JUDGMENT
Kania, A.C.J.
1. This is a petition under article 226 of the Const itution of India. Although the petition was filed as a special civil application on the appellate side of this court, it has been transferred to the original side and hence has come up for hearing before us.
2. The dispute in this petition relates to an order on revision passed by respondent No. 1, who is the Deputy Commissioner of Agricultural Income-tax, Central Division, Pune. Respondent No. 2 is the Commissioner of Agricultural Income-tax and respondent No. 3 is the State of Maharashtra. Petitioner No. 1 is a registered company with its head office at Pune. Petitioner No. 2 is a shareholder and a director of the 1st petitioner. The dispute in the petition relates to the disallowance in the revision order of a claim of deduction respect of the payment of bonus made by petitioner No. 1 in respect of certain part of the bonus paid by petitioner No. 1 in the previous year relevant to the assessment year 1962-63. The relevant previous year in this case is the previous year ending on March 31, 1962. The petitioner company, at the material time, earned income from agricultural activities as well as their other business activities. Petitioner No. 1 file its return in respect of agricultural income-tax for the assessment year 1962-63 some time in 1967. That return was filed on the footing of the relevant previous year being the previous year ending on March 31, 1962. Claims for allowance of several expenses were made in this return and one of these claims was for an amount of Rs. 2,77,251 being the bonus paid by petitioner No. 1 to its staff working in its agricultural operations and part of the bonus paid to the head office staff. The Income-tax Officer concerned held that an amount of Rs. 5,44,401 paid by petitioner No. 1 as bonus to its staff engaged in its agricultural activities as well as the staff engaged at the head office was expenditure incurred for the purpose of the business. Out of this amount, the Income-tax Officer had disallowed a sum of Rs. 2,77,251 on the ground that the sum represented the bonus paid by petitioner No. 1 (referred to hereinafter as “the company”) to its agricultural staff and one-third of the bonus paid to the head office staff which could be attributed to the agricultural activity of the company. The Agricultural Income-tax Officer passed an assessment order on March 10, 1967, inter alia, disallowing the claim for deduction of the said amount of Rs. 2,77,251. The Agricultural Income-tax Officer further took the view that the company was not entitled to treat the previous year ending on March 31, 1962, as the relevant previous year and that the relevant previous year for the assessment year 1962-63 was the period July 1, 1960, to June 30, 1961. On appeal to the Appellate Assistant Commissioner, this order was set aside on the ground that the notice pursuant to which it was passed was bad in law and the Appellate Assistant Commissioner directed that a fresh assessment should be made. Pursuant to the order of the Appellate Assistant Commissioner, on April 26, 1968, the Agricultural Income-tax Officer passed a fresh order of assessment on the company. In this order, he allowed the claim of the company for the payment of bonus in the sum of Rs. 2,77,251 as claimed by the company. The Agricultural Income-tax Officer, however, rejected the claim of the company to treat the relevant previous year ending on March 31, 1962, as its previous year and took the view that the relevant previous year in the assessment of the company was the previous year ending on June 30, 1961. He also disallowed some of the other deductions claimed by the company. The company went in appeal against this order to the Appellate Assistant Commissioner. At the hearing before the Appellate Assistant Commissioner, no contention was taken by the Revenue to the effect that the said claim for bonus had been wrongly allowed by the Additional Income-tax Officer. On February 27, 1969, the said appeal was disposed of by the Appellate Assistant Commissioner who, inter alia, held that the company was not entitled to treat the year ending on March 31, 1962, as the relevant previous year but that the relevant previous year in respect of the company was the previous year July 1, 1960, to June 30, 1961. The Appellate Assistant Commissioner allowed certain other deductions which had been disallowed by the Agricultural Income-tax Officer. The company went in appeal against the order of the Appellate Assistant Commissioner before the Sales Tax Tribunal. By its order dated December 29, 1970, the Tribunal held that the company was entitled to exercise its option and treat the previous year April 1, 1961, to March 31, 1962 as the relevant previous year. The Tribunal allowed certain deductions which had been disallowed by the authorities below and also a claim for depreciation made by the company. We shall come to the order passed by the Tribunal in some detail at a later stage. It is sufficient to note here that the Tribunal directed that in view of the decision of the Appellate Assistant Commissioner on the “previous year” having been set aside, the order of the Agricultural Income-tax Officer which had been substantially upheld by the Appellate Assistant Commissioner, was also set aside and that the assessee company should be assessed afresh in the light of the findings given by the Tribunal. Pursuant to this decision of the Tribunal on October 31, 1974, the Agricultural Income-tax Officer made a fresh order of assessment on the company. In that order, as directed by the Tribunal, the company was allowed to treat the year April 1, 1961 to March 31, 1962, as the previous year relevant to the assessment year 1962-63. The Agricultural Income-tax Officer also allowed the claim for bonus amounting to Rs. 2,77,251 made by the company, but he apportioned the deduction allowable in respect of this amount in view of the change in the relevant previous year in accordance with the method adopted by him with which we are not concerned here. It may be clarified that the claim for bonus was not apportioned separately but formed a part of the apportionment of aggregate of deductions. The company preferred an appeal against this order to the Appellate Assistant Commissioner, in so far as it objected to the method of apportionment adopted by the Agricultural Income-tax Officer. The said appeal was allowed by the Appellate Assistant Commissioner on August 30, 1975. The Deputy Commissioner, respondent No. 1 herein, then issued a show-cause notice dated October 8, 1976, for suo motu revision of the order passed by the Agricultural Income-tax Officer on October 31, 1974, on the ground that the claim for bonus had been wrongly allowed in the said order and, after hearing the company, the Deputy Commissioner passed an order on November 4, 1976, revising the said order dated October 31, 1974, passed by the Agricultural Income-tax Officer and disallowed the entire claim for bonus made by the company. The ground on which this order of revision, which is at exhibit “K” to the petition, was passed is that although the amount of bonus was paid during the relevant previous year, it related to the accounting years 1957-58 and 1958-59 and hence could not be allowed as a deduction in the assessment for the previous year relevant to the assessment year 1962-63. Against the order of the Deputy Commissioner, the assessee company preferred a revisional application to the Commissioner under section 34 of the said Act. The Commissioner, however, dismissed the revision application and confirmed the order passed by the Deputy Commissioner. The order of the Commissioner is at exhibit “M” of the petition. It is these orders of the Deputy Commissioner and the Commissioner which are challenged in this petition.
3. Mr. Joshi, learned counsel for the petitioners, has urged several contentions before us. The first submission made by him was that the order of revision which was passed on November 4, 1976, is barred by limitation, because it was passed beyond the period prescribed under section 41(2) of the Maharashtra Agricultural Income-tax Act (referred to hereinafter as “the said Act”). The next submission urged by Mr. Joshi was that the order of assessment passed by the Agricultural Income-tax Officer on April 26, 1968, had merged with the order passed by the Sales Tax Tribunal on December 29, 1970, and hence it could not be subjected to the revisional powers of the Deputy Commissioner and the order in revision passed by the Deputy Commissioner was beyond its jurisdiction. The third submission was that, in effect, what the Deputy Commissioner had sought to do was to revise the order of the Sales Tax tribunal, which he had no jurisdiction to do. The fourth and the last submission made by Mr. Joshi was that the revisional order was passed on an erroneous view of law and hence was liable to be set aside. It was submitted by Mr. Joshi that as the payment of bonus had been made during the relevant previous year, the company was entitled to claim a deduction in respect of the same in the aforesaid relevant year and that claim could not be disallowed merely on the ground that it pertained to the income of the year 1957-58 or 1958-59.
4. The submission of Mr. Jetly, on the other hand, are to the effect that what the Deputy Commissioner revised was the order passed by the Agricultural Income-tax Officer on October 31, 1974, and that, as the show-cause notice had been issued within two years of the passing of the said order, the revisional order was not barred by limitation. It was submitted by him that the Deputy Commissioner had the jurisdiction to pass the revisional order because he had jurisdiction to revise the orders passed by the Agricultural Income-tax Officer, who was an officer subordinate to him. It was urged by Mr. Jetly that the revisional order, in so far as it had disallowed the claim of bonus, had taken the correct view in law.
5. Before we go into the merits of these contentions, we propose to refer to or set out the relevant provisions of the Maharashtra Agricultural Income-tax Act. Sections 4 and 5 of the said Act deal with the charge of agricultural income-tax. Sub-section (1) of section 4 provides that agricultural income-tax shall be charged at the rate specified in sub-section (2) of section 4 for each financial year, in accordance with and subject to the provisions of the Act, in respect of the total agricultural income of previous year or previous years of every person. The relevant part of section 5 of the said Act runs thus :
“Subject to the provisions of this Act, the total agricultural income of any previous year of any person comprises all agricultural income derived from land situated within the State and received by him within or without the State, including any land revenue or any local or education cess payable in respect of such land under any law for the time being in force in the State, but does not include……”
6. Section 2 of the said Act is the definitions section. Sub-section(1) of that section defines agricultural income. Sub-section (13) of section 2 runs as follows :
“‘received’ used with reference to the receipt of agricultural income by a person includes –
(a) receipt by an agent or servant on behalf of a principal or master, respectively,
(b) receipts by other persons which are deemed to be his receipts under the provisions of this Act,
and also includes receipts of agricultural income by way of adjustment of accounts with any other person.”
7. Section 8 deals with the computation of tax and allowances under the head “Agricultural income from agriculture”. Relevant portion of section 8 runs as follows :
“Agricultural income-tax shall be payable by an assessee under the head ‘Agricultural income from agriculture’ in respect of all agricultural income derived from land referred to in sub-clause (b) of clause (1) of section 2 included in his total agricultural income and received by him in the previous year, subject to the following allowances, namely : – ……
(9) any other expenditure of the assessee (not being in the nature of capital expenditure or personal expenditure) laid out wholly and exclusively for the purpose of deriving agricultural income from such land”.
8. Very briefly stated, under sub-section (5) of section 20, the Deputy Commissioner is entitled to exercise the powers conferred on the Commissioner in the area within his jurisdiction, save as set out therein. Section 23 deals with “assessment”. Sub-section (1) to (4) of that section deal with assessment pursuant to a return and sub-section (5) deals with best judgment assessment or assessment of a person who fails to make a return as required in law, or fails to comply with the terms of a notice issued under sub section (5) of section 22 or having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 22 of the Act and so on. Section 32 deals with hearing of appeals before the Appellate Assistant Commissioner. It is enough to note that under sub-section (4) of that section, the Appellate Assistant Commissioner is given the power, inter alia, on an appeal by the assessee, to confirm, reduce, enhance or annul the assessment. Section 33 deals with appeals to the tribunal Sub-section (4) of section 33 gives to the Tribunal to pass such orders in an appeal to the Tribunal as the Tribunal deems fit, and sub-section (5) provides that, except as provided in section 39 which deals with reference to this court, the orders passed by the Tribunal on appeal shall be final. Section 39 deals with reference and statements of case to be made by the Tribunal to the High Court. Sub-section (1) of section 41 deals with reassessment on the ground of income escaping assessment. Very briefly, it confers powers on the Agricultural Income-tax Officer, that, if he discovers that agricultural income chargeable to agricultural income-tax has escaped assessment or has been underassessed or has been subjected to excessive relief under the said Act, the Agricultural Income-tax Officer may reopen the assessment and tax the income. Sub-section (2) of section 41 provides for the time-limits within which orders of assessment can be made. We shall refer to the sub-section more particularly hereafter. Section 34 deals with the powers of revision vested in the Commissioner. Sub-section (1) of section 34 read as follows :
“(1) The Commissioner may of his own motion call for the record of any proceeding under the Act in which an order has been passed by any authority subordinate to him and may make such inquiry or cause such inquiry to be made an, subject to the provision of this Act, may pass such order thereon, as he thinks fit; and if the order is prejudicial to the assessee, he shall, before passing any such order, give the assessee an opportunity of being heard :
Provided that the Commissioner shall not revise any order under this sub-section if –
(a) where an appeal against the order lies to the Appellate Assistant Commissioner or to the Tribunal, the time within which such appeal may be made has not expired; or
(b) the order is pending on an appeal before Appellate Assistant Commissioner or has been made the Subject of an appeal to the Tribunal; or
(c) the order has been made more than two years previously.”
9. We now propose to consider the question as to whether the Deputy Commissioner had jurisdiction to revise the aforesaid order of assessment passed by the Agricultural Income-tax Officer on October 31, 1974. In this regard, the admitted position is that the power of revision can be exercised by the Commissioner or the Deputy Commissioner only in respect of orders passed by officers subordinate to the Commissioner. It is again common ground, and indeed beyond doubt, that an Agricultural Income-tax Officer is subordinate to the Commissioner, but the Tribunal is certainly not subordinate to the Commissioner or any other authority under the provisions of the said Act. If an authority were required for that proposition, reference may be made to the decision of this court in CIT v. Tejaji Farasram Kharawala [1953] 23 ITR 412. In that case, it was held that section 33B of the Indian Income-tax Act, 1922, does not confer : upon the Commissioner power to revise the orders of the Appellate Assistant Commissioner or the Appellate Tribunal. Although this decision has been rendered under the provisions of the Indian Income-tax Act, 1922, it is agreed by counsel that the principles laid down in that case is also applicable to the powers conferred under the said Act, namely, the Maharashtra Agricultural Income-tax Act, 1962. Hence, in considering the question, what we have to see is whether the order of October 31, 1974, is a completely fresh order passed by the Agricultural Income-tax Officer concerned, in which case it would be subject to the revisional powers of the Commissioner or the Deputy Commissioner, or whether it is a consequential order passed by the Agricultural Income-tax Officer in the implementation of the order of the Tribunal dated December 29, 1970. In order to consider this question, what we have to examine is whether the said order of the Tribunal directs a completely fresh assessment, as submitted by Mr. Jetly, or whether it directs an assessment pursuant to the directions of the Tribunal and to implement the same. In this regard, we may refer to the decision of a Division Bench of this court in CIT v. Indo-Aden Salt Works Co. [1959] 36 ITR 429. In that case, for the assessment year 1950-51, the Income-tax Officer allowed the claim of the assessee firm for relief under section 25(4) of the Indian Income-tax Act, 1922, on the ground that there was a succession only in so far as it related to income-tax but declined to grant any relief in respect of super-tax as super-tax had not been paid by firm either for 1920-21 or 1921-22. The appeal preffered by the assessee firm to the Appellate Assistant Commissioner was dismissed without going into the merits on the ground that the firm was not registered. On a further appeal to the Appellate Tribunal, the Appellate Tribunal reversed the order of the Appellate Assistant Commissioner but, on the request of counsel for the firm not to dispose of the question about super-tax as the assessee wanted to lead certain evidence before the Appellate Assistant Commissioner in that regard, the Tribunal passed an order, the relevant portion of which ran as follows :
“…… I would, therefore, vacate the Appellate Assistant Commissioner’s order and restore the appeal with the direction that it be disposed of on its merits.”
10. When the matter went back to the Appellate Assistant Commissioner, he not only inquired into the facts relating to the relief in respect of super-tax but went further, suo motu, into the question whether there was a discontinuance of the business earlier in 1933, and held there was discontinuance of business and, therefore, no relief could be granted to the assessee under section 25(4); and after giving notice of enhancement, withdrew the order for relief even in respect of income-tax. It was held by the Division Bench of this court that the order of the Appellate Tribunal, when read in the proper context, restricted the scope of enquiry by the Appellate Assistant Commissioner only to the question of merits affecting the claim of the assessee for relief from super-tax and, therefore, the Appellate Assistant Commissioner had no jurisdiction to issue the notice of enhancement and to withdraw the relief in respect of income-tax granted by the Income-tax Officer under section 25(4). In our view, the principles laid down by the division Bench in this case are clearly applicable to the case before us.
11. We have set out the facts earlier. The appeal preferred by the assessee company to the Tribunal was in respect of certain allowances which had been disallowed by the Agricultural Income-tax Officer as well as the Appellate Assistant Commissioner and against the order of the Appellate Assistant Commissioner in so far as it rejected the claim of the assessee company to treat the previous year ending March 31, 1962, as the relevant previous year. The judgment of the Tribunal which we have carefully perused shows that the Tribunal went into the question of each of the claims disallowed by the Appellate Assistant Commissioner and the option given to the assessee company in relation to the determination of the previous year. The Tribunal has set out in the opening portion of its judgment the contention which were raised by the assessee before the Tribunal. These contentions were in respect of the exercise of option for fixing the relevant previous year, the disallowance of expenses on guest house, on trucks and cars and the disallowance of the claim for deduction of licence fee and the share of profits paid by the assessee to the Government as per the agreement with the Government. There was also a controversy in respect of the claim for depreciation made by the company which had been disallowed. Each of these claims for deduction has been gone into by the Tribunal and some have been directed to be allowed. The Tribunal then came to the question about the fixation of the relevant previous year and the Tribunal took the view that the assessee company had the option in respect of fixing its previous years, as its accounts were maintained from 1st July to 30th June, and further held that the assessee company was entitled to exercise the option and to have the year April 1, 1961, to March 31, 1962, as the relevant previous year in respect of the assessment year 1962-63. The concluding portion of the judgment of the Tribunal to which we have referred earlier clearly shows that the assessment orders passed by the authorities below were all on the footing of the relevant previous year relating to the assessment year 1962-63 being the previous year July 1, 1960, to June 30, 1961. The Tribunal held that the year ending on March 31, 1962, should be treated as the relevant previous year for the said assessment year. As a result of this, the income of the assessee had necessarily to be recalculated as also the allowances and deductions. The Tribunal has, in terms, observed as follows :
“As the view of the lower authorities on the question of ‘previous year’ is being set aside, the orders of assessment made by the Agricultural Income-tax Officer in all the five cases and upheld by the Appellate Assistant Commissioner will be set aside and it will be directed that the appellant company be assessed afresh in the light of the findings given above.”
12. A fair reading of this order clearly shows that what the Tribunal had directed was not a fresh assessment as such but a fresh assessment in order to carry out a directions given by the Tribunal, namely, to grant the allowances and deductions which had been allowed by the Tribunal and to recalculate the income and the deductions in accordance with the earlier orders of the Appellate Assistant Commissioner subject to the modification as directed by the Tribunal. The order passed by the Agricultural Income-tax Officer on October 31, 1974, in our opinion was not a fresh order of assessment as such but an order implementing the directions of the Tribunal as set out above. If the order of the Agricultural Income-tax officer is regarded as an order implementing the direction of the Tribunal, as we regard it, it is clear that the Deputy Commissioner had no jurisdiction to revise this order.
13. There is also one further indication which leads to the conclusion that the order of October 31, 1974, was not a fresh order of assessment but an order implementing the directions of the Tribunal. Sub-section (2) of section 41 runs as follows :
“No order of assessment under section 23 or of assessment or reassessment under sub-section (1) shall be made after the expiry, in any case in which section 9 or clause (c) of sub-section (1) of section 29 applies, of eight years and, in other cases, of five years from the end of the year in which the agricultural income was first assessable :
Provided that nothing contained in this sub-section shall apply to a reassessment made in pursuance of an order made under section 32, section 33, section 39 or section 40.”
14. The order of October 31, 1974 passed by the Agricultural Income-tax Officer can either be regarded as an order under section 23, passed pursuant to the return filed by the assessee, or an order under section 33. We fail to see under what other section the order could have been passed and no such provision has been pointed out to us. If it is regarded as an order under section 23 or even under sub-section (1) of section 41, the bar of limitation under sub-section (2) of section 41 would clearly apply. However, if it is regarded as an order under section 33, the bar of limitation would not apply at all. This would support our conclusion that the order dated October 31, 1974, is an order reassessment under section 33 implementing the directions of the Tribunal. Quite apart from this, as we have already pointed out, on a fair reading of the order of the Tribunal, it is clear that the order dated October 31, 1974, passed by the Agricultural Income-Tax Officer is an order passed in implementation of the order of the Tribunal passed in the said appeal. It is true that against this order there was an appeal preferred by the company but that appeal was merely based on the ground that, according to the company, the Agricultural Income-tax Officer had made a mistake in implementing the directions given by the Tribunal and did not affect the finality given to the orders of the Tribunal. We may clarify in this regard that if the Agricultural Income-tax Officer makes any mistake in carrying out the directions given by the Tribunal, to that extent his order would be liable to be revised by the Deputy Commissioner or the Commissioner. However, it is clear that in allowing the claim of the company for bonus, the Agricultural Income-tax Officer was, in fact, implementing the direction of the Tribunal, and was not violating any of the directions given by the Tribunal, and hence the order was not liable to be revised.
15. We may mention that the view which we have taken also finds support to some extent in the decision of a Division Bench of the Andhra Pradesh High Court in Sri Lakshmi Satyanaryana Castor Oil Mills v. Dy. Commr of C.T. [1977] 39 STC 100, where it was held that under the provisions of the Andhra Pradesh General Sales Tax Act, 1957, the Commercial Tax Officer was bound to carry out the directions given to him by the Appellate Assistant Commissioner and so long as the order of the Appellate Assistant Commissioner was not set aside, it could not be said that there was any irregularity or illegality committed by the Commercial Tax Officer in passing the order in question implementing the order of the Appellate Assistant Commissioner. As a result of the amendment of the Act with retrospective effect, the illegality, if any, would be in the order of the Appellate Assistant Commissioner, but it was not revisable by the Deputy Commissioner, after the lapse of four years and the orders of the Appellate Assistant Commissioner had become final. The Deputy commissioner had, therefore, no jurisdiction to initiate revision proceedings against the order of the Commercial Tax Officer who was not acting illegally or irregularly in carrying out the directions of the Appellate Assistant Commissioner. We may mention that the question there was in respect of an exemption claimed by a dealer in groundnuts from tax under the Andhra Pradesh General Sales Tax Act on the ground that the goods were sold in the course of inter-State trade. That claim was rejected by the Commercial Tax Officer but allowed by the Appellate Assistant Commissioner who remanded the matter to the assessing authority for refund of the tax admissible after scrutinising the transactions. On remand, the Commercial Tax Officer by his order dated June 30, 1972, granted refund of tax on a certain turnover. Subsequently, section 6 of the Andhra Pradesh Act was amended with retrospective effect from October 1, 1958. In view of the amendment, it was possible that the claim for exemption made by the petitioner might not have been admissible. It was on these facts that the aforesaid conclusions were arrived at.
16. In Madras Rubber Factory Ltd. v. State of Tamil Nadu [1978] 41 STC 55 (Mad), an order of assessment passed by the Joint Commercial Tax Officer passed on December 26, 1969, was revised by the Deputy Commissioner, in exercise of his powers under section 32 of the Tamil Nadu General Sales Tax Act, 1959. That order was given effect to by the Joint Commercial Tax Officer. The order of the Deputy Commissioner was passed on September 14, 1971, and the order of the Joint Commercial Tax Officer implementing the same was dated September 22, 1971. In order to rectify an error found in the original order of the Joint Commercial Tax Officer dated December 26, 1969, and not in the order of the Deputy Commissioner dated September 14, 1971, the Board of Revenue by its order dated September 21, 1976, purporting to exercise its suo motu powers of revision under section 34, revised the order of the officer dated September 22, 1971, whereby the order of the Deputy Commissioner was implemented. It was held that the consequential order dated September 22, 1971, was not liable to be revised by the Board and the Board had no jurisdiction to revise that order.
17. The aforesaid decisions cited by us support the view that the Deputy Commissioner or the Commissioner can have no jurisdiction to revise an order passed by an Agricultural Income-tax Officer in implementation of the orders of the Tribunal.
18. We come next to the question as to whether the revisional order of the Deputy Commissioner dated November 4, 1976, discloses any error of law and is liable to be interfered with on that ground. In that connection, we find that the Deputy Commissioner has taken the view that the bonus in question paid by the assessee company to the workers engaged in its agricultural operations and the head office staff related to the income of the company for the accounting years 1957-58 and 1958-59 and hence it was not liable to be allowed as deduction in the assessment for the assessment year 1962-63 which corresponded to the relevant previous year ending on March 31, 1962. In this connection, it was sought to be urged by Mr. Jetly that there is nothing to show that the amount in question was paid as bonus by the company during the relevant previous year April 1, 1961, to March 31, 1962, although it must have been paid in the accounting year July 1, 1960, to June 30, 1961, which had earlier been taken by the taxing authorities as the relevant previous year, and it was urged by him that the claim of the assessee for deduction was liable to be rejected on that ground. There is no substance in this connection. By the order of the Tribunal passed on December 29, 1970, the Tribunal had directed that adjustments in the assessment should be made on the footing of the relevant previous year being April 1, 1961, to March 31, 1962, and the Agricultural Income-tax Officer in implementing that order allowed the deduction for proportionate bonus claimed by the assessee company. This would clearly lead to the inference that the Agricultural Income-tax Officer must have found that the bonus was paid during the relevant previous year ending on March 31, 1962.
19. The next submission of Mr. Jetly which was his main submission was that, under the provisions of the Agricultural Income-tax Act, in order that the payment or disbursement might be allowed as a deduction, it was not only necessary that the payment should be made during the relevant previous year, but it must also relate to the income of the relevant previous year. It was urged by him that since the bonus paid related to the income of the accounting years 1957-58 and 1958-59, it could not be allowed as a deduction in the assessment for the assessment year 1962-63. We find that this submission must be negatived in view of the principles laid down by the Division Bench of this court in Commr of Agrl. I.T. v. Phalton Sugar Works Ltd. [1980] 121 ITR 920. In that case, the Division Bench has, after citing the relevant provisions of the said Act, observed as follows (at pages 937 and 938) :
“Further, under section 4, the agricultural income-tax is to be charged in accordance with and subject to the provisions of the Act. The total agricultural income referred to in section 5 is to comprise of agricultural income derived from lands situate within the State and received by the assessee within or without the State. Thus, if we read sections 4 and 5 together bearing in mind the definition of ‘total agricultural income’ given in clause (15) of section 2, the agricultural income-tax is levied not on the total agricultural income derived from land but on the total agricultural income derived from land within the State and received by the assessee within or without the State”.
20. In regard to the claims for allowances, the Division Bench held as follows (at pages 939 and 940) :
“We have set out the relevant provisions above, but when we look at the whole section (section 8) we find that, apart from the case of depreciation which is covered by sub-section (6) and (7) of that section and apart from sub-section (9), every other sub-section speaks of the expenditure incurred in the previous year. The very wording of sub-section (9) would show that it too refers to the expenditure incurred in the previous year. That sub-section uses the expression “any other expenditure”. Further, it refers to expenditure which is not in the nature of capital or personal expenditure, that is, it is revenue expenditure of a nature different from that specified in the earlier sub-sections which deal with revenue expenditure. It is obvious that revenue expenditure for a period prior to the previous year cannot be brought into the previous year in order to reduce the taxable income of the previous year. According to the method adopted by the assessees, if in their first accounting period, the largest part of expenditure was incurred in the fist half and a proportionately smaller one in the second half, one-half of the total expenditure should be deducted from their income. Under the Act, however, they are entitled to claim a deduction only on the expenditure incurred in that half of their first accounting period as also of their second accounting period which falls within the previous year.”
21. In order to clarify the observation cited above, it will have to be noted that the relevant previous year in that case was held to be the previous year from April 1, 1961, to March 31, 1962, as in the case before us. The returns filed by the assessee comprised halves of two accounting periods, namely, the second half of the accounting year October 1, 1960, to September 30, 1961, and the first half of the accounting year October 1, 1961, to September 30, 1962.
22. It has been held in the aforesaid judgment that under section 8, the assessee is liable to pay agricultural income-tax in respect of all agricultural income derived from land by any of the activities referred to in section 2(1)(b) included in his total agricultural income and received by him in the relevant previous year subject to the allowances permissible under section 8 of the Act. It appears to us that, on a fair interpretation of these observations, they could only lead to the conclusion that the revenue expenditure which is of a type allowable as a deduction under the provisions of section 8 can be claimed as a deduction in the assessment year in question, provided it is incurred in the relevant previous year. It is not required that the expenditure must necessarily relate to the earning of the income in that previous year. On an analysis of the said decision as well as the provisions of the said Act, it is clear that this would be the correct position. As has been pointed out, in order to be allowable as a deduction under sub-section (9) of section 8, the expenditure in question must be incurred in the relevant previous year. Again, expenditure must be one which is incurred for the purpose of deriving agricultural income from the land and must not be in the nature of capital expenditure or personal expenditure. There is nothing in the plain language of sub-section (9) which would impose a condition that in order to be allowable as a deduction, the expenditure must have been incurred in order to earn the income of the relevant previous year or must relate to the income of the previous year, and to import such requirement into the provisions of Maharashtra Agricultural Income-tax Act and particularly into the provisions of sub-section (9) of section 8 thereof would lead to the result that in a case like this, even if an assessee has incurred the revenue expenditure wholly and exclusively for the purpose of earning agricultural income, he would be debarred from claiming it as a deduction in any year. This could not have been the intention of the Legislature and there is no reason why we should stretch the language of sub-section (9) of section 8 to bring about such an unjust result. We may observe that as far as payment of bonus is concerned, calculation of the bonus to be paid or the determination of the quantum of bonus can only be made after the end of the year in which the income in question was earned and hence, if we take a view that the assessee can claim the deduction for the payment of bonus only in the assessment year in whose relevant previous year the bonus was paid, no assessee could succeed in getting such a deduction. This would be obviously unjust and we see no reason to adopt a construction which would bring about such a result. Thus, we find that the revision order passed by the Deputy Commissioner discloses an apparent error of law in the construction of the provisions of sub-section (9) of section 8 and is liable to be quashed and set aside on that ground.
23. In view of what we have held earlier, the assessee-company must succeed in the writ petition and it is not necessary to consider the other contention raised by Mr. Joshi. However, as these contentions were urged at some length by Mr. Joshi, we briefly state our views in respect of the same.
24. One contention urged by Mr. Joshi was to the effect that the revisional order passed on November 4, 1976, was beyond time, as it was passed more than two years after the original order of assessment, which was passed in 1968. In our view, there is no substance in this contention. The revisional order clearly purports to revise the order of the Income-tax Officer dated October 31, 1976, and the show-cause notice for suo motu revision was issued within two years of that order. Apart from this, there is no question of the Deputy Commissioner attempting to revise the original order of the Agricultural Income-tax Officer dated April 26, 1968, because that order had already been set aside by the Sales Tax Tribunal. The contention of Mr. Joshi must, therefore, be rejected.
25. The next contention of Mr. Joshi was that the order of the Agricultural Income-tax Officer date April 26, 1968, merged with the order of the Sales Tax Tribunal passed on December 29, 1970, and hence the Deputy Commissioner had no jurisdiction to revise the same. This argument again proceeds on a misconception. In the first place, the Deputy Commissioner did not purport to revise the order dated April 26, 1968, at all and, in the second place, that order having been set aside by the Tribunal, we fail to see how there can be any question of merger of that order with the order of the Sales Tax Tribunal. That contention must also, therefore, fail. We may mention that, although a large number of authority were cited by either in respect of the two contentions mentioned hereinabove, we find it utterly unnecessary to refer to any of them because none of them was, in our view, relevant.
26. In the result, the petitioner succeeds. The order in revision dated November 4, 1976, passed by respondent No. 1 and the order of the Commissioner dated February 14, 1978, which confirms the order of the Deputy Commissioner dated November 4, 1976, will have to be quashed and set aside.
27. Bank guarantee given by the petitioner to stand cancelled.
28. The respondents to pay to the petitioners the costs of the writ petition.
