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Judgment
Mohan, J.
W.P. Nos. 2960/75, 1581/76 1948/76 and 1972/76
All these writ petitions raise a common question of law as to the scope of section 4(b) introduced in the Tamil Nadu Agricultural Income Tax
Act, 1955 (V of 1955). The said section 4(b) came to be introduced by the Tamil Nadu Act No. 4 of 1973 with effect from April 1, 1972.
Suffice it for me to note the facts of W.P. No. 2960 of 1975. The petitioner had been assessed under the Tamil Nadu Agricultural Income Tax
Act (hereinafter referred to as ""the Act"") for an extent of 124.50 acres equivalent to 72.37 a composition basis. The petitioner had settled an
extent of 50.46 ordinary acres in the name of a private trust called Nagakulam Bungalow Krishna Pooja Trust on May 14, 1955. Since the
Agricultural Income Tax Officer was of the view that this trust cannot be a public or religious or charitable trust and as it would attract section 4(b)
of the Act, the extent was clubbed in the holdings of the petitioner from 1973-74 for the purpose of assessment. The petitioner filed a revision
petition before the Commissioner of Agricultural Income Tax u/s 34 of the Act. After hearing the advocate for the petitioner, it was rejected on
February 4, 1975. Aggrieved by this order, the petitioner has preferred this writ petition to quash the order of the Agricultural Income Tax Officer
made in GIR. No. 108/A-73-74 dated October 16, 1974, in so far as it relates to the year 1973-74.
W.P. No. 1581 of 1976 relates to 1975-76, while W.P. No. 1948 of 1976 relates to 1974-75 and W.P. No. 1972 of 1976 relates to 1969-
It is the contention of the learned counsel for the petitioner, Mr. R. Kunchithapatham, that a careful reading of section 4(b) of the Act would
disclose that the agricultural income derived by a charitable or religious trust like the petitioner trust is exempt under the Income Tax Act, in view of
section 10 of the Income Tax Act, and, therefore, in as much as reference is made to that provision of the Income Tax Act, by section 4(b) of the
Tamil Nadu Agricultural Income Tax Act, the very basis of taxation is illegal. In support of this contention, reliance is placed upon my judgment in
W.P. Nos. 422 and 423 of 1976 (Rajam Chettiar Annadhana etc., Charities v. Agricultural Income Tax Officer).
Mr. K. Venkataswami, the learned Additional Government Pleader in meeting this submission states that my judgment in W.P. Nos. 422 and
423 of 1975 (Rajam Chettiar Annadhna, etc., Charities v. Agricultural Income Tax Officer) requires reconsideration, since when the amending Act
introduced section 4(b), it was with the avowed object of subjecting agricultural income derived by a charitable and religious trust to tax. All the
more so, when the very purpose of the Act, namely, the Tamil Nadu Agricultural Income Tax Act, is to levy tax on agricultural income. Therefore,
if section 10 of the Indian Income Tax Act, is alone got incorporated, the agricultural income held by a religious or a charitable trust would be
exempt. That would frustrate the very amendment. Consequently, what have to be looked into are sections 11, 12 and 13 of the Income Tax Act,
1961. Having regard to the language of section 4(b) of the Act, namely, ""to the same extent to which income derived from property held under
trust wholly or partly for charitable or religious purposes"", it should have reference only to the non-agricultural income. In other words, what has to
be found out is how under the Income Tax Act, income derived from non-agricultural property held by a charitable or religious trust is taxable, to
the same extent agricultural income would be taxable u/s 4(b) of the Act. Any other interpretation would lead to utter confusion. If would amount
to attributing wisdom to the legislature, as if the legislature was not aware of section 10(1) of the Income Tax Act, which confers a specific
exemption as far as the agricultural income is concerned.
Man grows wiser by experience; and this principle is aptly illustrated in this case. In my judgment in W.P. Nos. 422 and 423 of 1975 (Rajam
Chettiar Annadhana, etc., Charities v. Agricultural Income Tax Officer) the aspect which is now put forth by the learned Additional Government
Pleader was not ever urged. By stating so, is do not propose to disown the responsibility for my judgment. In fact, the interpretation sough to be
placed by the learned counsel for the petitioner found acceptance at my hands as a result of which I held that the agricultural income would be
exempt. By such an interpretation, the very object and the purpose of section 4(b) of the Act got thwarted. As rightly contended by the learned
Additional Government Pleader, the object of the Agricultural Income Tax Act is to tax agricultural income. Such an income derived from a
charitable or religious trust was exempt till the amending Act 4 of 1973. It was this exemption which was sought to be withdrawn so that, that
income also would become liable for taxation. Could it be said, under those circumstances, that the Tamil Nadu legislature looked at section 10(1)
alone and wanted to incorporate that provision of the Income Tax Act ? If that be so, how could this purpose be achieved ? Of course, it may be
possible to contend that, however well intentioned it might have been, it was not carried out in effecting the amendment. In fact, that is the
contention urged on behalf of the petitioner. I am unable to accept this contention since it would lead to not only frustrate the object of the section
but it does not even appear to be a good construction. As to why I held so will be evident from the following. Section 4 defines the scope of total
agricultural income. Originally, all agricultural income derived from land situated within the State, which is received by the assessee or which
accrued to him within or without the State was assessable. But that income did not include, in view of clause (b) as it stood then, any agricultural
income derived from property held under trust or other legal obligation wholly for religious or charitable purpose, and in the case of property so
held in part only for such purpose, the income applied thereto. This exemption is withdrawn by the amending section 4(b). That amendment reads
any agricultural income derived from property held under trust, wholly or partly for charitable or religious purposes, is not included in the total
income for purposes of the Income Tax Act, 1961 (Central Act 43 of 1961)"". What does ""the income derived from the property held under trust
wholly or partly for charitable or religious purposes"" mean ? Is it to mean only non-agricultural income ? Otherwise, the legislature could have
either said agricultural income or, to avoid redundancy, such income, meaning thereby agricultural income and this is spoken to in the beginning of
this clause. If this is the interpretation, reference to section 10(1) of the Income Tax Act was not in contemplation. What then are the section of the
Income Tax Act that are sought to be incorporated ? It is where sections 11, 12 and 13 of the Income Tax Act require to be looked at. These
sections occur under Chapter III which deals with income which do not form part of the total income.
Section 11 deals with income from property held for charitable or religious purposes. Obviously, therefore, it is this section to which reference
by incorporation will have to be made, since the well-accepted principle of law is, special excludes the general (generalibus specialia derogant).
Section 12 deals with income of trusts or institutions from contributions. Section 13 lays down the conditions for exemption. Having exempted the
agricultural income derived by a charitable or religious trust u/s 10(1), could it be said that the same income is sought to be taxed under sections 11
to 13 ? On the contrary, when both clauses (a) and (b) of section 11(1) say income derived from property held under trust, it could only mean the
income derived from non-agricultural property. This is the only way to construe harmoniously all the sections. Therefore, the learned Additional
Government pleader is well-founded in his submission. Consequently, I hold that my judgment in W.P. Nos. 422 and 423 of 1975 (Rajam Chettiar
Annadhana, etc., Charities v. Agricultural Income Tax Officer) does not lay down the correct law.
As regards individual cases, in W.Ps. Nos. 1948 and 1972 of 1976, the petitioner has not still exhausted the statutory remedy to appeal to the
Tribunal; and it is well open to him to urge that the clubbing of his private income with that of the trust is not warranted under the provisions of the
Act. The petitioner will file the appeals within two weeks from to-day before the Tribunal in which event the plea of limitation cannot be put against
him. I am sure this question will be considered in its proper perspective. Hence W.Ps. Nos. 1948 and 1972 of 1976 are dismissed with costs.
Counsels fee Rs. 200 (one set).
W.P. No. 1581 of 1976 is directed against the order u/s 17(4) of the Act. The matter will stand remitted to the Agricultural Income Tax Officer
who will proceed to issue fresh notices and assess or continue the composition in the light of the observations made above after affording the
petitioner an opportunity to make representations either in person or though counsel.
W.P. No. 2960 of 1975 : The matter will stand remitted to consider the question whether the private income of the petitioner could be clubbed
with that of the trust and assessment made. Therefore, the impugned assessments are hereby set aside and the assessing authority will proceed to
issue fresh notices and assess or continue the composition in the light of the observations made above, after affording an opportunity to the
petitioner to put forth his representations either in person or through counsel.
W.Ps. Nos. 3864 to 3869 of 1975
Applying my judgment in W.P. Nos. 2960 of 1975, these writ petitions will stand dismissed with costs. Counsels fee Rs. 500 (one set). Since
these writ petitions are directed against notices u/s 16(2) of the act and inasmuch as I have dismissed these writ petitions, the assessing officer will
proceed to continue this assessment, however, after affording an opportunity to the petitioner to file his representations either in person or through
counsel. The said representations will be filed within six weeks from this date before the assessing authority.