Mahanth Ramswaroop Das Vs. The State of
Bihar  INSC 7 (11 January 1961)
CITATION: 1961 AIR 1147 1961 SCR (3) 405
Agricultural Income-tax-Estate in management
of Court Receiver-Owner if liable to be assessed to tax for such period-Bihar
Agricultural Income-tax Act, XXXII of 1948, ss. 2, cl. (m), 3 and 13.
The appellant was the Mahant of the Asthal
Estate in Bihar which was in the management of a Receiver appointed by the
Civil Court in a suit relating to the estate. On appeal the question that arose
for decision in this Court was whether the appellant Mahant was liable to be
assessed under the Bihar Agricultural Income-tax Act, 1948, to pay agricultural
income-tax for the year in which the estate was in the management of the Court
Held, that the income though collected by the
Receiver was the income of the appellant. By virtue of the provisions of ss. 2,
cl. (m) and 13 of the Bihar Agricultural Income-tax Act it was open to the
taxing authorities to treat the Receiver as the assessee because he held the
property from which income was derived, but on that account the income in the
hand of the owner was not exempt from liability to assessment of tax. Section 3
of the Act provides for charging agricultural income of every person " as
defined in s. 2, cl. (m) which includes a receiver and S. E3 merely provides a
machinery for recovery of tax from "Persons" including receivers and
is not by itself a charging section.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No.449 of 1958.
Appeal by special leave from the judgment and
decree dated August 7, 1956, of the Patna High Court in Misc. Judicial Case No.
604 of 1953.
406 D. P. Singh, for the appellant.
S. P. Varma, for the respondent.
1961. January 11. The Judgment of the Court
was delivered by SHAH, J.-The High Court of Judicature at Patna answered in the
affirmative the following question which was submitted by the Board of
Agricultural Income-tax, Bihar, under s. 28(3) of the Bihar Agricultural
Income-tax Act, XXXII of 1948-hereinafter referred to as the Act:
" Whether, in the facts and
circumstances of the case, the petitioner could be legally assessed for the
income of the Estate in 1355 Fasli when the Estate was in the hand of the
Receiver ? " With special leave under Art. 136 of the Constitution, this
appeal is preferred against the order of the High Court.
The appellant is the Mahant of the Asthal
Estate, Salauna, in the District of Bhagalpur in Bihar. In a suit concerning
that estate, a Court Receiver was appointed by the First Class Subordinate
Judge, Monghyr, to manage the estate. The Receiver functioned till sometime in
December, 1949, and under the order of the Subordinate Judge he handed over
charge of the estate to the appellant on January 8, 1950.
On January 15, 1950, the appellant submitted
a return of income of the estate to the Agricultural Income-tax Officer,
Monghyr, for the Fasli year 1355 corresponding to September 16, 1948, to
September 15, 1949. The Agricultural Income- tax Officer assessed on August 7,
1950, the agricultural income of the estate at Rs. 90,507-2-6 and ordered the
appellant to pay Rs. 20,290-13-0 as agricultural income-tax.
Appeals against the order of assessment
preferred to the Commissioner of Agricultural Income-tax and the Board of
Agricultural Income-tax, Bihar, were unsuccessful. The Board however referred
the question set out hereinbefore to the High Court under s. 28(3) of the Act
as arising out of its order.
The only question which falls to be
determined in this appeal is whether the appellant was liable to be assessed to
pay agricultural income-tax for the year 407 in which the estate was in the
management of the Court Receiver. Section 3 of the Act which is the charging
" Agricultural income-tax shall be
charged for each financial year in accordance with and subject to the
provisions of this Act on the total agricultural income of the previous year of
every person." By s. 4,it is provided:
Save as hereinafter provided, this Act shall
apply to all agricultural income derived from land situated in the State of
Bihar." The income of the estate of the appellant was not exempt from
payment of tax and by virtue of s. 3, agricultural income-tax was charged upon
the income for the assessment year in question, and the appellant was prima
facie liable as owner of the estate to pay tax on that income. The appellant
however relied upon s. 13 of the Act which provides:
" Where any person holds land, from
which agricultural income is derived, as a common manager appointed under any
law for the time being in force, or under any agreement or as receiver,
administrator or the like on behalf of persons jointly interested in such land
or in the agricultural income derived there from, the aggregate of the sums
payable as agricultural income-tax by each person on the agricultural income
derived from such land and received by him shall be assessed on such common
manager, receiver, administrator or the like, and he shall be deemed to be the
assessee in respect of the agricultural income-tax so payable by each such
person and shall be liable to pay the same." The appellant urged that if
the land from which agricultural income is derived is held by a Receiver and
the income is received by the Receiver, the Receiver alone can, by virtue of s.
13, be deemed to be the assessee and the Receiver alone is liable to pay the
tax in respect of that income.
In support of his contention, the appellant
relies upon the definition of the word., " person " in s, 2, cl. (m)
408 Person' mean,% any individual or
association of individuals, owning or holding property for himself or for any
other, or partly for his own benefit and partly for another, either as owner,
trustee, receiver, common manager, administrator or executor or in any capacity
recognised by law, and includes an undivided Hindu family, firm or
company." In our view, there is no substance in the contention raised by
the appellant. The liability to pay tax is charged on the agricultural income
of every person. The income though collected by the Receiver was the income of
By s. 13, in addition to the owner, the
Receiver is to be deemed to be an assessee. But the fact that the Receiver may,
because he held the property from which income was derived in the year of
account, be deemed to be an assessee and liable to pay tax, does not absolve
the appellant on whose behalf the income was received from the obligation to
pay agricultural income-tax. Section 13 merely provides a machinery for
recovery of tax, and is not a charging section. When property is in the
possession of the Receiver, common manager or administrator, the taxing
authorities may, but are not bound to, treat such persons as assessees and
recover tax. The taxing authorities may always proceed against the owner of the
income and assess the tax against him. The definition in the connotation
of" person " undoubtedly included a receiver, trustee, common
manager, administrator or executor, and by such inclusion, it is open to the
taxing authorities to assess tax against any such persons; but on that account,
the income in the hand of the owner is not exempt from liability to assessment
Counsel for the appellant urged that the
income received by the appellant from the Receiver did not retain its character
of agricultural income and therefore also the appellant was not liable to pay
agricultural income-tax. But this contention was never raised before the taxing
authorities and no such question has been referred to this court. The character
of the income was accepted to be agricultural 409 income in the hands of the
appellant and the only question which was sought to be referred and raised
before the Board of Agricultural Income-tax was one as to the liability of the
appellant to be assessed to agricultural income-tax for the year in question.
In that view of the case, the appeal fails
and is dismissed with costs.