V. Savarimuthu Nadar, Kanyakumari vs Commissioner of Agricultural Income Tax, Board of Revenue, Madras

Veeraswami, J.—The question referred to us under Sec. 60(2) of the Travancore-Cochin Agricultural Income Tax Act, 1960, is:

Whether the document No. 1342 of the Sub-Registrar''s Office, Agasthiswaram, dated 15-6-1965 is a valid partition deed or a settlement

attracting the provisions of S. 9(1) of the Travancore-Cochin Agricultural Income Tax Act.

The assessee belongs to Nagarcoil and has been assessed for the assessment year 1960-61, to agricultural Income Tax on the income from

certain lands covered by the document dated 15-6-1955 and described as a deed of partition. His contention that it was not a settlement deed

was not accepted by the Revenue, which considered that the deed attracted Sec. 9 (1) of the Act and proceeded to assess on that basis.

We have perused the deed. The parties are said to be Christians. Some of the properties were obtained by the assessee at a family partition and

the rest of them acquired by him out of his own funds. The entire properties were divided into three schedules A, B and C. The A schedule

properties were allotted to the assessee and the B and C Schedule properties to each of his two sons respectively. So far as the A schedule

properties were concerned, the provision in the deed was that the assessee must take them absolutely. As regards the other schedules, the sons

should take only a restricted or limited interest and there were also restrictions on their powers of alienation. The father had, under the Christian

law, absolute powers of disposition over the entire properties and it was open to him to divide the properties among his sons. That is what he did

in the deed, and, in this sense, it may be regarded as a deed of partition. The father, in his absolute right over the properties, could regard some as

belonging to all the three jointly and proceed to divide them, subject of course to the restriction in relation to the B and C schedules. The

restrictions on these schedules can be supported on the basis of agreement as between the three. Looked regarded as a deed of partition and as a

valid one.

Even assuming that the deed is not of one of partition, we are of the view that as a settlement deed it will not attract S. 9(1). Sec. 9(1) is in these

terms:

In computing the total agricultural income of an assessee, all agricultural income arising to any person by virtue of a settlement or disposition

whether revocable or not, and whether effected before or after the commencement of this Act, from assets remaining the property of the settlor or

disponer shall be deemed to be the agricultural income of the settlor or disponer and all agricultural income arising to any person by virtue of a

revocable transfer of assets shall be deemed to be the agricultural income of the transferor;

Provided that for the purpose of this sub-section a settlement, disposition or transfer shall be deemed to be revocable if it contains any provisions

for the retransfer directly or indirectly of the agricultural income or assets to the settlor, disponer or transferor or in any way gives the settlor,

disponer or transferor a right to reassume power directly or indirectly over the agricultural income or assets;

Provided further that the expression ''settlement or disposition shall, for the purpose of this sub-section include any disposition, trust, covenant,

agreement or arrangement and the expression ''settlor or disponer'' in relation to a settlement disposition shall include any person by whom the

settlement or disposition was made;

Provided also that this submission shall not apply to any agricultural income arising to any person by virtue of a settlement or disposition which is

not revocable for a period exceeding six years or during the lifetime of the persons and from which agricultural income the settlor or disponer

derives no direct or indirect benefit but that the settlor shall be liable to be assessed on the said agricultural income as and when the power to

revoke arises to him.

In order that the section may apply, the disposition under the settlement should be of the income merely from the properties and the properties

must remain the properties of the settlor. Unless these two elements are satisfied there is no question of the section applying. In this case settlement

in favour of the sons was certainly not of the income; nor is it a case that under the deed the assets from which the income came remained the

property of the settlor. Whether the settlement is revocable or not, since the elements above mentioned required for the application of the section

are not satisfied, Sec. 9 will not apply to the instant case.

Our answer to the question is therefore in favour of the assessee with costs and against the department. Counsel''s fee Rs. 250.

EJ/RSK/D.V.C.

Reference answered.