1956 (5) TMI 38 - HC - Income Tax

Land not assessed to revenue, payment for freeing land, conveyance confirms transfer as revenue-free. Judge hesitated but agreed.

Srish Chandra Sen Versus Commissioner of Income-tax

The land in question was not assessed to land revenue within the meaning of section 2(1)(a) of the Indian Income-tax Act during the relevant assessment ... - Issues Involved:1. Whether the land in question was assessed to land revenue within the meaning of section 2(1)(a) of the Indian Income-tax Act during the relevant assessment years.Detailed Analysis:1. Background and Procedural Issues:The case involves a reference under section 66(1) of the Indian Income-tax Act, which poses a challenging legal question. The difficulty in reaching a satisfactory decision is compounded by the unavailability of certain crucial information and documents, despite requisitions made to the Board of Revenue, the Collector of 24 Parganas, and the Corporation of Calcutta. The paper-book is notably deficient, containing only the application for a reference, the respondent's reply, and various orders related to the assessments, but not the documentary evidence referred to by the Tribunal.2. Facts of the Case:The assessee, a Hindu undivided family, holds a square mile of land in the southern suburbs of Calcutta under a long lease from the Calcutta Corporation. The land, acquired in 1865 by the then Government of Bengal for the Corporation's conservancy purposes, is used for drainage outfall and refuse dumping. A portion of the land is under cultivation and let out to cultivating tenants, from whom the assessee receives selami and rent. The assessee claimed that the income from this portion was agricultural income and exempt from tax under section 4(3)(viii) of the Income-tax Act. The Income-tax Officer disallowed the claim, stating that the land was revenue-free since the Government had granted a redemption of the land revenue after its acquisition. The Appellate Assistant Commissioner accepted the assessee's contention, but the Tribunal reversed this decision, holding that the payment received by the Government was for freeing the land from the revenue charge permanently.3. Legal Framework and Historical Context:The Corporation of Calcutta was constituted by Bengal Act No. VI of 1863, which allowed it to acquire land for public purposes. The land in question was acquired under the First Land Acquisition Act (Act VI of 1857), which vested the land absolutely in the Government, free from all other estates, rights, titles, and interests. The land was part of the Panchanagram Estate, bearing an annual land revenue of Rs. 3,198-0-9. Upon acquisition, the Corporation paid compensation and an additional sum of Rs. 7,728-13-8 as '20 years' purchase of the rental,' which was the capitalised value of the land revenue.4. Effect of Acquisition and Redemption:The acquisition under Act VI of 1857 extinguished all interests in the land other than those of the Government. The Supreme Court's decision in Collector of Bombay v. Nusserwanji Rattanji Mistri clarified that such acquisition destroys all existing tenures and assessments. The land, upon acquisition, ceased to be part of a revenue-paying estate, and the assessment of land revenue was extinguished. The additional payment by the Corporation was not an advance payment of land revenue but consideration for freeing the land from the revenue charge.5. Redemption of Land Revenue:The concept of redemption of land revenue involves the payment of a capitalised sum to discharge the annual revenue liability. The correspondence between the Government of India and the Secretary of State during 1858-1862 indicates that the scheme of redemption was intended to allow holders of revenue-assessed land to make a lump-sum payment, thereby freeing the land from future revenue demands. The payment of Rs. 7,728-13-8 by the Corporation was described as '20 years' purchase of the rental,' indicating that it was the capitalised value of the revenue charge.6. Conveyance and Its Implications:The indenture of conveyance executed in 1870 granted the land to the Justices of the Peace for the Town of Calcutta, free from all Government land revenue. This conveyance confirmed that the land was transferred as revenue-free, and the payment made by the Corporation was for the purpose of freeing the land from the revenue charge permanently.7. Judgment:The judgment concludes that the land, upon acquisition and subsequent conveyance, was no longer assessed to land revenue. The additional payment made by the Corporation was not for redeeming an existing assessment but for compensating the Government for the loss of future revenue. The conveyance explicitly stated that the land was transferred free from all Government land revenue, confirming that it was revenue-free.8. Separate Opinion:One judge expressed some hesitation, noting that the payment of Rs. 7,728-13-8 could be interpreted as a remission of land revenue, implying that the land was still assessed to revenue. However, he ultimately agreed with the conclusion that the land was not assessed to land revenue during the relevant assessment years.Conclusion:The land in question was not assessed to land revenue within the meaning of section 2(1)(a) of the Indian Income-tax Act during the relevant assessment years. The payment made by the Corporation was for freeing the land from the revenue charge permanently, and the conveyance confirmed that the land was transferred as revenue-free.