JUDGMENT
Raj Kishore Prasad, J.
1. The Bihar Board of Agricultural Income-tax under Section 28 (3) of the Bihar Agricultural Income-tax Act, 1948 (Bihar Act XXXII of 1948), hereinafter called “the Act”, has referred the following question of law for decision by the High Court:
“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?”
2. The petitioner is the Mahanth of Asthal
Estate, Salauna, in the District of Bhagalpur.
This estate was under a Receiver appointed by
the First Subordinate Judge, Monghyr, till December, 1949. The final charge of the above estate
was made over by the Receiver to the assessee on
the 8th January 1950.
The petitioner on the I5th January. 1950, filed a return, in respect of the agricultural income of 1355 Fasli, on a sheet of paper, and not in the prescribed form, along with a petition stating therein that as the estate was under the Receiver, he was submitting the return on the total agricultural income on the basis of paperd supplied by the Receiver, and, that at the time of, the examination of accounts, he would explain the position in regard to the income and expenditure shown in the return.
3. The Agricultural Income-tax Officer, Monghyr, on the 7th August, 1950, assessed the petitioner to pay the agricultural income-tax amounting to Rs. 20,290/13/-. Against this order of assessment, the assessee carried an appeal to the commissioner of Agricultural Income-tax, Bhagalpur, which was heard, and disposed of by the Additional Commissioner, by an order dated the 7th November, 1951, The learned Additional Commissioner overruled the objection of the petitioner that he was not liable to ‘be taxed, because in the accounting period 1355 Fasli, the year of assessment of which was 1950-51, the estate was in possession of the Receiver.
The assessee, thereafter, moved the Board in revision against the aforesaid order. The Board by its order dated the 4th November, 1952, upheld the order of the learned Additional Commissioner, subject to some modification, and overruled the objection of the assessee that he was not liable to be taxed for the agricultural income-tax payable for the year 1355 Fasli. The petitioner, thereafter, made an application under Section 28(2) of the Act before the Board to refer to the High Court certain questions of law arising out of its order for decision; but the Board, on the 1st October, 1953, rejected the application, and refused to make any reference to this Court.
The petitioner, thereafter, on the 25th November, 1953, moved the High Court under Section 28(3) of the Act to require the Board to state the case, and to refer it, to decide the question of law arising out of its order. The High Court on the 10th December, 1953, under Section 28(3) of the Act, asked the Board to state the case on the above mentioned question of law. The Board, accordingly, has referred the question of law for decision by this Court, by its order dated the 11th of May, 1954.
4. Mr. Rajeshwari Prasad, appearing for the assessee, has relied on Sections 3, 2(m) and 13 of the Act in support of his contention that as the petitioner was admittedly not in possession of the estate in 1355 Fasli and as he received the agricultural income during the accounting period, the Receiver was liable to be taxed, and not the petitioner, under Section 3 read with Section 2(m) of the Act.
5. Section 3 of the Act, which is the charging section, is in these terms:
“3. 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’, (underlined by me) (here into ‘ ‘.”)
6. The word “person” occurring in Section 3 of the Act has been defined in Section 2, Clause (m), as follows:
“2(m). ‘Person’ means 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;”
Section 2(m) was amended, and an explanation to Clause (m) of Section 2 was added in 1954, but we are not concerned with it in the present case.
7. Mr. Rajeshwari Prasad contends that since the word “person”, mentioned in Section 3 of the Act, includes a “receiver” also, according to the definition of Section 2 (m), it is the Receiver who is the ”person” liable to be taxed under Section 3 of the Act. He has reinforced his argument by relying on Section 13 of the Act.
8. Section 13 of the Act & in these terms:
“13. Where any person holds land, from which agricultural income is derived, as a common managed 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.”
9. The argument put forward by Mr. Rajeshwari Prasad is that as the Receiver was in possession during the accounting period, he should have been assessed to agricultural income-tax as provided by Section 13, as he received the agricultural income and not the petitioner.. In support of his contention, he has relied on a Special Bench decision of this Court in Province of Bihar v. P. O. Lal Choudhury, AIR 1944 Pat 352: ILR 23 Pat 393 (A). Manohar Lall J. in delivering the unanimous decision of the Bench, observed as follows:.
“In this case, the Receiver is in possession of the properties from which agricultural income was derived and he holds it for the benefit of the assessee. It is therefore, clear that it is the Receiver who must be assessed and not the assessee. It is true that the assessee is still the owner of the property, but the Receiver cannot be treated, as the agent of the owner. The assessee has no control over the Receiver who is an officer of the Court, responsible to the Calcutta High Court who has appointed him.”
The above case, however, has no application to the present case, because, in the above case, the Receiver was admittedly in possession even at the time of assessment, taut in the present case, admittedly, the Receiver handed over charge to the petitioner on the 8th January, 1950, and, the Receiver was not in possession, either when the re-turn was filed by the assessee on the 15th January, 1950, or, when the assessment was made under Section 18 of the Act on the 7th August, 1950.
10. The answer to the question raised by the
reference, therefore, depends on a true interpretation of Section 13 of the Act. It is well settled that
when the meaning of the Act can be fairly gather
ed from the words used in the Act, it is the duty
of the Court to give effect to the meaning of the
Act. Hardship or inconvenience cannot alter the
meaning employed by the Legislature if such
meaning is clear on the face of the statute. Section 13 provides for “Assessment of tax on common manager, receiver, etc.” as the marginal note itself indicates. The opening words of Section 13 of
the Act are:
“Where any person holds land, from which agricultural income is derived………as receiver …..”
The word “holds” in Section 13 is a clear manifestation of the intention of the Legislature that it provides in Section 13 for assessment of tax on a Receiver, if he is in possession of the agricultural land during the year of assessment and during the accounting period and, also at the time of assessment. Section 13 cannot be construed so as to mean that the Receiver is to be assessed to tax on the agricultural income derived from land which was in his possession during the accounting period, but which is not in his possession during the period of assessment, or at the time of the actual assessment.
If the contention of Mr. Rajeshwari Prasad be accepted, it will lead to strange results. Suppose, the agricultural income-tax is to be assessed on a discharged Receiver, because he was in possession during the accounting period as a Receiver then in such a case it would be impossible to realise the tax from the Receiver personally, because he was in possession as a Receiver in a representative capacity, and not in his personal capacity, and, therefore, he cannot be made liable for such agricultural income-tax personally. As pointed out by my Lord the Chief Justice in course of the argument, suppose that the Receiver Us dead, and there is no other Receiver at the time of the assessment, in that case, the assessment cannot be made on a dead person at all, and, as such, there will be no person who will be liable to be taxed.
Section 13 must be, hence, construed to mean that if the Receiver is in possession, and he is continuing in possession of the agricultural land at the time of the assessment, he should be assessed with agricultural income, and he should be deemed to be the assessee in respect of the agricultural income-tax so payable by the person on whose behalf the Receiver was in possession, and in such a case the Receiver shall be liable to pay it. But in the present case, the Receiver was discharged, and, he handed over charge to the petitioner on the 8th January, 1950, and it was after his discharge that the return was filed, and the assessment was made.
In such circumstances, the Receiver cannot be made liable to be taxed. My concluded opinion, therefore, is that the correct construction of Section 13 is that the Receiver is to be deemed to be the assessee, and assessed to agricultural income-tax, and he is liable to pay it, only when he is in possession of the agricultural land, from which agricultural income is derived, at the time of assessment also, and not when he has been discharged, and he has handed over possession and is not in possession as a Receiver at the time of the assessment of the agricultural income-tax.
11. Section 3 is the general charging section, and, it has to be read along with Section 13, which is by way of an exception to it, which provides that the Receiver shall be assessed only when he is actually in possession, and not otherwise. The word “holds” in Section 13 clearly indicates that the possession of the Receiver should be in praesenti.
12. There is another reason why Section 13 of the Act will not apply to the present case. As pointed out by my Lord the Chief Justice in course of the argument, Section 13 contemplates a case where more than one person are jointly interested in the land, from which agricultural income is derived, and, the common manager, or the Receiver, the administrator, or the like, as the case may be, should hold the land on behalf of such persons, jointly interested in such land. In such a case, Section 13 would apply, if, of course, as stated earlier, such Receiver, or the like, is in possession of such land even at the time of assessment of the agricultural tax. In the present case, the only person interested in the agricultural land is the petitioner himself, and, the Receiver, who was in possession during the accounting year, was on behalf of only one person, namely, the petitioner alone. To such a case, Section 13 can have no application at all.
13. Mr. Rajeshwari Prasad places strong reliance on the case of A.W. Williams v. W. M. G. Singer. (1921) 7 Tax Cas 387 (B), particularly on the observation of Viscount Cave at Page 411. But that was made with reference to the interpretation of Section 100 of the Income-tax Act of 1842 in context of other sections of the English Income-tax statutes. The present case is entirely different and that observation of Lord Cave has no application.
The case of the Province of Bihar v. Ram Bhubneshwari Kuer, AIR 1948 Pat 395 (C) also, relied upon by Mr. Rajeshwari Prasad, has no application because that was also a case in which the assessee had created a trust in respect of his estate vesting the estate in the Board of Trustees, which was in management of the estate at the date of the assessment, and, therefore, it was held by Agarwala, Acting C. J., with whom Manohar Lall, J., also agreed in a concurring judgment, that the Board of Trustees is a “person” within the meaning of Section 2 (m), and, as such, it is liable to be charged for income-tax on its agricultural Income for the year previous to the year of assessment. In my opinion, therefore, the present case must be decided on the construction of Section 3 of the Act itself.
14. Lord Dunedin, in Whitney v. Commissioners of Inland Revenue, 1926 AC 37: 10 Tax Cas 88 (D), observed thus:
“Now, there are three stages in the imposition of a tax: there is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, ex hypothesi has already been fixed. But assessment particularizes the exact sum which a person liable has to pay. Lastly, come the methods of recovery if the person taxed does not voluntarily pay.”
The above observation was quoted with approval by the Federal Court in Chatturam v. Commissioner of Income-tax, Bihar, (1947) 15 ITR 302: AIR 1947 PC 32: ILR 26 Pat 442 (E).
15. Therefore, the liability to pay the agricultural income-tax is founded on Section 3 of the Act, which is the charging section. Section 6, and the subsequent provisions, are the machinery sections to determine the amount of tax, which enable the liability to be quantified, and when quantified to be enforced against the subject but the liability is definitely and finally created by the charging, section.
Section 13 is a machinery section, and not a charging section. Section 13 means that if a Receiver is in possession he shall be deemed to be the assessee, and he shall be liable to be assessed, and to pay the tax. But, as I have said before, Section 13 does not apply to the present case at all. The contention of Mr. Rajeshwari Prasad must, accordingly, be overruled. The assessment on the petitioner has been correctly made.
16. For the reasons given above, the question, referred by the Board; must be answered in the affirmative, against the assessee, and in favour of the Department. The State of Bihar will be entitled to its costs; hearing fee Rs. 200/- (Rupees two hundred).
Ramaswami, C.J.
17. I agree.
