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TMI Blog1944 (2) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ng possession of the estate after litigation which stated in 1921 and was contested up to the Privy Council. The annuity in question is payable under para. 8 of the will which runs as follows : After my death, my said affectionate brother Jagadish Chandra Deo Dhabal Deb (i.e., the appellant) shall pay ₹ 3,000 a year at the rate of ₹ 250 a month to each of my said affectionate grandsons Dhanapathi (i.e., the plaintiff-respondent) and Radhika Prasad Singha, till my debts are not cleared off. And when the debts are cleared off, they shall each be paid ₹ 12,000 a year at the rate of ₹ 1,000 a month with their sons, grandsons and other male descendants, from generation to generation. The said sum of ₹ 24,000 shall be a charge that is encumbrance on my Dhalbhum zamindari. The only other paragraph in the will to which it is necessary to refer is para. 2 which runs as follows : Whatever right and title I have in my zamindari Ghatsila alias Dhalbhum and other immovable properties Raj Sultantant which I will leave behind, shall, after my death, absolutely devolve according to the under-mentioned provisions upon Raja Jagdish Chandra Deo Dhabal Deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin the definition of agricultural income, can be definitely found out. In this Court, after some discussion, it was agreed by counsel on both sides that for the purpose of this suit and appeal, it should be taken that the income of the Dhalbhum Estate is half agricultural and half non-agricultural income. The agreement was recorded in the order of the Court dated 2nd February 1944. This agreement is strictly limited to the suit and appeal, and is, therefore, not to be taken as any admission on either side as to the real proportion between the agricultural and the non-agricultural income of the estate, should the matter arise for decision in future in any proceedings in Court or otherwise. The learned Munsif took the view that the appellant in Court or otherwise assessed to agricultural income in respect of the amount payable to the plaintiff-respondent as annuity. I doubt whether his view on that point is correct. But that matter is not directly before the Court and it is unnecessary to express a definite opinion on the point. The learned Subordinate Judge took the view that the defendant, now appellant, was at liberty to pay the allowance due to the plaintiff either from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a charge on the property thereby transferred. The Judicial Committee agreeing with a Full Bench of this Court held that the annual payment was no agricultural income. They stated : It is not rent or revenue derived from land. It is money payable under a contract imposing a personal liability on the covenantor, the discharge of which is secured by a charge on land. Mr. P. R. Das rightly points out that the present cast is clearly distinguishable from that case which came before the Judicial Committee. In the present case the plaintiffs right to the annuity is not based on any personal covenant of the appellant and the direction in the will granting the annuity could not be considered as a personal covenant of the testator. There is one decision of the Privy Council which appears to have an important bearing on the question now before us. This is the case in Bejoy Singh Dudhuria v. Commissioner of Income Tax, Calcutta. The facts of that case were somewhat different from those now before us and it will be necessary to consider whether changes in the law which have taken place since the pronouncement of the Judicial Committee made in that case have altered the principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment of the learned Chief Justice and approved of them. The first of those portions given in quotation marks, read with their Lordships later decision that the sums paid by the appellant before them to his step-mother were not income of the appellant at all, clearly shows that if the appellant had received his various properties, securities, and businesses under a bequest from his father upon the term that those assets were charged with an annuity for the maintenance of the widow, such an annuity would not have been the income of the appellant at all. The other portion quoted from the judgment of the learned Chief Justice distinguished the case from one of a charge created by the Raja for the payment of debts which he has voluntarily incurred. The facts of the case now before us fit in exactly with the hypothetical case cited by the learned Chief Justice in his justice in his judgment, and it will, therefore, appear that the law applicable to the present case is the law applied by their Lordships of the Judicial committed in Bejoy Singh Dudhuria v. Commissioner of Income Tax, Calcutta. The case reported in Gopal Saran Narain Singh v. Commissioner of Income Tax, Bihar O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are now not directly concerned with the provisions of the Income Tax Act but with the provisions of the Bihar Agricultural Income Tax Act, 1938, and, in particular, with the terms of Section 11 thereof. Section 11(1) starts with the words save as provided in Sections 9, 12 and 13, but Sections 9 and 13 have no application to the facts of the present case. Section 12 runs as follows : Where any person holds land, from which agricultural income is derived, as a common manager appointed under any law for the time being in force or under any agreement or as receiver, administrator or the like on behalf of persons jointly interested in such land or in the agricultural income derived therefrom, the aggregate of the sums payable as agricultural Income Tax by each person on the agricultural income derived from such land and received by him shall be assessed on such common manager, receiver, administrator or the like, and he shall be deemed to be the assessee in respect of the agricultural Income Tax so payable by each such person and shall be liable to pay the same. It was not suggested on behalf of either party in this appeal that the appellant is holding the Dhalbhum estate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y reason of that income. In the absence of any such restrictive explanation it might be urged, for example, that a lessee holds land partly for his own benefit and partly for the benefit of his landlord. I, therefore, see no reason to interpret the word portion in the explanation in any restricted sense. There appears to be no reason why a person entitled to a fixed sum out of fluctuating agricultural income should be exempt from agricultural Income Tax thereon while a person entitled to a fluctuating share would be liable to such a tax. Section 11(1) directs that if a person holds land from which agricultural income is derived partly for his own benefit and partly for the benefit of the beneficiaries, agricultural Income Tax shall be assessed on the total agricultural income derived from such land, and it states that the agricultural Income Tax so payable shall be assessed on the person holding such land and he shall be liable to pay the same. He is, therefore, the assessee as defined in Section 2 (e) of the Act. Nothing in Section 11 or any other section of the Act, however, says that the total agricultural income derived from such land is or is to be deemed the income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rather than the other and, therefore, the entire income of the estate of both kinds should be treated as a proof from which the legatees, that is, the appellants and the annuitants, may draw income for themselves, and none of them is entitled to take more than his share of a particular kind of income. In this view whatever is the share of the total Dhalbhum Zamindari income, which is agricultural income, the same share of the annuity must be considered agricultural income. For the purpose of this appeal, without reference to the future, the parties have agreed that that should be taken as one half. The appellant is, therefore, entitled to deduct one half of the agricultural Income Tax which would be payable or has been paid on the annuity in question in this suit. I will repeat that so far as the extent of the share to be treated as agricultural income is concerned, this decision will not bind either party for the future or in respect of any installments of the annuity which became payable after the date of suit. The principle which I have adopted in apportioning the agricultural Income Tax appears to be in accordance with the practice adopted by the Income Tax authorities in ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to alter the entire nature of the income of the estate, it seems to follow that he has the power to alter the nature of the income payable to the plaintiff-respondent. As already mentioned, the parties to this appeal did not raise any question about Section 12 of the Bihar Agricultural Income Tax Act, 1938, and have proceeded on the basis that if the income in question is agricultural income it is taxable under Section 11. It may perhaps make a difference to the actual amount of tax payable which of the two sections is applicable and nothing in my judgment is to be taken as deciding under which of those two sections the income is in fact taxable, a matter which could only be determined by the agricultural Income Tax authorities subject to any reference which may be made to the High Court. The learned Additional Subordinate Judge, who took a different view, relied for his decision on the cases reported in Gopal Saran Narain Singh v. Commissioner of Income Tax, Bihar and Orissa, Commissioner of Income Tax, Bihar and Orissa v. Dhaneshwardhar Misra, Lakshmi Narasayamma Rao v. Commissioner of Income Tax, Madras, and In re Saltanat Begum. The first of these cases is the case tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct embodied in the decree. If that decision meant anything further than this, I should consider that it was inconsistent with the decision of the Privy Council in Bijoy Singh Dudhuria v. Commissioner of Income Tax, Calcutta. The case in Sundrabai v. Commissioner of Income Tax, Bombay, was a decision of the year 1931. It was then held that the monthly maintenance allowance and the annual value of a rent-free bungalow given to a Hindu widow under a decree of Court not specifying whether the allowance was payable out of the corpus or income of her husbands estate consisting inter alia of agricultural lands were assessable to Income Tax. That case also I find difficult to reconcile with the decision of the Privy Council in Bijoy Singh Dudhuria v. Commissioner of Income Tax, Calcutta. As a result of my conclusions and the agreement between the parties regarding the proportion between agricultural and non-agricultural income, the defendant-appellant is entitled to deduct one-half of the amount which he claimed to deduct as the plaintiffs share of agricultural Income Tax. This suit has really been contested by the defendant-appellant as a test case regarding his liability to the annuit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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