# [1961] 3 S.C.R. 405

- **Citation:** [1961] 3 S.C.R. 405
- **Court:** Supreme Court of India
- **Decided:** 1960-05-15
- **Case number:** CIVIL APPELLATE JtrRISDICTION: Civil Appeal No. 449of1958
- **Bench:** J. L. Kapur, M. HrnAYATULLAH, J. C. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1961-3-s-c-r-405-2018
- **Pages:** 5

## Headnote

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 r948, ss. 2, cl. (m), 3
and IJ.
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 appellantMahant was liable to be assessed under the Bihar Agricultural
Income-tax Act, r948, 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 r3 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 ··Y{hich income was
derived, but on that account the income in tli:e.'nand 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. r3 merely provides a machinery for recovery of tax from
"persons" including receivers and is not by itself a charging
section.
CIVIL APPELLATE JtrRISDICTION:
Civil Appeal No.
449of1958.
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.
January II,
"zg~I- \,
'···406.
~ . \
.,_·
' . ,
'
·, i
/
-
SUPREME COURT REPORTS
[1961]
D. P. Singh, for the appellant. ·
---c-;·-- --·.
Mahanth
· \_
S. P. Varma, for the respondent.
Ramswaroop Das
1961. January 11. The Judgii::limt of the Court was
• v.
delivered by
· ·
--
·--
.
: -
'.
State of Bihar
.
.
SHAH, J.-The High Court of Judicature at Patna
answered· in the . affirmMive 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 £
Shah].
.·
' I
"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?"
\Vi th special leave under- Art. 136 of .the Constitution, this appeal is preferred against the order of the
High Court. The appellant is the l\fahant -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, .Mcinghyr, 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 Januai:ylb.
-1950._ On January}5, 1950, the appellant submitted
\.a return of .income of the estate to the Agricultural
Income-tax Officer, l\fonghyr, for the Fasli year 1355
·corresponding to September 16, 1948, to September 15,
· 1~49. ·The Agricultural Income-tar Officer: assessed
· on August 7, 1950, the agricultural income of the es_tate 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 Com~ · ·
-:·missioner 'of Agricultural Income-tax and the Board
of, Agricultural Income-tax; Bihar, were unsuccessful.
The Board however refori:ed the question set . out
hereinbefore to the High Court under s. 28(3) of tho
'Act as arising out of its order.
. .. ·
.
- ; The, only question which falls to be determined in
this appeal is ~ hether the appellant .was lia hie to be
assessed to pay agricultural income-tax for; the year
.
'
,_ '
\...
.
.
.. "
--
.
3 S.C.R.
SUPREME COURT REPORTS
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

## Text

I
3 s.c.R. SUPREME COURT REPORTS
405
the impugned Resolutions were ultra vires and should
I96'
be quashed.
.
Dr. Akshaibar Lal
In the result, the appeals are allowed.
Resolut10ns
v.
Nos. 90, 94 to 96 and 99 to 102 dated May 15, 1960, of Vice-Cilancellor,
the Executive Council of the Banaras Hindu UniverBanaras Hindu
sity are quashed, and an appropriate writ or writs
Univmity
shall issue to the respondents to that effect. The Hidayat1tllah J.
respondents shall pay the costs of these appeals, as also
of the High Court.
Only one set of hearing fee here
and in the High Court shall be allowed.
Appeals allowed.
MAHANTH RAMSW AROOP DAS
1).
THE STATE OF BIHAR.
(J. L. KAPUR, M. HrnAYATULLAH and J. C. SHAH, JJ.)
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 r948, ss. 2, cl. (m), 3
and IJ.
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 appellantMahant was liable to be assessed under the Bihar Agricultural
Income-tax Act, r948, 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 r3 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 ··Y{hich income was
derived, but on that account the income in tli:e.'nand 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. r3 merely provides a machinery for recovery of tax from
"persons" including receivers and is not by itself a charging
section.
CIVIL APPELLATE JtrRISDICTION:
Civil Appeal No.
449of1958.
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.
January II,
"zg~I- \,
'···406.
~ . \
.,_·
' . ,
'
·, i
/
-
SUPREME COURT REPORTS
[1961]
D. P. Singh, for the appellant. ·
---c-;·-- --·.
Mahanth
· \_
S. P. Varma, for the respondent.
Ramswaroop Das
1961. January 11. The Judgii::limt of the Court was
• v.
delivered by
· ·
--
·--
.
: -
'.
State of Bihar
.
.
SHAH, J.-The High Court of Judicature at Patna
answered· in the . affirmMive 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 £
Shah].
.·
' I
"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?"
\Vi th special leave under- Art. 136 of .the Constitution, this appeal is preferred against the order of the
High Court. The appellant is the l\fahant -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, .Mcinghyr, 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 Januai:ylb.
-1950._ On January}5, 1950, the appellant submitted
\.a return of .income of the estate to the Agricultural
Income-tax Officer, l\fonghyr, for the Fasli year 1355
·corresponding to September 16, 1948, to September 15,
· 1~49. ·The Agricultural Income-tar Officer: assessed
· on August 7, 1950, the agricultural income of the es_tate 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 Com~ · ·
-:·missioner 'of Agricultural Income-tax and the Board
of, Agricultural Income-tax; Bihar, were unsuccessful.
The Board however refori:ed the question set . out
hereinbefore to the High Court under s. 28(3) of tho
'Act as arising out of its order.
. .. ·
.
- ; The, only question which falls to be determined in
this appeal is ~ hether the appellant .was lia hie to be
assessed to pay agricultural income-tax for; the year
.
'
,_ '
\...
.
.
.. "
--
.
3 S.C.R.
SUPREME COURT REPORTS
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 th~t 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 states:
Mahanth
Ramswaroop Das
v.
State of Bihar
Shah].
Mahanth
Ram swaroop Da£
v.
State of Bihar
Shah].
408
SUPREME COURT REPORTS
[1961)
"'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 Jaw, 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.
Bys. 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 ihcome 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
3 S.C:R.
SUPREME COURT REPORTS
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.
M/S. BHOR INDUSTRIES L'l'D.
. v.
THE COMMISSIONER OF INCOME-TAX,
BOMBAY· CITY I.
(and connected appeals)
(J. L. KAPUR, M. HrnAYATULLAH and J.C. SHAH, JJ.)
Income-tax-Assessment of dividend income-Company incorporated in Indian State subsequently merged-Extension of Indian
Income-tax Act to merged State-Taxation concessions tit merged
State-Scope-Assessment on shareholders of non-distributed profits
-Exemption from taxation-Computation of dividends deemed to be
distributed-Deduction of interest-Merged States (Taxation Concessions) Order, r949, para. r2-lndian Income-tax Act, r922 (fr of
r922), ss. r4(2)(c), z8A(8), 23A.
The appellant had been incorporated in r944 as a private
company limited by shares in the former State of Bhor with its
registered office in Bhor. The shareholders of the company were
at all material times resident in British India. By virtue of the
States Merger (Governors' Provinces) Order, r949, the State was
merged with the Province of Bombay with effect from August I,
1949. The provisions of the Indian Income-tax Act, r922, were
extended to the merged State with effect from April r, r949.
Under fue power given by s. 6oA of the Act which enabled the
Central Government to remove any difficulty in the application
of the Act to'merged States by making a general or special order
granting exemption or other modification, the Central Government notified the Merged States (Taxation Concessions) Order,
r949.
Paragraph r2 of that Order stated that "the provisions of
s. 23A of tile Indian Income-tax Act shall not be applied in
respect of the profits and gains of any previous year ending before
rst day of August, 1949, unless the State law contains a provision corresponding thereto." The total world incon1e of the
company for 1946and.1947 was Rs. 6,57,084-and 7,80,r25 respect.
ively and for those years the company declared dividends of
Rs. 2,580 and Rs. 1,140. For (he assessment years r947-48 and
5•
Mahanth
Ramswaroop Dt1s
v.
State of Bihar
Shah].
· J11nuary za .