2003 (7) TMI 57 - HC - Income Tax

Court rules proceedings without jurisdiction, protects petitioners' rights under Agricultural Income-tax Act

The court ruled in favor of the petitioners, finding that the proceedings initiated by the Assistant Commissioner of Agricultural Income-tax, based on the ... Karnataka Agricultural Income-tax Act, 1957 - omit the words 'and shall continue to be in force for the next two years immediately following or until such time the extent of land holding exceeds the maximum specified in sub-section (1) whichever is earlier' and also the words 'of three years' in sub-section (6) of section 66 - petitioners claim that they are entitled for exemption for the next two years immediately following, in terms of section 66(5) of the Act. According to him, the subsequent amendment cannot render ineffective the earlier composition permission in terms of the Act. – amended provision would show that the Government never intended to withdraw or nullify the permission granted for the subsequent two years in terms of section 66(5)- Held that the petitioners are entitled to claim right in terms of section 66(1) as it stood prior to April 1, 2000, with regard to extension of permission for the subsequent two years Issues:Challenging proceedings initiated by Assistant Commissioner of Agricultural Income-tax based on amendments to the Agricultural Income-tax Act.Analysis:The petitioners challenged the proceedings initiated by the Assistant Commissioner of Agricultural Income-tax, which were based on amendments to the Agricultural Income-tax Act. The petitioners, who owned coffee plantations, had submitted their agricultural income-tax returns and applied for composition under Section 66 of the Act. The respondents directed the petitioners to file returns for a specific assessment year in light of an amendment to the Act. The petitioners contended that the amendment should not affect the earlier composition permission granted to them.In the case of one petitioner, the respondents rejected the request for composition tax payable for subsequent years, leading to the petitioner filing a petition. The respondents opposed the petitions, relying on the amendment to the Act as the basis for their demand. The court heard arguments from both parties, with the petitioner's counsel emphasizing the entitlement to exemption for the next two years following composition permission under Section 66(5) of the Act. The government advocate argued that the petitioners were liable to pay tax as per the amendment, and the earlier permission could not help the petitioners.The court analyzed Section 66 of the Act, particularly subsections (1) and (5), which outlined the composition of agricultural income-tax and the duration of permission granted. The court noted that the permission granted under Section 66 had a life of three years, including the relevant assessment year. The court examined the effect of the amendment on the permission granted before the change and cited Supreme Court judgments emphasizing the principle against interference with vested rights by subsequent legislation. The court concluded that the petitioners' rights under Section 66(1) could not be rendered ineffective by the subsequent amendment.The court found that the subsequent proceedings initiated by the respondent were without jurisdiction and set them aside. A direction was issued to the respondent not to proceed under the Act until the three-year period mentioned in Section 66(5) elapsed, including the relevant assessment year. The court reserved liberty to the authorities to take action after the three-year period as per the law. The petitions were allowed, and parties were directed to bear their respective costs.