K.P.M. Abdul Majeed P. Kondagai vs The Assistant Agricultural Income Tax Officer

K. Veeraswami, J.—These are petitions under Article 226 of the Constitution for a direction forbidding the Assistant Agricultural Income

Tax Officer, Nannilam, from proceeding against the common petitioner for assessment of the agricultural income. He and his brother K.P.M.

Abdul Khader owned 309-66 acres of wet and dry lands in Nannilam taluk. They divided the properties by metes and bounds under a deed of

partition dated 21st July, 1952, each getting a moiety of the estate. The petitioner, thereafter, by two deeds dated 23rd March, 1955 and 15th

March, 1958, settled his entire share of lands on his wife and minor children. Though the settles individually applied for composition under the

provisions of the Madras Agricultural Income Tax Act, the Agricultural Income Tax Officer clubbed all the lands, including the share allotted to

K.P.M. Abdul Khader and charged the total income from the entire lands to agricultural Income Tax. This order was eventually set aside by this

Court in T.C. No. 52 of 1963 on the view that the assessment made on the basis of an association of persons was illegal. The Agricultural Income

Tax Officer then served on the petitioner a notice dated 13th January, 1965, to show cause why he should not be assessed to tax in respect of the

income from the lands settled by him on his wife and minor children. The officer in Justification relied on Section 9 (2) and expressed his intention

to proceed under that provision. All these was for the year 1959-60. Ignoring the petitioner''s objection that in view of the settlement made in

favour of his wife and minor children, he did not own any land to attract the provisions of the Act, the Agricultural Income Tax Officer served

further notices on him asking for his income from the entire lands u/s 9 (2). The petitioner has, therefore, applied to this Court for a direction as we

mentioned at the outset.

We think that the petitions are well founded. It does look strange at first sight that if a holder of lands settles part of them on his wife and/or

minor children by way of gift and the lands retained by him exceed the limit for exemption u/s 10 (1), the income from the lands so settled was

liable to be included in the income of the settlor; but if he transferred by way of a gift to his wife and or minor children his entire lands, the

provisions of the Act; would be inapplicable to him. But on a careful consideration of Sections 10 (1), 9 (2) to the definition of ""to hold,"" we are

clearly of opinion that will be the result., Section 10 (1) is specific in its terms that nothing contained in the Act shall apply to a person who holds

land not exceeding twelve and a half standard acres before the amendment in 1968. There is a proviso to the sub-section which we need not recite

for present purposes. The expression "" to hold "" is defined to mean, to possess and enjoy either as owner or tenant or mortgagee in possession or

as a maintenance holder or in one or more of these capacities. When a person denudes himself of the entire land owned by him, by making a gift

thereof to his wife and/or minor children, by the terms of Section 10(1) and the definition of the expression '' to hold '', the provisions of the Act

would be inapplicable to him. There is nothing in Section 9 (2) to alter the position. That provision only requires the income which has been derived

from the assets transferred by a person to his minor child, to be included in his income. It does not deal with the ownership or possession of the

lands, and contains no deeming provisions that in a case like this, by a fiction and notwithstanding the settlement, the transferor should be deemed

to own the lands forming the subject-matter of transfer without consideration. The result is that the petitioner in these petitions holding as he does

no lands, or land not in excess of twelve and a half standard acres before the 1968 amendment, is not affected by any of the provisions of the

Madras Agricultural Income Tax Act. If follows the direction proceeding from the respondent is clearly invalid.

The petitions are allowed with costs, one set. Counsel''s fee Rs. 200.