N.B. Bavamooppan vs Commissioner of Agricultural Income Tax

V.V. Kamat, J.—These five references under the Agricultural Income Tax Act really survived for answer to the following question :

" Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the properties purchased by the wife and minor children of the applicant will amount to transfer of assets to the wife and minor children otherwise than for adequate consideration, falling u/s 9(2) ?"

This is because out of the original three questions urged for reference, questions Nos. 1 and 3 are dealt with by the earlier order of this court in O. P. Nos. 3012, 3011 and 3010 of 1993, dated October 7, 1994 (T. L. Viswanatha Iyer and Usha JJ.). It is observed that question No. 3 is only ancillary to question No. 2. It is further observed that question No. 1 proceeds on the assumption that there was a dispute with regard to the source of the amount of consideration as flowing from the assessee and as the Tribunal has specifically observed that there is no dispute with regard to the factual position that the money was advanced by the assessee, the said question could not arise for consideration. This leaves for consideration the above question.

The question is whether the assessee can get the benefit of the provisions of Section 9(2) of the Agricultural Income Tax Act.

In the first instance we had an occasion to deal with the question in I. T. R. No. 39 of 1990 Sunny Kuriakose Vs. Commissioner of Agricultural Income Tax, ) decided on February 7, 1996, to consider the provisions of Section 9(2)(iv) of the Agricultural Income Tax Act, 1950. It is observed that the statutory provision of Section 9(2)(iv) of the Act is crystal clear in computing the total agricultural income of any individual for the purpose of assessment and it is seen that in the process assets transferred directly or indirectly to the minor child by such an individual otherwise than for adequate consideration would have to be included in the plain statutory language of Section 9(2) of the Act. We sought support of the judgment of the co-ordinate jurisdiction in P.M. Paily Pillai Vs. State of Kerala, . relating to the series of transactions exhibiting consistency in its origin with regard to the use of the funds of the assessee having been regarded by the said court as clearly covering the situation with the help of Section 9(2)(a)(iv) of the Act.

The Tribunal has recorded an unequivocal observation that there was no dispute as regards the position that the consideration for the purchase of the properties in the name of the assessee''s wife and minor children was given by the assessee himself.

Learned counsel relied on yet another aspect from the judgment of the Tribunal at the second appellate stage. Learned counsel placed reliance on the following observations in support of his contention :

" He has also pointed out that the money he has advanced to his wife and minor children for purchase of properties of their own has been repaid later in instalments by them on getting income from the properties. "

On the basis of the above observations learned counsel contended that even though the position is undisputed that the consideration has flowed from the assessee, in view of the position that the amounts received from the assessee have been repaid later in instalments by them on getting income from the properties, the transfer would have to be understood for all purposes as being without consideration.

With anxiety with regard to these observations, which are essentially in the nature of submissions at the Bar, we considered firstly the second appellate order of the Tribunal. The Tribunal itself has specifically observed at its internal page No. 6 in the following manner :

" Here, in the cases before us, admittedly, a major portion of the purchase price has been from the assessee and the purchases are in the name of his wife and minor children. The independent source of the wife or minor children is not revealed. There is no condition to live apart, etc."

This shows that there is no independent source with regard to the wife and minor children. In the entire text of the second appellate order of the Tribunal, the above contention regarding repayment appears only in the nature of submission there being no material in support thereof.

Not only that we have also carefully considered the first appellate order of the Appellate Assistant Commissioner (annexure "B"). The factual particulars are clearly seen. It is seen that the properties purchased by the wife, Smt. Nissa, are for the amount of Rs. 4,36,000 totally. The properties purchased in the name of the minor son, Ajith, are for the amount of Rs. 1,53,560. The properties purchased in the name of daughter, Sunitha, are for the amount of Rs. 1,11,771 whereas the properties purchased in the name of the minor son, Prijith, are for Rs. 1,53,560.

The further particulars show that as far as the assessee is concerned, the minor son, Ajith, received Rs. 17,000 and the rest of the amount is in the nature of a loan from the Federal Bank in a kuri. As regards the minor daughter, Sunitha, the amount of loan from the assessee is Rs. 4,400 and regarding the minor son, Prijith, the loan amount is Rs. 19,004.52. Even after carefully going through the order of the first appellate authority, neither of the contentions appears to have been raised and therefore considered. The contention taken up before the first appellate authority concentrated only with reference to the contention that the minors and the wife had their own source of income for all these purchases.

We have also examined the assessment order and find total absence of the above contentions.

As far as the present references are concerned, the contention that the amounts are repaid to the assessee by instalments remains only in the nature of a whisper through the submissions, there being no material in regard thereto. If that is the position, there is no occasion for a doubt that the transaction is hit by the statutory provisions of Section 9(2)(a)(iv) of the Agricultural Income Tax Act, 1950.

Accordingly, the question is answered in the affirmative, in favour of the Revenue and against the assessee.

A copy of this judgment shall be forwarded to the Agricultural Income Tax Appellate Tribunal, Addl. Bench, Ernakulam, under the seal of the court and the signature of the Registrar, as required by law.