9911796707
TMI Blog1924 (1) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... aziers who graze their cattle in the forest areas and waste lands, there is nothing to render inapplicable the definition of agricultural income contained in Clause (a). 3. As regards both of the other classes of income abovementioned, learned Counsel for the Assessee has contended that independently of any exemption given by the Indian Income-Tax Act, and notwithstanding the wide language of Sections 4 and 6 which are the charging sections and of Section 12, the Assassee as the holder of a permanently settled estate is entitled to be considered as outside the scope of the Act as regards all forms of income derived from his estate. This contention is grounded upon the language of solemn promise employed in, more than one of the Articles of Regulation I of 1793. It is not suggested that an Act of the Indian Legislature can be regarded as invalid in so far as it is shown to revoke or curtail, the declarations contained in the Regulation. But it is contended that in the circumstances the Indian Income-Tax Act must be approached with strong presumption against double taxation, and against any intention on the part of the Legislature to revoke by implication historic and explicit p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respectfully demur as a principle for the construction of a modern statute. In Manindra Chandra Nandi v. Secretary of State (1907) 34 Cal. 251, it did not avail to cut down clear, though absolutely general, language. 9. We have first, then, to examine Regulation I of 1793 as a statutory exemption from future taxes. The particular sanad of the predecessors-in-title of the present Assessee is not before us, and the case was argued at the bar on the basi3 of this Regulation. In Chief Commissioner of Income-Tax v. Zamindar of Singampatti A.I.R. 1922 Mad. 325, cited by learned Counsel for the Assessee, the sanad and the Regulation (Madras Regulation XXV of 1802) were read together, and were construed to contain an explicit exemption applicable to taxes which might be imposed thereafter as well as to taxes in force at the time. In reaching this conclusion the Pull Bench of the Madras High Court put much reliance on the decision of the House of Lords in a rating case arising in the City of London Associated Newspapers v. City of London Corporation (1916) 2 A.C. 429. There the actual decision was that a statute which vested in the owners free from all taxes and assessment whatsoever c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. They show that the usual amount which went to Government in the past had been some 10-11ths of the net produce or rents. They show the status of zamindar solidifying from that of officer of State to that of proprietor of lands, and the notion of rent emerging from the notion of land revenue. 14. The phrases used by the Permanent Settlement Regulation are: The limitation of the public demand upon the lands : to declare the jama which has been or may be assessed upon these lands fixed for ever : they and their heirs will be allowed to hold these estates at such assessment for ever. Zamindars, etc., are to consider these orders fixing the amount of the assessment as irrevocable and not liable to any alteration by any persons whom the Court of Directors may hereafter appoint to the administration of their affairs in this country : they will enjoy exclusively the fruits of their own good management and industry : no demand will ever be made upon them by the present or any future Government for augmentation of the public assessment in consequence of the improvement of their respective estates. 15. The width and depth of these phrases may be further gauged from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which separate them. It is at least desirable to see how the Legislature has interpreted or observed the fixity of public demand promised in 1793. That it has freely legislated so as to prevent zamindars from exacting excessive rents, imposing illegal cesses, imposing undesirable conditions of tenancy, evicting tenants for inadequate reason, and so forth is no more than an exercise of the power expressly reserved by the Regulation. The Bengal Act X of 1859 and the Bengal Tenancy Act of 1885 represent this exercise of power. But the Income-Tax Act of 1860 and the Cess Acts are of a different character, and more instructive for the present purpose. 19. That Act XXXII of 1860 imposed upon owners of permanently settled estates as well as of other estates a tax of 3 per cent, upon the annual value admits of no doubt whatsoever. It further imposed a tax of 1 percent, for roads, canals and other reproductive public works. This was done without purporting to revoke or repeal any part of Regulation I of 1793. The language is: Schedule 1: For and in respect of the property in, and profits arising from, all lands and houses in India. 20. The rules under Schedule I are given in. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat further in this permanently settled Province the duty levied for roads and public works. Bengal Acts imposing Road Cess (Act X of 1871) and Public Works Cess (Act II of 1877) are represented now by the Cess Act of 1880 (Bengal Act IX of 1880). The frame of this enactment is to impose these cesses on all immovable property. They may not be levied at a rate exceeding in each case 3 per cent., and they are to be assessed on the annual value of lands and on the annual net profits from mines, quarries, and other immovable property. No one supposes that there is any exemption for lands because they are permanently settled. As a matter of construction, why not? There are no express words cancelling any part of Regulation I of 1793, but the provisions requiring the holder of an estate or tenure to lodge a return refer one to the definition of estate which word is to mean inter alia land included under one entry in the general registers of revenue paying lands. So far as I have observed it is only incidentally that the distinction between permanent and temporary settlement is referred to. In Section 27 when the revenue or rent of a small estate is under ₹ 100 the Collector m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner himself, (iii) such occupation being necessitated by reason of his connection with the land, (iv) proximity to the land. 25. There is no mention in the Act of mining royalties or of fisheries. There is express mention of land revenue, but no hint of a distinction between temporary and permanent settlement. 26. The question then must be whether, in providing detailed and precise regulations for the assessment of a tax upon all incomes with a carefully defined protection for agricultural income, the Legislature, while basing this protection upon a consideration of the payment of land revenue, has omitted to notice or has chosen not to mention so plain and important an issue as the exemption of all income derived from permanently settled estates. Or whether on the other hand this is part of the very matter to which the Legislature has addressed itself in formulating, and, in 1922, slightly changing the elaborate definition of agricultural income which is contained in Section 2 of the Act of 1922. 27. The fundamental fact for the purposes of construction is that the hypothesis, that the statute may have been enacted without attention to the broadest fact in Indian revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention of the Assessee is correct : Chief Commissioner of Income-Tax v. Zamindar of Singampatti A.I.R. 1922 Mad. 325. The Court proceeded partly on the basis of the sanad of the Rajah, and partly on the terms of Madras Regulation XXV of 1802. It held that-there is nothing in the Income-Tax Act to indicate that the attention of its framers was ever drawn to Regulation XXV of 1802. 29. This there certainly is not; but it is a bold supposition that the Legislature dealing with exemptions on the basis of land revenue was unmindful of the Permanent Settlement. Again, it was stated in the judgment of the Full Bench: No other reason is suggested (sc. for the exemption of agricultural income from income-tax) than the equity of exempting from further burden income which had already paid toll to the State in the shape of land revenue. This applies equally whether the land is liable to ryotwari assessment, or whether Government demands have been permanently commuted as in the case of a permanently settled estate. Logically the exemption from further burden should apply to both; and it would seem that it ought to cover all sources of income which had been commuted under a permanent se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inuity and justice of English legislation, and in particular upon the presumption against enactments interfering with any person's rights without compensation. The force of the maxim varies in different circumstances as an instrument to cut down language which is clear. In the present case it does not require one to view as gravely improbable, the theory that, when the Legislature said all income...as described or comprised in Section 6 from whatever source derived...received in British India...save as hereinafter provided, it meant the full value of what it said, notwithstanding that it had before it the question of the Permanent Settlement. One would not expect it to tax and compensate nor would it seem that financial policy in 1793 and in 1886 would altogether square. The first and last thing to find is whether or not the conditions of the Permanent Settlement need or need not be taken, as in the mind of the Legislature at the time. If yea, the Legislature has expressed itself. 34. Can it be said here; that if the Legislature intended the exemption of agricultural income as its provision to meet the case of all persons assessed to land revenue, and without distinction b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for what and why is it to be deserted? For an interpretation which throws upon the income-tax authorities the duty of applying the language of Regulation I of 1793 as independent Statute of exemption? On the hypothesis that the attention of the Legislature was not called to the Permanent Settlement? Surely not. On the theory that the Legislature felt so confident in the continuity of its policy that it could, without the expenditure of a few words of saving, use the widest language without leading any one to suppose that mining royalties in Bihar would be touched? The plain fact is that there had been no continuity of policy since 1860 save as to. cesses which were now established. On the view that the Legislature cannot be supposed to have repealed the Permanent Settlement without formal confession of so fell a purpose? But when the promises of 1793 were altogether over-ridden, the Legislature had never done it in this manner; and the Act of 1886 was a victory for the Permanent Settlement in particular by reason of the express exemptions. 37. In Barker v. Edger (1898) A.C. 748, Lord Hobhousa put the matter thus: When the Legislature has given its attention to a separate subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the purpose of collecting the rent of the forests periodic leases are granted to parties (permitting them to fell timber. Rent-in-kind is realised by a share of the timber felled or by a share of the sale-proceeds thereof. The timber so felled is not subjected to any process of manufacture. The lessees stack the felled timber at places for the purpose of sale and payment of rent and for such stacking they pay rent of the site Under the name of sthaljat. 41. Here, again, the question is whether this rent is derived from land which is used for agricultural purposes under Section 2(1)(a) of the Act. The contention of the Assessee is that this rent is part of his income from the forest, that the land is used for purposes of forestry, and that forestry is within the meaning of the term agriculture as used in the Act. The learned Senior Government Pleader declines to concede that there is anything in the Income-Tax Act which exempts income derived from forestry, and contends that in any case this income is not a part of forestry income. The Commissioner of Income-Tax, Assam, in the letter of reference to this Court says: The land is used, not by the applicant for the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce is made on the application of the Assessee. The Commissioner has held that income derived from pasturage is not assessable to income-tax on the ground that it is agricultural income within Sections 2 and 4 of the Income-Tax Act. The Crown does not now dispute the correctness of the Commissioner's decision on this point with which I agree. 45. The issue in controversy which fell for determination on this Reference is whether income derived from the rental (i) of fisheries or jalkar mehals, (ii) of land let to contractors for the purpose of stacking timber, and accruing from the estates of the applicant which were permanently settled under Regulation I of 1.793 and subsequent Regulations, is assessable to income-tax. The Commissioner has determined that the income which is derived from each of these sources is liable to assessment. The applicant, however, contends that neither of these sources of income is assessable to income-tax, and he founds his contention upon two grounds : (i) that such income is agricultural income as defined in Section 2, and is exempted from assessability under Section 4(3)(viii) of the Income-Tax Act of 1922, (ii) that the imposition of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m expressing any view which I may entertain upon that vexed question because, in my opinion, income derived from sthaljat is not rent or revenue derived from land which is used for agricultural purposes, but is rent derived from land which is used for the purpose of enabling the timber contractors to carry on their trade or business see Killing Valley Tea Company v. The Secretary of State for India A.I.R. 1921 Cal. 40. In respect of such income the applicant is not entitled, in my opinion, to pray in aid the provisions of Section 2 for the purpose of claiming exemption from liability to pay income- 49. The second ground upon which the applicant bases his contention that provisions of the Income-Tax Act do not apply to the sources of income in question raises an issue of grave and far-reaching importance. The applicant urges, that, if it were to be held that provisions of the Income-tax Act are applicable to such income, the result would be that the rights and privileges which were granted and secured to him for ever as the proprietor of permanently settled estates under Regulation I of 1793, and subsequent Regulations, would pro tanto be abrogated. Now, the Regulations which c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded, whether on the plea of error or fraud or on any pretext whatever - saving of course the case of lands expressly excluded from the operation of the settlement, such as lakhiraj and thanadari lands - shall be and considered wholly illegal and invalid. 52. Lord Cave, in the case of Secretary of State for India in Council v. Maharaja of Burdwan A.I.R. 1922 PP.C. 6, observed: On an analysis of the terms of these Regulations, so far as they are material to the question now tinder consideration, it appears that, while lands included in a permanent settlement were carefully excluded from further assessment, this protection was extended only to lands actually in existence at the time of the settlement and specifically included in the estate as settled. The produce of 'every bigha' of these lands was to be assessed to revenue once for all (Regulation XIX of 1793); and even waste land producing little or no revenue to the proprietor, if included within the limits of any pergunnah, mouzah or other division of estates for which a settlement was concluded, was to be free from further assessments, on being brought into cultivation (Regulation II of 1819, Section 31). 53. Now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. Now, the charging sections of the Income-Tax Act, 1922, are Sections 3 and 4. Section 3 provides: Where any Act of the Indian Legislature enacts that income-tax shall be charged for any year at any rate or rates applicable to the total income of an assesses tax at that rate or those orates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of all income, profits and gains of the previous year of every individual, company, firm, and Hindu undivided family. 54. Section 4, Sub-section (1) says: Save as hereinafter provided, this Act shall apply to all income, profits or gains as described or comprised in Section 6, from whatever source derived, accruing, or arising, or received in British India, or deemed under the provisions of this Act to accrue or arise, or to be received in British India. 55. Section 4, Sub-section (3)(viii) excludes from the ambit of Sections 3 and 4 Agricultural income. The heads of taxable income are set out in Sections 6 to 12. 56. Section 6 provides: Save as otherwise provided by this Act, the following heads of income, profits and gains, shall be chargeable to income-tax in the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gate or modify existing rights is manifest as a necessary implication from the language us6d in the repealing statute, it matters not, in my opinion, that the existing rights are not therein expressly and specifically modified or cancelled. Lord Selborne, Lord Chancellor, refers to this canon of construction in Mary Seward v. The owner of the Vera Cruz (1884) 10 App. Cas. 59, where he observes: If anything be certain it is this, that where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered or derogated from merely by force of such general words, without any indication of a particular intention to do so. 58. Lord Justice Bowen re-stated the canon in Re Cuno Mansfield v. Mansfield (1889) 43 C.D. 12 in these words: In the construction of Statutes you must not construe the words so as to take away the rights which already existed before the Statute was passed, unless you have plain words which indicate that such was the intention of the Legislature. 59. See also Irrawaddy Flot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds are used there is a strong presumption that the Legislature did not intend to take away a particular privilege, right, or property, of particular class, unless they have done something to show that. If they have done something in such a way as would shew that that was their intention, if they have said in negative words that those rights or privileges shall all be taken away any enactment to the contrary notwithstanding, that would prevent the presumption arising at all. But in the absence of that, I think it is an intelligible principle to say that the Legislature shall not be presumed to have done anything unfair, and to have taken away this particular privilege, not having stated openly that they meant to take it away, or in such open or clear language that the persons affected might come and resist and use arguments to shew why it should not be taken away, but having simply used general words quite consistent with, their never having thought of this privilege at all. I think, my Lords, that that principle will reconcile almost all the cases; certainly it will reconcile all I have cited, and it is a good and intelligible principle. 61. See also Hawkins v. Gathercole (1854) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , however when a general income-tax was again imposed by Act II of that year, and in the subsequent Income Tax Acts passed in 1918 and 1922, no specific reference is; made to the intention of the Government to charge all lands, and no mention whatever is made that it was the intention of the Government to assess income-tax in respect of lands comprised in permanently settled estates. Why not, if the intention of the Legislature in passing the. Income-Tax Acts had been to abrogate pro tanto the exemption of such estates; from further taxation which had been-granted under the Permanent Settlement; in 1793? 64. The reason for the strange omission of the Legislature to express its alleged intention to do so in plain and express language may be that after 1865 the Legislature regarded a tax upon profits and gains derived from professional and1 industrial sources as more likely to create a productive source of revenue to the State than a tax upon income derived1 from land. Or again, assuming for the moment that the Legislature did in fact intend, by enacting the Income Tax Acts, 1886-1922, to modify the terms of the Permanent Settlement, it may be that the Legislature, construing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto which the Government of India ought not to have entered. Again, the Legislature may or may not be justified on moral or political grounds in cancelling or modifying the rights and privileges which were granted under the Permanent Settlement. Such problems are matters of policy with which the Court has no concern. The question which the Court is called upon to decide is not whether the Legislature intended to modify, or was justified in repealing, the Permanent Settlement in whole or in part, but whether by enacting the Income-Tax Act it has succeeded in so doing, For the reasons which I have stated, and having regard to the provisions of the Income-Tax Act, so far am I from being satisfied that the Legislature has thereby manifested its intention to cancel or encroach upon the exemption from further taxation which was secured to the applicant under Regulation I of 1793 and Regulation II of 1819, that I am left in doubt as to whether or not such was the-intention of the Legislature in enacting: the Income Tax Act. But no tax can be imposed except by words which are clear, and the benefit of the doubt is the right of the subject per Lord Justice Fitz Gibbon in Re Finance Act, 189 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Cess Act. By Sections 5 and 6 of Act IX of 1880, it is specifically provided: 5. From and after the commencement of this Act in any district or part of a district all immovable property situate therein, except as otherwise in Sections 2 and 8 provided, shall be liable to the payment of a road cess and a public works cess. 6. The road cess and the public works cess shall be assessed on the annual value of lands and on the annual nett profits from mines, quarries, tramways and other immovable property, ascertained respectively as in this Act prescribed. 70. I am, therefore, of opinion that (i) the income derived from fisheries and (ii) the income derived from land used for stacking timber which accrues from the permanently settled estates of which the applicant is the present zamindar cannot lawfully be charged with income-tax. Rankin, J. 71. My learned brother and I are agreed as to the course which should be taken in view of the difference of opinion between us upon the subject-matter of this Reference. In the case of Tata Iron and Steel Co. Limited v. Chief Revenue Authority, Bombay A.I.R. 1923 P.C. decided on the 12th March, 1923 by the Judicial Committee of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any special jurisdiction or power conferred or any special form of procedure prescribed by or under any other law for the time being in force. 73. When we come to read Section 98, we find that there is a provision under the heading Appeals from Original Decrees according to which on a case of difference of opinion between two Judges, the decree appealed from shall be affirmed and, to that proviso, there is a proviso that the Bench may, when they differ in opinion on a point of law refer the matter for the opinion of another Judge or Judges. Even if we take the general provisions of Section 141 and the rather less general provisions of Section 108, it does not seem to be possible to apply the provisions of Section 98 to a case under Section 66 of the Income Tax Act. There is no decree or order which is being challenged in the sense that the Court is invited to affirm or discharge it. I find, therefore, the greatest difficulty in seeing how Section 98 can be applied in such a case unless we are to solve all difficulties by endeavouring to do so cypres, and entirely by analogy. Moreover, the decision of the Privy Council in the case of Bhaidas Shivdas v. Bai Gulab A.I.R. 1921 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
