August 1923 His Majesty's Government do not regard or treat His Highness or his subjects as subjects of His Majesty and they do not regard or treat Tripura as being part of British India or of His Majesty's dominions. Tripura is an Indian St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akla Roshanabad is as a matter of law the property of the State or of the Petitioner personally. 5. Whether the money received from the Assam Government under the agreement dated February 13, 1897, was income or agricultural income within the meaning of the Assam Agricultural Income-Tax Act, 1939 (Assam Act IX of 1939). 6. Whether the income of the accounting year 1345 B. S. (Assessment year 1939-40) can be deemed to have escaped assessment within the meaning of sec. 30 of the Assam Agricultural Income-Tax Act, 1939 (Assam Act IX of 1939). 7. Whether the salami realised in respect of settlement of lands is agricultural income within the meaning of the Assam Agricultural Income-Tax Act, 1939 (Assam Act IX of 1939). 8. Whether in determining the agricultural income a deduction of 15 per cent of the arrears of rent clue but not realised during the accounting period should be made under cl. (c) of sec. 7 of the Assam Agricultural Income-Tax Act, 1939 (Assam Act IX of 1939). 9. Is the income derived from the Chakla Roshanabad Estate liable to tax under the Assam Agricultural income-Tax Act-- (a) by assessment upon the State of Tripura or (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f all authority within its boundaries. Chakla Roshanabad was settled with the then ruler and if the present ruler holds the property in his capacity as ruler then it could clearly in my view be State property. On the other hand if Chakla Roshanabad was settled with the then ruler in his personal capacity then the property could be regarded as the property of the Maharaja. 15. The Board of Agricultural Income Tax was of opinion that Chakla Roshanabad formed part of the personal property of the then assessee, the Maharaja of Tripura. But in my view the early history of this zemindary shows that it is the property of the Maharaja in his capacity as ruler. 16. When the British drove out the Moghuls they left the Raja undisturbed in what is now the State of Tripura. As I have said, they did not return to him Chakla Roshanabad and. therefore, that property no longer forms part of the State. The British authorities, however, seem to have realised that the loss of Chakla Roshanabad to the then Raja was a serious matter and they settled the zemindary with him and the land has been so settled since the permanent settlement. It appears to me that the obvious inference is that the Britis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b Burmono v. Beerchunder Thakoor 12 Moo. I. A. 523 (1869) the Privy Council had to consider a suit in the nature of an ejectment brought by the half-brother of the late Raja of Tippera to recover from his uterine brother the then Raja a zamindari forming part of the Raj of Tipperah. 21. The zemindary in question was Chakla Roshanabad and it seems clear that their Lordships of the Privy Council regarded this property as forming part of the royal possessions of the ruling prince. At page 534 Lord Chelmsford who delivered the judgment of the Board stated: The suit was one in the nature of an ejectment........to recover a very valuable zemindary being that part of the royal possessions of the Rajah of Tipperah which lies within the Indian territories of the British Crown. The Rajah of Tipperah, though in respect to these lands subject to the laws and Courts of British India, is in fact an independent prince with a considerable territory known as the Tipperah Hills, and as the title to the zemindary and to the Raj is the same, the dispute respecting the former involves a question of the right of succession to the Musnud or throne of the independent principality. 22. It seems cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and to his royal possessions both without and within British Indian Territory being one and the same, and the latter an apparage to the said throne following the course of succession thereto. 26. It appears that the Special Bench accepted this defence and appears to have treated Chakla Roshanabad as part of the royal possessions which would descend to the person entitled to the guddee on the death of the then ruler. 27. Though the precise point which has to be considered in this case did not arise in the three cases to which I have made reference, it is clear, however, that the Courts treated Chakla Roshanabad not as the personal property of the ruler, but as part of the royal possessions which were situate outside the State of Tripura. 28. For these reasons I am satisfied that the opinion of the Board of Agricultural Income-Tax that Chakla Roshanabad is the personal property of the Maharajah cannot be sustained. It has in law been regarded as royal property descending with the guddee and a right to the guddee gave a right to the possession of the zamindari. 29. In my view it is also clear that the Maharaja is an independent ruler and, therefore, not amenable to the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he public property of every state, being destined to public uses, cannot with reason be submitted to the jurisdiction of the Courts, of such state, because such jurisdiction, if exercised, must divert the public property from its destined public uses; and that, by international comity, which acknowledges the equality of states, if such immunity grounded on such reasons, exist in each state with regard to its own public property, the same fmmunity must be granted by each state to similar property of all other states. The dignity and independence of each state require this reciprocity. 34. It is clear from this last observation that State property of a particular State is not subject to the jurisdiction of another State though the property lies in the latter State. 35. It was contended, however, that the principles of International Law applicable to independent sovereigns had no application to rulers of Indian States because the latter were not, in the true sense of the word, independent. It is clear from the reply of His Excellency the Crown Representative that the Maharaja of Tripura is not independent in the full sense of the word. In internal matters he is undoubtedly indep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and their Lordships held that a suit brought against a railway through its Manager and Engineer-in-Chief, where the railway was neither a State Railway nor a company railway but was owned and managed by a sovereign prince was in reality a suit against such sovereign prince and when brought in a British Indian Court without compliance with the provisions of secs. 86 and 87 of the Civil Procedure Code, was not maintainable. Here again the Gaekwar of Baroda, though not sovereign in the true sense of the word, was treated by the Court as a sovereign prince. 40. It is clear, therefore, from these cases that English Courts have treated Indian rulers as independent and entitled to the privileges granted to such rulers by International Law. 41. There are provisions in the Code of Civil Procedure relating to suits brought by and against Indian rulers, namely, secs. 86 and 87. Sec. 86 makes it clear that an Indian prince or chief may be sued in an Indian Court with the consent of the Crown Representative, but such consent cannot be given except in certain special cases set out in sub-sec. (2). He can under this sub-section be sued if he is in possession of immovable property situate w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they commit any breach of it, and also, for most purposes, to its Civil Jurisdiction, a foreign sovereign, an ambassador, the troops of a foreign nation and its public property are, by the law of nations, not subject to them and statutes would be read as tacitly embodying this rule. 46. It appears to me that in construing the provisions of the Assam Agricultural Income-Tax Act, we must give effect to this principle enunciated in Maxwell's Interpretation of Statutes. There is nothing in the Act to show that the Provincial Legislature intended to take away the privileges of a foreign sovereign and that being so, we must so construe the Act as to preserve such privileges. 47. During argument reference was made to certain provisions in the Government of India Act and, in particular, to sec. 155 which made it clear that the property of Indian States was not liable to Federal taxation. In my view, however, these provisions cannot assist the Court in deciding this question as Federation never came into existence. It is quite clear, however, from the provisions of the Government of India Act that the Government of India had no authority over Indian States. 48. For these reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision in the case. The two Bombay cases, however, are very strong authorities in support of the Maharaja's contention that he cannot be made liable to agricultural income-tax in Assam. 53. Great reliance was placed by the Government of Assam upon a decision of a Bench of the Allahabad High Court in Kunwar Bishwanath Singh v. Commissioner of Income-Tax, C. P. and U. P. 10 I. T. R. 322 (1942) in which it was held that the late Maharaja of Benares was liable to be assessed to income-tax on certain income derived from zemindary situate in the United Provinces. In my view, however, this case cannot help the Government of Assam. It is true that the learned Judges who decided the case came to the conclusion that the Maharaja of Benares, though a ruling prince, was not wholly independent, but that does not appear to be the ground for their decision. The case was decided upon the terms of the instrument of transfer which created the independent State of Benares. It is pointed out that in sec. 26 of the instrument of transfer it was distinctly stated that in the other estates in possession of His Highness which were outside the State of Benares--and presumably the income derived in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maharaja personally. 57. The powers of the Assistant Commissioner upon appeal are contained in sec. 24 (5) of the Assam Agricultural Income-Tax Act, 1939. That sub-section is in these terms: In disposing of an appeal, the Assistant Commissioner of Agricultural Income-tax may In the case of an order of assessment-- (a) confirm, reduce, enhance or annul the assessment; (b) set aside the assessment and direct the Agricultural Income-Tax Officer to make a fresh assessment after such farther enquiry as may be directed; or, in the case of an order under section 21 or 22 confirm, cancel or vary such order; Provided that no enhancement of an assessment shall be made under this section, unless the appellant has had a reasonable opportunity of showing cause against such enhancement. 58. The Board of Agricultural Income-Tax appears to have thought that all that the Assistant Commissioner did on appeal was to confirm the assessment, but he changed the assessment on an association of individuals to assessment upon the Maharaja personally. It appears to me that he did far more than confirm the assessment. He in fact set aside the Original assessment and assessed the Mahar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the land in consideration of the receipt of certain sums of money some of which were payable annually. It appears to me that these sums payable under this agreement may be regarded as part of the Maharaja's income but not part of any agricultural income. They are due under an agreement and cannot be said to be income arising from agricultural land or agricultural property. This point was not seriously pressed by the Assam Government. 63. Question 6. Whether the income of the accounting year 1345 B. S. (assessment year 1939-40) can be deemed to have escaped assessment within the meaning of sec. 30 of the Assam Agricultural Income-Tax Act, 1939 (Assam Act IX of 1939). 64. It will be remembered that the Income-Tax Officer made no assessment in the first place as he was of opinion that Chakla Roshanabad lay within the State of Tripura and, therefore, clearly outside the Act. Later, however, he seems to have changed his view and issued a notice under sec. 30 claiming that the income had escaped assessment for the year 1939-40. It certainly had not been assessed for that year because the Income-Tax Officer thought that the income was not assessable. The question which arise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arriving at a conclusion whether income which has not been taxed by reason of an erroneous decision has escaped taxation. 67. The matter was again considered by a Bench of this Court in the matter of Messrs. The Anglo-Persian Oil Company (India), Ltd. v. Commissioner of Income-Tax, Bengal 37 C. W. N. 430 (1933). In that case it was held that sec. 34 of the Indian Income-Tax Act was not limited to cases of non-disclosure by the assessee or discovery of new matter by, or inadvertence on the part of, the taxing authorities; it covers cases of error by the latter. When it appeared that the original allowance of a deduction was unwarranted, there was a case of income, i.e., part thereof, escaping assessment and sec. 34 could be applied to re-open the assessment and assess such amount. This case appears to be some authority for the proposition that it income is not taxed by reason of an error of the taxing authorities it has escaped assessment. 68. A similar view was taken by this Court in re: Messrs. P. C. Mullick and D. C. Aich A. I. R. (1940) Cal. 520 in which a Bench held that the words escaped assessment in sec. 34 of the Indian Income-Tax Act mean also has not been asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice calling for a return under section 22, is issued within the tax year, then section 34 provides the only means available to the Crown of remedying the omission, but that is a different matter. 70. From this observation it is clear that Lord Macmillan was of opinion that income which had already been duly returned for assessment could not be said to have escaped assessment within the statutory meaning. In the present case the Maharaja had made a return of his income under protest or the year 1939-40 and after consideration the Income-Tax Officer had held that it was not assessable. That being so, the case appears to fall within the observations of Lord Macmillan that as the income had already been duly returned for assessment it could not be said to have escaped assessment within the statutory meaning. 71. In re: The Commissioner of Income-Tax v. U. Lu Nyo I. L. R. 12 Rang. 118, it was held that sec. 34 of the Indian Income-Tax Act did not entitle an Income-Tax Officer to go behind and revise an assessment made by his predecessor which as completed and had become final. It appears that in the course of assessment for 1929-30 the Income-Tax Officer rejected the accounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed assessment within the statutory meaning of that phrase. The Board of Agricultural Income-Tax was of opinion that this income had escaped assessment. But 1 cannot agree with that view and I, therefore, must hold that proceedings could not be taken under sec. 30 of the Assam Agricultural Income-Tax Act in respect of this income for the year 1939-40. 75. Question 7. Whether the salami realised in respect of settlement of lands is agricultural income within the meaning of the Assam Agricultural Income-Tax Act, 1939 (Assam Act IX of 1939). 76. The (sic)bard was of opinion that salami was (sic). But on the materials before us at the moment it is difficult to say whether this salami was or was not income. In the case of Raja Bahadur Kamakshya Narain Singh v. The Commissioner of Income-Tax, Bihar and Orissa 48 C. W. N. 59 (1948), their Lordships held that the salami paid for a mining lease under which a monthly royalty calculated on the tonnage of coal extracted, subject to a minimum amount after a certain date, is payable is a capital receipt. It is a single payment made to purchase the general right to enjoy the benefits granted by the lease. 77. In The Province of Bihar v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly be regarded as rent or revenue derived from land, within the meaning of that expression as used in the definition of ' agricultural income ' in sec. (1) (a). But these considerations do not apply to the salami or premium paid for recognition of a transfer of a holding from one tenant to another. When the transfer is recognised, the original tenancy continues and there is no new demise. The sum paid as salami or premium in such circumstances is obviously not rent in any sense of the term; nor can it be deemed the return, yield, or profit of any land. The money is paid by the transferee to the landlord to purchase peace, so that he may not contest the validity of the transfer. We cannot hold that the money so levied by the landlord can be comprised within the scope of the definition of agricultural income. 81. In my view it seems impossible to give a precise answer to this question as it is not known in respect of what transactions the amount returned as salami was received. 82. Question 8. Whether in determining the agricultural income a deduction of 15 per cent of the arrears of rent due but not realised during the accounting period should be made under cl. (c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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