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TMI Blog1964 (4) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts are as follows : The respondent was the zamindar of Bhadra Estate in Balaghat District of Madhya Pradesh. His estate was known as Bahela Zamindari consisting of 78 villages. The Act came into force on January 26, 1951. Under the Act the proprietary rights of zamindary vested in the State and he became entitled to compensation in respect of the said rights in the said villages under section 8 of the Act. The compensation was to be determined in accordance with the rules contained in Schedule I to the Act. Under rule 8 of Schedule I the zamindar would be entitled to compensation at 10 times the net income. The net income would be calculated by deducting from the gross income, inter alia, the average of the income-tax paid in respect of the income from big forest during 30 agricultural years preceding March 31, 1951. On November 30, 1951, the Compensation Officer determined the compensation payable to the respondent at Rs. 2,21,330-12-6. In arriving at that figure he deducted not only the income-tax payable by the respondent but also the super-tax and surcharge payable by him. The average of the income-tax paid by him during the material 30 years was only Rs. 3,760-2-9, but i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es shall be calculated by deducting from the gross income the sums under the following heads, namely : ... (c) the average of the income-tax paid in respect of the income received from big forest during the period of thirty agricultural years preceding the agricultural year in which the relevant date falls; . . . " Rule 8(1) : " The amount of compensation in the Central Provinces and in Berar shall be ten times the net income determined in accordance with the rules herein contained. " The combined effect of the said provisions is that for the purpose of ascertaining the net income of an estate one of the deductible items is the average of the income-tax paid in respect of the income received from the big forest. That average is ascertained on the basis of the income-tax paid during the 30 agricultural years preceding the agricultural year in which the relevant date falls. The compensation payable is ten times the net income ascertained under the rules. The relevant date for the purpose of ascertaining the average is the date specified by notification by the State Government under section 3 of the Act : for instance, if the relevant date falls in the year 1951, the income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x ; its identity is maintained. A self-contained chapter deals with the charge, assessment, collection and recovery of super-tax. There are essential differences between the two taxes emanating not only from the express provisions contained in Chapter IX but also from the omission to apply the specified sections of the Act to the said tax. Successive Finance Acts also made a distinction between the two taxes. This is not the occasion to notice in detail the differences between the two taxes. It is enough to state that there are pronounced differences between the incidents of the two taxes. But two relevant differences may be noticed, namely : (i) though both the taxes are assessed on the total income of a person, the total income for the purpose of income-tax is computed on the basis of income classified under the different heads mentioned in section 6 of the Act, whereas super-tax is not concerned with the different heads, but is payable on the total income so ascertained; and (ii) while super-tax, except in a few cases, is payable by the assessee direct, the income-tax is payable by him direct as well as by deduction. While in the case of income-tax by reversing the process the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income goes up to the taxable level. In that event super-tax not payable in respect of the income from big forest will have to be deducted. That apart, the rules made under the Act do not provide for any machinery for allocating the super-tax payable on the total income among the different sources. It is said that the same difficulties are present even in the case of income-tax. Though income-tax is also a tax on the total income of an assessee, the Act, as we have indicated earlier, provides for computing the income under different heads and, therefore, it is not inappropriate to describe a particular tax as attributable to an income from a particular head, but it would wholly be inappropriate to describe that a part of the super-tax is payable in respect of an income from a particular source. The argument of Mr. Rajagopal Sastri, learned counsel for the respondent, that the 30 years mentioned in the rule takes us back to a period when there was no super-tax appears to be not sound, for, as we have stated earlier, super-tax was, payable in one form or other from the year 1917. That apart, if the income-tax takes in super-tax, the non-existence of super-tax in a particular y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll, and, in his opinion, what the testator had done was to give the widow the yearly sum of pound 2,500 clear of all deductions for which the trustees were accountable, but that did not include super-tax, which she must pay herself." The learned judge proceeded to state : " No super-tax is really payable 'in respect of' this sum." It is true that the said judgment turned upon the provisions of a particular will, but the reasoning is helpful. There, income-tax was, deductible in respect of a sum bequeathed, here income-tax is deductible in respect of the income received from big forest. As super-tax is not a charge in respect of the income from big forest, on the parity of reasoning it shall be held that the word " income-tax " used in clause (c) of rule (2) of Schedule I to the Act excludes super-tax. In Reckitt, In re : Reckitt v. Reckitt , a fund was bequeathed to trustees upon trust for investment and to pay out of the income of the investments " the annual sum of pound 5,000 free of income-tax during the life of the annuitant. The Court of Appeal held that the annuitant was entitled to have the sum paid to her without deduction on account of super-tax and that the trus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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