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Issues: (i) Whether rule 8-A of the Zamindari Abolition and Land Reforms Rules merely conferred an option on the Collector to adjust agricultural income-tax dues against compensation, or imposed a mandatory obligation to do so; (ii) Whether agricultural income-tax assessed for the previous year ending on 30 June 1952 fell within section 6(d) of the U. P. Zamindari Abolition and Land Reforms Act, 1950 so as to be adjustable against compensation.
Issue (i): Whether rule 8-A of the Zamindari Abolition and Land Reforms Rules merely conferred an option on the Collector to adjust agricultural income-tax dues against compensation, or imposed a mandatory obligation to do so.
Analysis: The rule provided that arrears of land revenue and tax on agricultural income due from an intermediary for any period prior to the date of vesting shall be realised in the manner specified in the rule. The opening words preserving the State Government's right to recover dues by other means did not convert the prescribed mode of recovery into a discretion. The rule was framed to effectuate the statutory scheme and required the Collector to realise the dues by adjustment in the manner stated.
Conclusion: The Collector had no option in the matter and was bound to give effect to the adjustment mechanism under rule 8-A.
Issue (ii): Whether agricultural income-tax assessed for the previous year ending on 30 June 1952 fell within section 6(d) of the U. P. Zamindari Abolition and Land Reforms Act, 1950 so as to be adjustable against compensation.
Analysis: Agricultural income-tax under the taxing statute was charged on the total agricultural income of the previous year. Although assessment was made after the close of that year, the liability attached to income of the previous year. Accordingly, tax assessed for the period ending on 30 June 1952 was treated as tax for a period prior to vesting and was covered by section 6(d), making rule 8-A applicable.
Conclusion: The tax fell within section 6(d) and was eligible for adjustment against compensation.
Final Conclusion: The substantive entitlement to adjustment under the statutory scheme was affirmed, but the matter required factual inquiry on whether compensation bonds were still available so that the relief could be made effective.
Ratio Decidendi: Where a statutory rule directs recovery of pre-vesting tax dues by deduction from compensation, the prescribed mode is mandatory and applies to tax assessed on the previous year's income if the liability relates to the period prior to vesting.
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