PETITIONER: MAHANTH RAMSWAROOP DAS Vs. RESPONDENT: THE STATE OF BIHAR. DATE OF JUDGMENT: 11/01/1961 BENCH: SHAH, J.C. BENCH: SHAH, J.C. KAPUR, J.L. HIDAYATULLAH, M. CITATION: 1961 AIR 1147 1961 SCR (3) 405 ACT: Agricultural Income-tax-Estate in management of Court Receiver-Owner if liable to be assessed to tax for such period-Bihar Agricultural Income-tax Act, XXXII of 1948, ss. 2, cl. (m), 3 and 13. HEADNOTE: The appellant was the Mahant of the Asthal Estate in Bihar which was in the management of a Receiver appointed by the Civil Court in a suit relating to the estate. On appeal the question that arose for decision in this Court was whether the appellant Mahant was liable to be assessed under the Bihar Agricultural Income-tax Act, 1948, to pay agricultural income-tax for the year in which the estate was in the management of the Court Receiver. Held, that the income though collected by the Receiver was the income of the appellant. By virtue of the provisions of ss. 2, cl. (m) and 13 of the Bihar Agricultural Income-tax Act it was open to the taxing authorities to treat the Receiver as the assessee because he held the property from which income was derived, but on that account the income in the hand of the owner was not exempt from liability to assessment of tax. Section 3 of the Act provides for charging agricultural income of every person " as defined in s. 2, cl. (m) which includes a receiver and S. E3 merely provides a machinery for recovery of tax from "Persons" including receivers and is not by itself a charging section. JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No.449 of 1958.
Appeal by special leave from the judgment and decree dated
August 7, 1956, of the Patna High Court in Misc. Judicial
Case No. 604 of 1953.
406
D. P. Singh, for the appellant.
S. P. Varma, for the respondent.
1961. January 11. The Judgment of the Court was delivered
by
SHAH, J.-The High Court of Judicature at Patna answered in
the affirmative the following question which was submitted
by the Board of Agricultural Income-tax, Bihar, under s.
28(3) of the Bihar Agricultural Income-tax Act, XXXII of
1948-hereinafter referred to as the Act:
” Whether, in the facts and circumstances of
the case, the petitioner could be legally
assessed for the income of the Estate in 1355
Fasli when the Estate was in the hand of the
Receiver ? ”
With special leave under Art. 136 of the Constitution, this
appeal is preferred against the order of the High Court.
The appellant is the Mahant of the Asthal Estate, Salauna,
in the District of Bhagalpur in Bihar. In a suit concerning
that estate, a Court Receiver was appointed by the First
Class Subordinate Judge, Monghyr, to manage the estate. The
Receiver functioned till sometime in December, 1949, and
under the order of the Subordinate Judge he handed over
charge of the estate to the appellant on January 8, 1950.
On January 15, 1950, the appellant submitted a return of
income of the estate to the Agricultural Income-tax Officer,
Monghyr, for the Fasli year 1355 corresponding to September
16, 1948, to September 15, 1949. The Agricultural Income-
tax Officer assessed on August 7, 1950, the agricultural
income of the estate at Rs. 90,507-2-6 and ordered the
appellant to pay Rs. 20,290-13-0 as agricultural income-tax.
Appeals against the order of assessment preferred to the
Commissioner of Agricultural Income-tax and the Board of
Agricultural Income-tax, Bihar, were unsuccessful. The
Board however referred the question set out hereinbefore to
the High Court under s. 28(3) of the Act as arising out of
its order.
The only question which falls to be determined in this
appeal is whether the appellant was liable to be assessed to
pay agricultural income-tax for the year
407
in which the estate was in the management of the Court
Receiver. Section 3 of the Act which is the charging
section provides:
” Agricultural income-tax shall be charged for
each financial year in accordance with and
subject to the provisions of this Act on the
total agricultural income of the previous year
of every person.”
By s. 4,it is provided:
Save as hereinafter provided, this Act shall
apply to all agricultural income derived from
land situated in the State of Bihar.”
The income of the estate of the appellant was not exempt
from payment of tax and by virtue of s. 3, agricultural
income-tax was charged upon the income for the assessment
year in question, and the appellant was prima facie liable
as owner of the estate to pay tax on that income. The
appellant however relied upon s. 13 of the Act which
provides:
” 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.”
The appellant urged that if the land from which agricultural
income is derived is held by a Receiver and the income is
received by the Receiver, the Receiver alone can, by virtue
of s. 13, be deemed to be the assessee and the Receiver
alone is liable to pay the tax in respect of that income.
In support of his contention, the appellant relies upon the
definition of the word., ” person ” in s, 2, cl. (m) which
estates;
408
Person’ mean,% any individual or association
of individuals, owning or holding property for
himself or for any other, or partly for his
own benefit and partly for another, either as
owner, trustee, receiver, common manager,
administrator or executor or in any capacity
recognised by law, and includes an undivided
Hindu family, firm or company.”
In our view, there is no substance in the contention raised
by the appellant. The liability to pay tax is charged on
the agricultural income of every person. The income though
collected by the Receiver was the income of the appellant.
By s. 13, in addition to the owner, the Receiver is to be
deemed to be an assessee. But the fact that the Receiver
may, because he held the property from which income was
derived in the year of account, be deemed to be an assessee
and liable to pay tax, does not absolve the appellant on
whose behalf the income was received from the obligation to
pay agricultural income-tax. Section 13 merely provides a
machinery for recovery of tax, and is not a charging
section. When property is in the possession of the
Receiver, common manager or administrator, the taxing
authorities may, but are not bound to, treat such persons as
assessees and recover tax. The taxing authorities may
always proceed against the owner of the income and assess
the tax against him. The definition in the connotation of”
person ” undoubtedly included a receiver, trustee, common
manager, administrator or executor, and by such inclusion,
it is open to the taxing authorities to assess tax against
any such persons; but on that account, the income in the
hand of the owner is not exempt from liability to assessment
of tax.
Counsel for the appellant urged that the income received by
the appellant from the Receiver did not retain its character
of agricultural income and therefore also the appellant was
not liable to pay agricultural income-tax. But this
contention was never raised before the taxing authorities
and no such question has been referred to this court. The
character of the income was accepted to be agricultural
409
income in the hands of the appellant and the only question
which was sought to be referred and raised before the Board
of Agricultural Income-tax was one as to the liability of
the appellant to be assessed to agricultural income-tax for
the year in question.
In that view of the case, the appeal fails and is dismissed
with costs.
Appeal dismissed.
