THE PROVINCE OF BIHAR vs RAMCHARITAR MAHTON.

MEREDITH, J. - The question that has been referred to us by the Board of Agricultural Income Tax at the instance of the assessee is :-

"Whether an assessment can legally be made for the Fasli year ending September 1944, on the basis of an Act passed during the course of that year and which came into force on publication in the Bihar Gazette dated March 14, 1944."

Under Section 5 of the Bihar Agricultural Income Tax Act (VII OF 1938) agricultural Income Tax shall be payable by a person whose total agricultural income of the provious year exceda Rs. 5,000. There was a proviso reading as follows :-

"Provided that the tax shall not be payable by a person who receive no agricultural income other tham income referred to in sub-clause (2)(i) of clause (a) of Section 2 and who is in cultivating possession of less than 200 acres."

This proviso was deleted by Act IV of 1944, which is stated to have come into force on the March 14, 1944. The assessment with which we are concerned was made upon the income for the year 1351 Fasli, that is to say, the period extending from the September 15, 1943, to the September 2, 1944. The income was assessed at Rs. 5,503, and the areas cultivated by the assessee is 181.58 acres. Therefore, the proviso would have saved the assessee from liability. But he is liable u/s 5 without the proviso.

The contention for the assessee is that the bulk of his income on which the assessment has been made accrued prior to the deletion of the proviso, the land being wheat producing land. He cannot, therefore, be made liable to pay Income Tax on that income unless it be held that Act of IV of 1944 has retrospective effect.

The Board has expressed the opinion that the assessee could get no benefit at the time of assessment from the proviso, and, in my opinion, that view is the correct one. No question seems to arise as to whether Act IV OF 1944 is retrospective. The assessment has been made upon the income for the year 1351 Fasli. u/s 3 of the Act agricultural Income Tax is to be charge for each financial year, in accordance with the subject to the proviso of the Act, on the total agricultural income of the previous year. The tax having been assessed on the income for 1351, that year is the previous year within the meaning of Section 3. The definition of the previous year is to be found in Section 2(O) : "Previous year means the agricultural year, the last day of which falls within the financial year for which the assessment is to be made, etc." It follows that the previous year having ended in September 1944, the assessment was made for the financial year 1944-45 beginning on the April 1, 1944. The assessment has, therefore, been for a financial year which began after the deletion of the proviso.

The confusion in the argument seems to lie in this : that the income of the previous year, that is to say, the year 1351 Fasli, is only the basis of calculation. The calculation is to be made upon the income for the previous year, not upon the taxable income of the previous year. It clearly makes no difference at all whether during that year, which is used as a basis for calculation, the assessee was a taxable person or not. The important question is whether he was a person liable to t ax during the financial year foie which assessment was made. The assessment was made for the financial year 1944-45, and for the entire period of that year from the beginning the assess was a person liable to tax as the proviso had been deleted before the beginning of that financial year.

Upon an analysis of the position it is apparent that there is no substance in the contention for the assessee. I would, therefore, answer the question by saying that the assessment in question could be legally made. The agricultural Income Tax department is entitled to its costs which we assess at Rs. 250 inclusive of the sum of Rs. 100 which has been deposited.

AGARWALA C.J. - I agree.

Reference answered accordingly.