Transferred property income taxed under agricultural income-tax law despite no current ownership; contextual reading of "person" upheld.
Income from assets transferred to minor unmarried daughters was includible in the transferor's total agricultural income under section 9(2) of the Agricultural Income-tax Act, 1950, because the charging and computation provisions allowed assessment of such transferred-property income even if the assessee had divested all his own property. The court held that present ownership was not necessary where the statutory computation brought the income within charge, and the assessee remained liable to assessment. The definition of "person" in section 2(m) was read in the context of sections 3 and 9(2), so it extended to an individual assessable on that basis. The reference was answered for the Revenue.
Issues: (i) Whether an assessee who had gifted away all his properties and retained no property of his own was liable to be assessed under section 9(2) of the Agricultural Income-tax Act, 1950, in respect of income arising from the gifted properties transferred to his minor unmarried daughters; (ii) Whether such an assessee could be regarded as a "person" within section 2(m) of the Agricultural Income-tax Act, 1950.
Issue (i): Whether an assessee who had gifted away all his properties and retained no property of his own was liable to be assessed under section 9(2) of the Agricultural Income-tax Act, 1950, in respect of income arising from the gifted properties transferred to his minor unmarried daughters.
Analysis: Section 3 charged agricultural income-tax on the total agricultural income of every person, while section 9(2) required inclusion, in computing the total agricultural income of an individual, of income arising from assets transferred directly or indirectly to a minor child otherwise than for adequate consideration. The computation machinery did not require that the assessee must presently own or hold property if, on the statutory computation, assessable income arose under section 9(2). The context of the charging and computation provisions showed that income from assets transferred to minor unmarried daughters was includible in the assessee's total agricultural income.
Conclusion: The assessee was liable to be assessed under section 9(2); the answer was against the assessee and in favour of the Revenue.
Issue (ii): Whether such an assessee could be regarded as a "person" within section 2(m) of the Agricultural Income-tax Act, 1950.
Analysis: The definition of "person" in section 2(m) was subject to the qualification that it would apply only if not repugnant to the subject or context. The word could not be read in isolation. Read with sections 3 and 9(2), the Act contemplated assessment of an individual whose income was to be computed by including transferred assets' income, even if he did not presently own or hold property. The contextual meaning therefore extended to an individual who had owned or held property relevant to the computation under the Act.
Conclusion: The assessee did fall within the statutory concept of "person" for the purposes of sections 3 and 9(2); the answer was against the assessee and in favour of the Revenue.
Final Conclusion: The reference was answered in favour of the department, upholding the inclusion of income from property gifted to minor unmarried daughters in the assessee's assessable agricultural income and rejecting the Tribunal's contrary view.
Ratio Decidendi: A statutory definition must yield to the subject and context, and where the charging provision and computation provision together evince a legislative intent to include transferred-property income in assessable income, an assessee may be taxed even though he no longer owns or holds property.
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