M. Jayamohan and others vs Commissioner of Agricultural Income Tax

Janarthanam J.

These revisions, at the instance of the assessees, are directed against the orders passed by the Commissioner of Agricultural Income Tax,

Madras-5 (for short ""the CAIT""), in suo motu revision proceedings u/s 34 of the Tamil Nadu Agricultural Income Tax Act, 1955, (Act No. V of

1955 - for short ""TNAIT Act""), in SMRP Nos. 45 and 46 of 1987 dated September'' 19, 1989, for the assessment years 1984-85 and 1985-86.

The assessees are the sons of one A. Wilson and his wife Mrs. Leela Wilson. It appears that Mr. A. Wilson died in the year 1969 and Mrs.

Leela died in the year 1979. The assessees, it is said, inherited from their parents 46.17 acres of land in Mancode, Nallor and Kakulam villages.

The assessees, it is said, effected among themselves oral partition of the entire holdings in the year 1977 and pursuant to the oral partition so made,

they enjoyed their individual shares by metes and bounds. It appears that the assessees recorded the oral partition by means of a registered

document in the year 1984.

The Assessing Officer, namely, the Agricultural Income Tax Officer-I, Nagercoil, recognising the oral partition earlier made, passed the

assessment orders for the years 1984-85 and 1985-86 u/s 65 of the Tamil Nadu Agricultural Income Tax Act, in relation to the individual holdings

of the assessees.

The Commissioner of Agricultural Income Tax, after complying with the necessary and requisite formalities, set aside the assessment order for

the said assessment years and issued directions to the Assessing Officer to assess the assessees for the said years, as ""association of persons"",

giving rise to the present actions.

From the pith and submissions of Mrs. Chitra Venkatraman, learned counsel appearing for the assessees, and Mr. T. Mathi, learned

Government Advocate (Taxes) representing the Revenue, the one and only question that crops up for consideration is as to :

Whether, on the facts and in the circumstances of the case, the orders passed by the Commissioner of Agrl. Income Tax in suo motu revision

proceedings u/s 34 of the Tamil Nadu Agricultural Income Tax Act setting aside the orders of the Assessing Officer and directing him to assess the

assessees as ''association of persons'' are sustainable in law ?

Our attention had been drawn to the decision in State of Tamil Nadu Vs. Thiruvalargal Singara Estate, , wherein their Lord-ships of a Division

Bench of this court happened to consider the test for determining the true meaning of the expression ""association of persons"" -

(a) In that case, the son and the grandsons of the testator succeeded to certain shares under a will. The question posed therein was as to whether

the son and the grandsons of the testator succeeding to certain shares under the will could be construed to have formed an association for the

purpose of enjoying the estate.

(b) Their Lordships of the Division Bench of this court, after taking into consideration the test laid down by the Supreme Court in the case of G.

Murugesan and Brothers Vs. Commissioner of Income Tax , Madras, , and also the decision of this court in K. Md. Iqbal v. State of Tamil Nadu

[1992] 1 MTCR 608, ultimately said (page 201 of 217 ITR) :

. . . we are of the view that the Tribunal is right in holding that the son and grandsons of the testator who have got an undivided share in the estate

under the will, cannot be held to have voluntarily come forward to form an association with the object of producing income and make profits or

gains and share the same. But for the will they could not have acquired a one-fifth share each. Therefore, they can only be considered as tenants-

in-common, each having a definite share as per the terms of the will. Hence, we are of the view that the order of the Tribunal does not call for

interference. Accordingly, the tax cases are rejected.

The ratio so laid down is applicable on all fours to the facts of the instant case. The assessees are admittedly Christians. Therefore, it goes

without saying that they are governed by the provisions of the Indian Succession Act, 1925 (Act No. 39 of 1925 - for short ""IS Act""), as respects

inheritance of properties. The assessees, being the sole surviving issues-sons-of their parents, it goes without saying that as per the salient

provisions adumbrated u/s 37 of the Indian Succession Act, the entire holdings of land left by their parents shall be equally divided between the

assessees, that is to say, their surviving children. Such being the case, sure it is, that all the assessees are entitled to a specific and definite share in

the holdings, left by their parents. Therefore, they have to be necessarily a considered as tenants-in-common.

Once they are considered as tenants-in-common, sub-section (3) of section 3 of the Tamil Nadu Agricultural Income Tax Act, will get attracted

for taxing the agricultural income of the lands held as tenants-in-common. The said sub-section prescribes that in the case of persons holding

property as tenants-in-common and deriving agricultural income, the tax shall be assessed at the rate applicable to the agricultural income of each

tenant-in-common. In this view of the matter, we are of the view that the orders of the Commissioner in setting aside the assessments made by the

Assessing Officer for the assessment years 1984-85 and 1985-86 and directing the said Assessing Officer to revise the assessments treating the

assessees as ""association of persons"" are not sustainable in law.

The moment the assessees are treated as persons holding the properties as tenants-in-common, the tax shall have to be necessarily assessed at

the rate applicable to the agricultural income of each tenant-in-common. The Assessing Officer accepted the composition applications filed by the

individual assessees u/s 65 of the Tamil Nadu Agricultural Income Tax Act, accepting the oral partition that came into existence between the

assessees in the year 1977. Whether the assessees are treated as persons holding the property as tenants-in-common or they are enjoying specific

holding of lands, pursuant to the oral partition, the result for taxation purpose is the same, in the sense of the individual assessees being subjected to

tax at the rate applicable to the agricultural income derived from their respective holdings, in the case of submission of returns by them or it is

equally open to them to get assessed by resorting to the method prescribed u/s 65 of the Tamil Nadu Agricultural Income Tax Act. Therefore, the

assessments made by the Assessing Officer for the assessment years 1984-85 and 1985-86 allowing composition to individual assessees u/s 65 of

the Tamil Nadu Agricultural Income Tax Act cannot at all be found fault with and in that view of the matter, we rather feel, we are not far wrong in

ordering restoration of the orders of the Assessing Officer for the assessment years 1984-85 and 1985-86.

These tax case (revisions) are thus disposed of. No costs.