# The Collector of Bombay v. Nusserwanji Rattanji Mistri ~nd

- **Citation:** [1961] 2 S.C.R. 598
- **Court:** Supreme Court of India
- **Decided:** 1961
- **Bench:** S. K. Das, l\L HrnAYATULLAH, J.C. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-collector-of-bombay-v-nusserwanji-rattanji-mistri-nd-1997
- **Pages:** 12

## Headnote

Income Tax-Agriwlt11ral income-Acquisition of land forming part of permanently settled estate-Redemption of liability to
pay land revenue by payment of lump sum--Agricultural income
from the land-Liability to income-tax-Indian Income-tax Act,
z922 (II of z922), s. 2(1).
By a notification dated November 2, 1864, a piece of land
forming part of the Panchannagram Estate which was permanently settled under Regulation I of 1793. was acquired by the
Government of Bengal at the instance of the Justices of the
Peace for the Town of Calcutta, which was a corporation established under the provisions of the Calcutta Municipal Act, 1863,
and the Justices were required to pay the compensation payable
to the proprietor of the Estate. After the acquisition, the proprietor of the Estate was granted abatement of land revenue
assessed on the Estate to the extent of Rs. 386-7-1, being the
proportionate land revenue on the land acquired. On October
27, 1865, the Government called upon the Justices to pay a sum
of Rs. 7,728-13-8, which represented the amount capitalised at
20 years' purchase of land revenue attributed to the area acquired. On December 5, r870, the Secretary of State executed in
favour of the Justices of the Peace a conveyance of the land
acquired, \vhich stated, inter alia, that it was "ever free and
clear and for ever discharged from all Government land revenue
whatever or any payment or charge in the nature thereof to the
end and intent that the said land may be used for a public purpose, namely, for the conservancy of the town/' On January
23, 1880, a lease of the land was granted by the Justices to the
predecessors-in-title of the appellant, under which the lessee had
the right to carry on cultivation with the aid of sewage.
Before the income-tax authorities the appellant claimed
that the agricultural income derived by him from the land was
not liable to income-tax, but the claim was rejected on the
ground that on the payment of a lump-sum in 18b5 the liability
to pay land revenue was redeemed and no land revenue was
demanded thereafter; consequently, the income derived from the
land was not agricultural income within the meaning of s. 2(1)
of the Indian Income-tax Act, i922, and was not, therefore,
exempt from tax. The appellant's contention was that the
redemption only saved the Justices from liability for payment
but did not affect the assessability of the land to revenue
under Regulation I of 1793·
..
. ···'- -·-· ..
2 S.C.R. SUPREl\IE COURT REPORTS··
599 .
Held, that by the down payment cif a lump suni in 1865 the
z960
entire land revenue to be recovered from the land was redeemed
and the land became free from land revenue assessinent in per- Srish Chandra Sen
petuity, as completely as if there was no assessment. Therev.
after, the land could not be said to be assessed to land revenue
Commr. of
within the meaning of s. 2(1) of the Indian Income-tax Act,
Incom• Tax
1922, and, consequently, the income derived therefrom could not
be considered .to be agricultural income under that section.
The Collector of Bombay v. Nusserwanji Rattanji Mistri ~nd
Others, [1955] l S.C.R. 1311, distinguished.
CIVIL Al'l'ELLATE JURISDICTION: Civil Appeal No.
405of1957.
Appeal from the judgment and order dated l\Iay
15, 1956, of the Calcutta High Court in I.T.R. No. 20
of 1953.
S •. 11! itra, B. Das and S. N. Jr! ukherjee, for appt'.!:
lants Nos. 2 to 41.
A. N. Kripal and D. Gupta, for the respondent.
1960. Nov_ember 23. The Judgment of the Court
was delivered by
·
I
HrnAYATULLAH, J.-The point involved in this Hidayatullah ].
appeal is a very short one; but it requires a long narration of facts to reach it. The appeal is against the
judgment and order of the High Court of Calcutta
dated l\Iay 15, 1956, arising out of an Income-tax
Reference.
By the Calcutta l\Iunicipal Act VI of 1863, there
was established a Corporation under the name of
"The Justices of the Peace forthe Town of Calcutta".
By a notification issued on November 2, 1864, one
squa

## Text

Noveinber 23.
598
SUPREME COURT REPORTS
SRISH CHANDRA SEN (DECEASED)
AND OTHERS
v.
[1961)
THE COMMISSIONER OF INCOME-TAX,
WEST BENGAL
(S. K. DAS, l\L HrnAYATULLAH and J.C. SHAH, JJ.)
Income Tax-Agriwlt11ral income-Acquisition of land forming part of permanently settled estate-Redemption of liability to
pay land revenue by payment of lump sum--Agricultural income
from the land-Liability to income-tax-Indian Income-tax Act,
z922 (II of z922), s. 2(1).
By a notification dated November 2, 1864, a piece of land
forming part of the Panchannagram Estate which was permanently settled under Regulation I of 1793. was acquired by the
Government of Bengal at the instance of the Justices of the
Peace for the Town of Calcutta, which was a corporation established under the provisions of the Calcutta Municipal Act, 1863,
and the Justices were required to pay the compensation payable
to the proprietor of the Estate. After the acquisition, the proprietor of the Estate was granted abatement of land revenue
assessed on the Estate to the extent of Rs. 386-7-1, being the
proportionate land revenue on the land acquired. On October
27, 1865, the Government called upon the Justices to pay a sum
of Rs. 7,728-13-8, which represented the amount capitalised at
20 years' purchase of land revenue attributed to the area acquired. On December 5, r870, the Secretary of State executed in
favour of the Justices of the Peace a conveyance of the land
acquired, \vhich stated, inter alia, that it was "ever free and
clear and for ever discharged from all Government land revenue
whatever or any payment or charge in the nature thereof to the
end and intent that the said land may be used for a public purpose, namely, for the conservancy of the town/' On January
23, 1880, a lease of the land was granted by the Justices to the
predecessors-in-title of the appellant, under which the lessee had
the right to carry on cultivation with the aid of sewage.
Before the income-tax authorities the appellant claimed
that the agricultural income derived by him from the land was
not liable to income-tax, but the claim was rejected on the
ground that on the payment of a lump-sum in 18b5 the liability
to pay land revenue was redeemed and no land revenue was
demanded thereafter; consequently, the income derived from the
land was not agricultural income within the meaning of s. 2(1)
of the Indian Income-tax Act, i922, and was not, therefore,
exempt from tax. The appellant's contention was that the
redemption only saved the Justices from liability for payment
but did not affect the assessability of the land to revenue
under Regulation I of 1793·
..
. ···'- -·-· ..
2 S.C.R. SUPREl\IE COURT REPORTS··
599 .
Held, that by the down payment cif a lump suni in 1865 the
z960
entire land revenue to be recovered from the land was redeemed
and the land became free from land revenue assessinent in per- Srish Chandra Sen
petuity, as completely as if there was no assessment. Therev.
after, the land could not be said to be assessed to land revenue
Commr. of
within the meaning of s. 2(1) of the Indian Income-tax Act,
Incom• Tax
1922, and, consequently, the income derived therefrom could not
be considered .to be agricultural income under that section.
The Collector of Bombay v. Nusserwanji Rattanji Mistri ~nd
Others, [1955] l S.C.R. 1311, distinguished.
CIVIL Al'l'ELLATE JURISDICTION: Civil Appeal No.
405of1957.
Appeal from the judgment and order dated l\Iay
15, 1956, of the Calcutta High Court in I.T.R. No. 20
of 1953.
S •. 11! itra, B. Das and S. N. Jr! ukherjee, for appt'.!:
lants Nos. 2 to 41.
A. N. Kripal and D. Gupta, for the respondent.
1960. Nov_ember 23. The Judgment of the Court
was delivered by
·
I
HrnAYATULLAH, J.-The point involved in this Hidayatullah ].
appeal is a very short one; but it requires a long narration of facts to reach it. The appeal is against the
judgment and order of the High Court of Calcutta
dated l\Iay 15, 1956, arising out of an Income-tax
Reference.
By the Calcutta l\Iunicipal Act VI of 1863, there
was established a Corporation under the name of
"The Justices of the Peace forthe Town of Calcutta".
By a notification issued on November 2, 1864, one
square mile of land forming part of the Panchannagram Estate was· acquired by the Government of
Bengal at the instance of the Justices. · Section CXII
of the ~Iunicipal Act provided that the Justices might
"agree with the owners of any land for the absolute
purchase thereof ....... : .... for any_ other purpose whatever connected with the conservancy of the Town":
Under s. CXIII, it was provided that if there was
any hindrance to acquisition by private treaty, the·
Government of Bengal upon the representation of the
Justices would compulsorily acquire.the land and vest
600
SUPREME COURT REPORTS
[1961]
i960
such la.nd in the Justices on their paying compensa-
.
tion a.warded to the proprietor. The action which
Sm~ Chandra Sen was ta.ken by the notification was under s. CXIII of
com:;,, of
the Municipal Act, and the acquisition was under Act
Incom• Tu
VI of 1857, an Act for the acquisition of land for public purposes.
Hidayatullah J.
The Pa.ncha.nnagram Estate wa.s permanently settled under Regulation I of 1793. After the acquisition,
the proprietor of Panchannagra.m Estate was granted _
abatement of la.nd revenue assessed on the Estate to
the extent of Rs. 386-7-1. This represented the proportionate la.nd revenue on the land acquired.
In August, 1865;the Justices were required to pay
Rs. 54,685-2-10 as compensation payable to the proprietor and to other persons holding interest in the
land. Another piece of land which is described as an
open level sewer, was also acquired about the same
time, a.nd separate compensation was paid for it.
With the a.mount of con veya.nce charges, the total
compensation thus paid
by the
Justices was
Rs. 57,965-8-10. On October 27, 1865, the Government
called upon the Justices to pay a further sum of
Rs. 7,728-13-8. This order has not been produced in
the case; but from other correspondence, it is easy to
see that the a.mount represented an amount capitalised at 20 years' purchase of la.nd revenue attributed to
the area acquired, which, as has been stated above,
ca.me to Rs. 386-7-1. This payment was made on or
a.bout January 12, 1866. Similarly, another amount
wa.s pa.id in July of the same year for redemption of
the la.nd revenue in respect of the strip of land for the
open sewer.
On December 5, 1870, a. conveyWnce wa.s executed
by the Secretary of State in favour of the Justices of
the Peace. It was there stated, inter alia :
"Whereas the Honourable the Lieutenant Governor of Bengal hath thought fit that the said land so
acquired as aforesaid would be vested in the said
Justices of the Peace for the Town of Calcutta a Corporation created by and authorised to hold land under
the said Act No. VI of 1863 of the Council of the
Lieutenant Governor of Bengal to the end and intent
l
2 S.C.R. SUPREME COURT REPORTS
601
that the said land may be held by the said Justices
1 960
for a public purpose, namely, for the conservancy of 5 . . h C-h d
5
h T
d
b. t .
t th
""
an ra
en
t e own ......... an su JeC m every way o
e same
v.
Act but free and discharged from all payment of land
Commr. of
revenue, land tax and all and every tax or imposition
Income Ta"
in the nature of revenue derivable from land payable
to Government in respect thereof; NOW THIS IN- Hidayatuliah J.
DENTURE WITNESSETH ................................ .
to hold the said pieces of land, hereditaments and
premises intended to be conveyed with the appurtenances except as aforesaid unto the said Justices of the
Peace for the Town of Calcutta. and their successors
for ever free and clear and for ever discharged from
all Government land revenue whatever or any payment or charge in the nature thereof to the end and
intent that the said land may be used for a public
purpose namely for the conservancy of the town upon
the trusts and subject to the powers, provisions, terms
and conditions contained in the said Act No. VI of
1863 of the Council of the Lieutenant Governor of
Bengal and to the rules heretofore passed or hereafter
to be passed by the Government of Bengal under the
the said last mentioned Act;".
On January 23, 1880, a temporary lease of the land
known as the 'Square Mile' was granted by the Justices of the Peace to the predecessors-in-title of the
appellant (assessee), Srish Chandra Sen who has,
since the filing of the appeal, died, leaving behind 40
legal representatives who have been shown in the
cause title of the appeal. The lease was renewed for
further periods, and the rent was also progressively
increased. The conservancy arrangements for which
the land was held were carried out ; but the lessee
had the right to carry on cultivation with the aid of
sewage.
The assessee derived from this land various kinds
of income, some being purely agricultural and some,
non-agricultural. For the assessment year 1942·43,
the total agricultural income was computed at
Rs. 99,987-9-6,
and non-agricultural income, at
Rs. 12,503-8-0. Agricultural income-tax was charged
by the State of Bengal under the Agricultural Income-
602
SUPREME COURT REPORTS
[1961]
'960
tax Act, on the agricultural income less expenses.
s 1 h Ch
d s For the assessment years, 1943-44, 1944-45, 1945-46
· ' '
:• '" '"and 1946-4 7, the assessments were made along similar
Com,,;,_ of
lines. In 1947, the Income-tax Officer reassessed the
lncom• 1'ax
income for the assessment year, 1942-43 after reopening the assessment under s. 34 of the Income-tax Act
Hidayatullah J. on the ground that the so-ca.lied agricultural income
had escaped assessment to income-tax under the
Indian Income-tax Act.
Assessments for the other
years, 1943-44, 1944-45, 1945-46 and 1946-4 7 were also
reopened, and the income in those years was also
similarly reassessed. The assessee appealed to the
Appellate Assist.ant Commissioner against all these
orders of the Income-tax Officer, but his appeals failed.
Against the orders of the Appellate Assistant
Commissioner, appeals were filed before the Incometax Appellate Tribunal (Calcutta Bench). The Tribunal dealt with the assessment for 1942-43 separately,
and allowed the appeal as regards assessment for
that year. It held that the reassessment was improper under s. 34 of the Income-tax Act, because the
Income-tax Officer had not proceeded on any definite
information but in the course of a "roving enquiry".
The Tribunal also held that the income was exempt
from taxation to income-tax under s. 4(3)(viii) of the
Act, inasmuch as this income was derived from land
used for agricultural purpose.~, which continued to be
assessed to land revenue.
In the appeals arising out of assessments for the
subsequent years, a common order was passed by the
Tribunal, remanding the appeals to the Appellate
Assistant Commissioner for a rehearing. The Tribunal stated that the appellants had filed a number of
documents to establish that land revenue was assessed
on the land which, the Department contended, proved the contrary. The Tribunal felt that the matter
should be reconsidered by the Appellate Assistant
Commissioner, and hence remanded the cases. The
Appellate Assistant Commissioner in the rehearing
held that the land in question continued subject to land
revenue, and that the lump sum payment was merely
payment of revenue in advance. He accordingly allowed the appeals, and ordered exclusion of the income
2 S.C.R. SUPREME COURT REPORTS
603
from the assessments for the four years in question.
1960
On appeal by the Department, the Tribunal chang-
.
-
ed its opinion, and came to the conclusion that the Snsh Chandra Se"
payment of a lump sum was not a payment in
Com;~. of
advance of the land revenue due from year to year
Incoms Ta:r
but was land revenue capitalised. It referred to the
deed by which the proprietorship in the'land was vesHiday,•tullah J.
ted in the Corporation by the Secretary of State, and
stated that by the document and the capitalisation of
land revenue, the demand for land revenue was extinguished for ever. It accordingly allowed the appeals,
and restored the orders of assessment made by the
Income-tax Officer.
The assessee next moved the Tribunal for a reference setting out a number of questions which, he contended, arose out of the Tribunal's order. The Tribunal
referred the following question of law for the opinion
of the High Court:
"Whether on the facts and in the circumstances
of this case the Tribunal's conclusion that the . }and
was not assessed to land revenue within the meaning
of s. 2(l)(a) of the Indian Income-tax Act is justified?"
The reference was heard by Chakravarti, C. J., and
Sarkar, J., (as he then was). In an elaborate judgment, the learned Chief Justice upheld the conclusions
of the Tribunal, and answered the question in the
affirmative. Sarkar, J., in an equally elaborate order
expressed his doubts about the correctness of the
Chief Justice's reasons, but declined to disagree with
him.
The question that arises in this case, as we have
stated in the opening of this judgment, is a very
short one.
It is an admitted fact that by pay~
ment of a lump sum the liability to pay land revenue was redeemed and no land revenue was demanded or was ever demandable from the Justices
or their assigns in perpetuity. The contention of the
assessee is that this redemption saved the Justices
from the liability for payment but did not affect the
assessability of the land to revenue under Regulation
I of 1793. Unless, it is contended, there was a canceJlation of the assessment, as is to be found in the
604
SUPREME COURT REPORTS
[1961]
'!_60
Land Tax and Tithe Redemption Acts in England,
5,;,11 Chandra sen the liability must be deemed to continue and land
v.
would still be assessed to land revenue for purposes
Commr. of
of s. 2(l)(a) of the Indian Income-tax Act. That secIncome Tax
tion reads as follows:
Jlidayatullrih J.
"2(1) 'Agricultural income' means-
(a) any rent or revenue derived from land which
is used for agricultural purposes, and is either assessed to land revenue in (the taxable territories) or subject to a local rate assessed and collected by Officers
of (the Government) as such ....
It is not denied that both the conditions, namely,
"used for agricultural purposes" and "is either assessed to land revenue or subject to a local rate ............ "
have to co-exist; It is admitted by the Department
that there is no question of subjection to a local rate
assessed and collected, in this case.
The income
derived from the land was from its·use for agricultural purposes, and the first condition is thus satisfied.
The dispute centres round the point whether the land
can be said to be assessed to land revenue, in spite of
the lump sum payment in 1865.
In the High Court, the matter was examined from
three different points of view. The first was the effect
of acquisition of the land by Government upon the
continued assessability of the land to land revenue.
The learned Chief Justice held that by the acquisition
the assessment ceased to subsist. The second was
the effect of the redemption of land revenue by the
Justices by a lump sum payment.
The learned
Chief Justice was of opinion that it had the effect
of cancelling the assessment.
The last was the
effect of the grant free from land revenue, about
which the learned Chief Justice was of opinion that it
freed the land from assessment to land revenue.
Sarkar, J., agreed as to the first, but expressed doubts
about the second and third propositions.
According
to the learned Judge, the acceptance of a lump sum
payment in lieu of recurring annual payments was
more a matter of agreement than a cancellation of
assessment to land revenue.
The matter has been argued before us from the
2 S.C.R. SUPREME COURT REPORTS
605
same points of view; but Mr. Mitra has added an
196°
argument abbout hthe
8
interpretatfio
8
n to be hp~;l.hced on thde Srish Chandra Sen
conveyance y t e ecretary o
tate w ic , accor -
ing to him, only freed the Justices from 'payment' of
Com:r. of
the assessed land revenue but did not cancel the
Income Ta:¥
assessment.
No Act of Legislature bearing upon the power of Hidayatullah J.
Government to accept a lump sum payment in lieu of
the annual demands for land revenue has been brought
to our notice. Counsel admitted that they were unable to find any such legislative provision. We have
thus to proceed, as did the High Court, without having before us the authority of a legislative enactment.
The only materials to which reference was made are:
an extract from the explanatory notes in the Revenue
Roll of the Touzi which shows that an abatement of
land revenue pro tanto was granted to the proprietor
of Panchannagram Estate, and a despatch from the
Secretary of State for India (Lord Stanley)-N o. 2
(Revenue) dated December 31, 1858-recommending
redemption of land revenue by an immediate payment
of a sum of equivalent value, together with a Resolution of Government (Home Department No. 3264
(Rev) dated October 17, 1861) on permission to redeem
the existing land revenue by the immediate payment
of one sum equal in value to the revenue redeemed.
By the resolution, it was provided that such redemption would be limited to 10 per cent of the total revenue in the Collectorate and the price to be paid was to
be fixed at 20 years' purchase of the existing assessment. It may be mentioned that in Despatch No. 14
dated July 9, 1862, the Secretary of State for India
(Sir Charles Wood) did not agree with the earlier
policy, but did not cancel it.
It may thus be assumed that what was done was
under the authority of the Crown, which was then
paramount, which paramountcy included the prerogative to free land from the demand of land revenue
with or without conditions. We have, therefore, to
examine three things: the effect of acquisition on the
continuance of the assessment to land revenue, the
effect of redemption by a down payment on the same,
71
606
SUPREME COURT REPORTS
[1961)
196°
and the effect of the grant, free from land revenue, to
-
the Justices.
Srish Cliandra Sen
The acquistion was under Act VI of 1857. That
Com:,. of
Act provided in s. XXVI as follows:
Income Tax
"When any land taken under this Act forms part
of an estate paying revenue to Government, the award
Hidayatullah J. shall specify the net rent of the land including the
Government. Revenue, and the computed value of
such rent: and it shall be at the discretion of the
Revenue authorities either to pay over the whole of
such value to the owner of the estate on the condition
of his continuing to pay the jumma thereof without
abatement; or to determine what proportion of the
net rent shall be allowed as a remission of revenue, in
which case a deduction shall be made from the said
value proportionate to the value of such remission."
This provision only saved the Estate assessed to land
revenue from liability to pay land revenue proportionately falling upon the land acquired compulsorily,
subject to a like proportionate reduction in the amount
of compensation payable to the proprietor of the
estate, but the provision cannot be stretched to mean
that the liability of the land actually acquired, to land
revenue in the hands of grantees from the Government also ceased.
Be that as it may, it is hardly
necessary to view the present case from this angle at
all, because, whether the land acquired continued to
be subject to an assessment or must be deemed to be
reassessed as a separate estate, the result would be the
same if Government demand still subsisted on it, as,
in fact, it did. There could have been no redemption
of the liability by a down payment if no land revenue
could have been demanded. The fact that the recurring liability was redeemed by a lump sum payment
itself shows that in the view of Government as well as
of the Justices, the 'Square Mile' was still subject to
the recurring demand and was thus still assessed to
land revenue. It is, therefore, not profitable to investigate the effect of acquisition on the continued liability
of the land to land revenue between the time there was
acquisition and the vesting of the land in the Justices.
For the above reason, we need not examine at
2 s.c.R. SUPREME COURT REPORTS
607
length the case in Lord Colchester v. Kewnoy (1), where
1960
the acquisition by the Crown was held not to make 5 . h Ch
d
5
.
.
'
h
rts
an ra
en
the area acquired immune from land-tax, because t e
v.
burden of the tax would then have fallen upon the
Commr. of
remaining land situated in the unit from which it was
Income _Ta11---
acquired and on which unit a quota of the land-tax
was chargeable. Such a position does not arise here, Hidayatullah f.
because the Panchannagram Estate was given abatement and a lump sum was paid to free the land acquired from the liability to land revenue. Similarly, the
d;cision of this Court in The Collector of Bombay v.
!Vusserwanji Rattanji Mistri and Others (9), where on
tpe acquisition of some Foras lands held under ]'oras
Land Act {Bombay Act VI of 1851) the Foras tenure
was declared to have come to an end and on the
same lands being resold by Government as freehold,
they were declared not to be subject to assessment to
which they were previously subject, is not very
helpful.
There do not appear to be any rules prior to 1875,
which were framed under the Land Acquisition Act of
1870 (Act X of 1870) and which are to be found in the
Calcutta Gazette of July 7, 1875, p. 818. If there
were, they have not been brought to our notice. But
a practice similar to the rules seems to have obtained
under s. XXVI of the Act of 1857. That Act also did
not contain any provision for making rules, as are to
be found in the subsequent Acts for compulsory
acquisition of land. In the absence of any statutory
law or rules, we must take the facts to be that after
acquisition the Panchannagram Estate was given
abatement of land revenue, -and the demand for land
revenue was transferred to the land acquired and
granted to the Justices. At that stage, the liability to
assessment remained, and it was that liability which
was redeemed by a down payment.
We next consider the effect of redemption. Learned counsel for the appellant contends that redemption
in this connection means that by a single payment,
the liability for pe.riodical payments is saved but the
assessment on the land remains uncancelled. He has
cited Wharton's Law Lexicon to show the meaning of
(1) (1866) L.R. 1 Exch. 368.
(2) [1955) I s.c.R. 13n.
608
SUPREME COURT REPORTS
[1961]
1960
the word "redemption", which is "commutation or the
S•ish Chandra Sen substitution of one lump payment for a succession of
v.
annual ones: e.g. See the Land Tax and the Tithe
Commr. of
Redemption Acts and manyotherstatutes". Redemplnco>ne To~ tion is the act of redeeming which in its ordinary
meaning is equal to bringing off a charge or obligation
Hidayatullah J. by payment. To what extent this redemption freed
the land or its holder from the obligation depends not
so much upon what the obligation was before redemption as what remained of that obligation after it.
Here, the payment itself was meant to be "an immediate payment of one sum equal in value to the
revenue redeemed" (vide the Resolution of Govern.
ment dated October 17, 1861). By the down payment,
the entire land revenue to be recovered from that land
was redeemed. The payment was equal to the capitalised value of the land revenue. When such a payment took place, it cannot be said that the assessment
for land revenue remained. The land was freed from
that assessment as completely as if there was no
assessment. Thenceforward, the land would be classed
as revenue-free, in fact and in law. In The Land-Law
of Bengal (Tagore Law Lectures, 1895) p. 81 S. C.
Mitra described these revenue-free lands as follows:
"There is another class of revenue-free lands
which comes within these rules laid down in the
Registration and Tenancy Acts, namely, lands of
which Government has, in consideration of the payment of a capitalised sum, granted proprietary title
free in perpetuity from any demand of' land-revenue."
That this is what had happened here is quite
apparent from the conveyance by the Secretary of
State vesting the land in the Justices. It is significant
that there is no mention of the payment of Rs.
7, 728-13-8, nor of the assessability of the lands to
land revenue. On the other hand, the deed of conveyance merely reaffirmed the position, which existed
before by stating:
" ... to hold the said pieces of land, hereditaments
and premises intended to be conveyed with the appurtenances except as aforesaid unto the said Justices of
the Peace for the Town of Calcutta and their successors for ever free and clear and for ever discharged
2 S.C.R. SUPREME COURT REPORTS
609
from all Government land revenue whatever or any
x96o
payment or charge in the nature thereof."
Srish Chandra sen
There can be no doubt that the land revenue was for
v.
ever extinguished and the land became free from land
Commr. of
revenue assessment °in perpetuity. It cannot thereIncome Ta:t
after be said that the land was still assessed to land Hidayalullah J.
revenue.
Mr. Mitra made a great effort to construe the operative part quoted above with the aid of the recital in
the deed, where it was stated:
•: ... but free and discharged from all payment of
land revenue, land tax and all and every tax or imposition in the nature of revenue derivable from land·
payable to Government ... ".
-
He drew attention to the word 'payment', and contended that what was saved was payment of land
revenue. He argued that in case of ambiguity it was
permissible to construe the operative portion of a deed
in the light of the recitals, and cited Halsbury's Laws
of England, 3rd Edn., Vol. XI, p. 421, para. 680,
GW?Jn v. Neath Canal Oo. (1) and Orr v. Mitchell (2). If
there was any ambiguity in the operative portion of
the deed, we may have taken the aid of the recitals.
But there is no ambiguity in the deed. The history of
redemption is a matter of record, and it is plain that
Government was accepting a down payment and
freeing land from land revenue. This is precisely
what was done, and the result of the down payment
is set out with great clarity in the deed itself, and it is
that there was no land revenue assessed on or
demandable from that land. In fact, no demand or
payment or charge in the nature of land revenue could
ever be made on it. In view of this, it is, in our judgment, quite satisfactorily established that this land
was not assessed to land revenue and the income from
it did not fall within s. 2(l)(a) of the Income-tax Act.
The answer given by the High Court was thus correct.
In the result, the appeal fails, and will be dismissed
with costs.
Appeal dismisse,d
(I) (1868) LR. 3 Exeh. 209,
(2) [1893] A. C. 238, 254.