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TMI Blog1987 (10) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... he entire income of the estate situated in Kerala and owned by the trust is to be spent for religious and charitable purposes in Tamil Nadu. The agricultural income derived from the estate was exempted from levy of agricultural income-tax for the periods up to 1973-74, but from 1973-74 onwards, the income from the cardamom estate is subjected to levy of agricultural income-tax for the reason that under the amended provisions of section 4(1)(b) of the Agricultural Income-tax Act, such income spent for religious and charitable purpose outside the State of Kerala does not qualify for exemption. Section 4(1)(b) of the Act was amended by the Kerala Act 9 of 1974 which came into force on April 1, 1974. The petitioner challenges the validity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording to the petitioner, the classification of income as spent within the State and as spent outside the State has no rational basis as in both cases the income is spent for religious and charitable purposes. I do not see any merit in the contention. Section 2, clause (a), defines agricultural income as any rent or revenue or income derived from land used for agricultural Purposes. The Act has application only to such income derived from land situated within the State. Section 3 charges the total agricultural income of every person to tax under the Act subject to the exemptions contained in the Act. The exemption under section 4(1)(b) is available only to the agricultural income obtained from land within the State owned by the trust and sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain Peanut Cu. v. Pinson [1930] 282 US 499 Stated at page 501: "We must remember that the machinery of Government would not work if it were not allowed a little play in its joints." The above observation was quoted with approval by the Supreme Court in Murthy, Match Works v. Assistant Collector of Central Excise [1974] 4 SCC 428 (at page 438)and it was held that " the economic wisdom of a tax is within the exclusive province of the Legislature ". The same view is expressed in State of Gujarat v. Shri Ambica Mills Ltd. [1974] 4 SCC 656, wherein it is stated at page 678 (at p. 1314 of 1974 AIR SC) : " In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial deference to legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill tax and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. The exemption under section 10(26)(a) of the Income-tax Act, 1961, confined to income from any source within the tribal areas obtained by the members of the scheduled tribes mentioned therein was upheld by the Supreme Court in the decision in ITO v. Takin Roy Rymbai [1976] 103 ITR 82. The question before the Supreme Court was whether the exclusion of income derived by a tribal from an area outside the tribal area from the benefit of exemption was opposed to article 14 of the Constitution. Upholding section 10(26)(a) of the Income-tax Act, the Supreme Court observed it pages 88 and 89: "While it is true that a taxation law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, the Supreme Court held at page 90 : " Thus, the classification made by the aforesaid sub-clause (a) for purposes of exemption is not unreal or unknown. It conforms to a well recognised pattern. It is based on intelligible differentia. The object of this differentiation between income accruing or received from a source in the specified areas and the income accruing or received from a source outside such areas, is to benefit not only the members of the Scheduled Tribes residing in the specified areas but also to benefit economically such areas." The object of section 4(1)(b) of the Agricultural Income-tax Act confining the exemption to agricultural income spent within the State is to benefit not only the concerned religious or charita ..... X X X X Extracts X X X X X X X X Extracts X X X X
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