Jani Kuer vs State of Bihar

Sarjoo Prosad, J.—This is a reference u/s 28 (3), Bihar Agricultural Income Tax Act, made by the Board of Agricultural Income, tax. This reference was called for by the Court at the instance of the petitioner, the Maharani of Bettiah, whose estate is under the Court of Wards, and it refers to an assessment during; the agricultural year 1352 Fasli corresponding to 1944-45. The only point under reference is

"Whether the assessee whose estate is under the Court of Wards and is guided by the provisions of the said Act in making payments of all demands, is entitled to deduction of the general rate and audit rate u/s 6 (b) and Section 7 (3) (b), Agricultural Income Tax Act paid to and collected by the Provincial Government under Bihar Court of Wards Act or the Publics Demands Recovery Act in pursuance of rules having the force of law framed by the Government of Bihar under Act X [10] of 1892 (Government Management of Private Estates Act)?"

The, reference has been necessitated because the petitioner assessee claimed deductions on account of certain payments made by her manager under the Court of Wards on account of the costs of audit and general rates levied under Act X [10] of 1892. The amounts under the above claim on account of the said deductions are a sum of Rs. 30,691 of the management charges paid to the Government of Bihar and Rs. 17,378 on account of the audit rate. The-revenue authorities refused to allow these deductions on the ground that the retes were not levied in respect of the lands from which agricultural income was derived, and, therefore, the claim for the deductions was not sustainable u/s 6, Bihar Agricultural Income Tax Act.

On behalf of the assessee it is contended: that the said deductions claimed by the assessee would come within the meaning of Section 6 (b) and 7 (3) (b) of the Act, and, therefore, it should have been held to be admissible by the revenue authorities. Now, Section 6 (b) of the Act refers to sums paid in respect of the land from which agricultural income is derived byway of local cess or rate collected under any Bengal Act or under any Bihar and Orissa Act or under any Bihar Act. Here the general rate and the audit rate in wards estates are levied u/s 3, Government Management of Private Estates Act, 1892, which is neither a Bengal Act, nor a Bihar and Orissa Act, nor a Bihar Act-as contemplated by Clause (b) of Section 6. In regard to audit rate, there is no specific provision for deduction u/s 6 at all. Now Section 7 (3) provides, rules prescribing the manner of determining the net amounts of agricultural income for the purpose of Clause (b) of Sub-section (l) of the section which) is to be on the net amount of such income after making the permissible deductions, namely, the sum actually paid in the previous year in respect of each land as any local cess or rate collected under any Bengal Act or under any Bihar and Orissa Act or under any Bihar Act. Here again the same difficulty arises and Section 7 (3) (b) also has no application to the case. Mr. Baldeo Sahay for the petitioner, however, contends that the Government Management of Private Estates Act only provides for the levy of the management and audit charges and the rules framed thereunder prescribe the rates for such charges, but there is no machinery in the Act for realisation of these charge Section These charges, therefore, on his submission become payable and are collected from the estate by virtue of Section 48, Court of Wards Act under which the manager of the Court of Wards is bound to make certain payments of public demands and other charges. It is, therefore, contended that the payment having been made by the operation of Section 48, Court of Wards Act, it should be deemed that the payment was collected under a Bihar Act, and, as such, would fall u/s 6 (b) or u/s 7 (3) (b), Agricultural Income Tax Act. This argument, in my opinion, is too far-fetched to be accepted. It is true that the Government Management of Private Estates Act does not provide for the realisation of the charges leviable u/s 3 of the Act but the power to collect the charges must be implied in the power to levy the charges in question, and in any case there is a provision u/s 7 of the Act enabling Government to frame rules for the purpose of giving effect to the provisions of the Act. Even though Government may not have framed rules for that purpose, they can always do so, and, in any event, the charges leviable u/s 3 can be recovered by suit. u/s 48, Court of Wards Act, although the manager of the Court of Wards is under the law bound to make the payments as required by the Act, still it cannot be said that the various payments made by the manager are collected under that section. The manager may have to pay public demands, may have to pay Government revenue, may have to pay Income Tax and various other charges; and, the payments so made are not collected u/s 48 of the Act but they are actually collected under various other Acts under which the liability of the estate arises to make those payments. It is contended that the manager in making these payments is really fulfilling a double function; on the one hand, he is making payments as the manager of the estate, and, on the other he should be deemed to have collected these payments on behalf of Government. The underlying fallacy to this argument is that it is not the manager who is collecting but the collections are made by the Government treasury in respect of these charges. Therefore, it cannot be contended with success that the aforesaid payments should be deemed to be collections u/s 48, Court of Wards Act, and, as such, are deductions permissible under Sections 6 (b) and 7 (3) (b), Agricultural Income Tax Act. At first sight it may appear a little hard on the assessee not to be allowed these deductions although the payments have been made in respect of Government demands but the Agricultural Board of Revenue points out that there is no hardship involved inasmuch as a general deduction of 12 1/2 per cent. on account of collection charges is permissible under the law as provided in Section 6 (c), Agricultural Income tax Act. It is stated by the Board that private estates are also audited but no separate deductions are allowed to them in respect of audit charges, and in its opinion these costs incurred by the estate are in the nature of costs of supervision and management all included in collection charges. There may be some strength in this observation of the Board though it is unnecessary for us to decide the matter in answering the present reference. I have held above that the deductions claimed do not come within the language of Section 6 (b) or Section 7 (3) (b), Agricultural Income Tax Act, and, as such, the assessee is not entitled to the deductions.

The answer to the question submitted to us is, therefore, in the negative, and the reference may be answered accordingly. The Department will also be entitled to the costs of this reference, hearing fee Rs. 100.

Shearer, J.

I agree.