TaxTMI 
TaxTMI 
1962 (8) TMI 67
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....n the first petition were given. Kasaragod Taluk, wherein the agricultural lands of the petitioner's family are situate, formed part of the district of South Kanara in the Madras State Under the States Reorganization Act, 1956, (Central Act 37 of 1956) the Kerala State comprising the following territories was formed : (a) the territories of the existing State of Travancore-Cochin, excluding the territories transferred to the State of Madras by section 4; and (b) the territories comprised in (i) Malabar District, excluding the islands of Laccadive and Minicoy, and (ii) Kasaragod Taluk of South Kanara District. Under the act the territories comprised in Kasaragod Taluk of South Kanara District and the District of Malabar in the Madras state were constituted into a separate district known as the Malabar District in the State of Kerala. For convenience of reference we shall hereinafter describe the territories carved out of the Madras State as Madras area and the rest as T-C area. After the formation of the State of Kerala on November 1, 1956, the laws in force in the State of Madras were continued in the Madras area and those in force in the Travancore-Cochin state were continued in t....
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....counting period April 1, 1956, to March 31, 1957, and the tax payable thereon. The petitioner preferred an appeal to the Assistant Commissioner of Agricultural Income-tax Kozhikode, against the order of the Income-tax Officer questioning the said assessment on the ground, inter alia, that the assessment was made arbitrarily. When that appeal was pending, the judgment of the Kerala High Court was delivered and subsequently Ordinance II of 1959 was promulgated. The Assistant Commissioner, therefore, set aside the order of the Income-tax Officer on the basis of the decision of the Kerala High Court and remanded the matter to the Agricultural Income-tax Officer for disposal in accordance with law. After remand, on March 23, 1959 the Income-tax Officer issued a notice to the petitioner to submit his return of agricultural income for the assessment year 1957-58 in accordance with the provisions of the Ordinance and the subsequent Amending Act replacing the said Ordinance. On November 10, 1960, the Income-tax Officer determined the net income of the petitioner for the assessment year 1958-59 at Rs. 87,745,36 and assessed the tax at Rs. 21,920.41; the tax was calculated on the average net ....
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....sification two conditions must be fulfilled, namely, (i) that the classification must be, founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases, namely, geographical, or according to the object or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the act under consideration. It is also well established that article 14 condemns discrimination not only by a substantive law but also by law of procedure." Though a law ex facie appears to treat all that fall within a class alike, if in effect it operates unevenly on persons or property similarly situated, it may be said that the law affends the equality clause. It will then be the duty of the court to scrutinise the effect of the law carefully to ascertain its real impact on the persons or property similarly situated. Conversely, a law may treat persons who appear to be similarly situate differently; but ....
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....ring to the aforesaid total agricultural income the same proportion as the period of twelve months bears to the period of the previous year as defined in this section; and (ii) the limit of exemption from chargeability to tax shall be determined with reference to the 'average annual income'." The Malabar District in the State of Kerala is constituted by combining Kasaragod Taluk of the South Kanara District and the District of Malabar of the Madras State. For the purpose of assessment for the financial year 1958-59 in respect of agricultural income derived from the said district, section 2A of the Act gives a special definition of "previous year'. Under that definition, "previous Year" commences from November 1, 1956, and ends on March 31, 1958, i.e., a period of 17 months; but the assessee can elect a lesser period as "previous year" if his accounts are made up to a date within the financial year ending on March 31, 1958, that is to say, he can elect any date commencing from April 1, 1957, to March 31, 1958, if his accounts are made up to that date in which case the "previous year" so far as he is concerned will commence from November 1, 1956, and end on the said date so chosen by....
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....priately adapted for securing this end. In these circumstances, can it be said that there was no reasonable nexus between the classification and the object of the legislation. The object of the legislation thus was to impose agricultural income-tax on assessee in the Madras area had also in respect of the period between November 1, 1956, and March 31, 1957, which could not be done under the pre-existing law. The differences between the two parts of that State have reasonable nexus to the said object. Because of the said differences the legislature thought that the definition of "previous year" should be so amended in respect of the Madras area that the assessees in that area may not escape payment of agricultural income tax in respect of the period after the said area formed part of the Kerala State. It is argued that this court sustained the constitutional validity of a law on geographical and territorial bases only in a case where the said law was a pre-existing law in an erstwhile State which continued to be law in the area of that State after it merged in the larger unit, and that it cannot be invoked where the law is for the first time enacted after the merger, for, it is said....
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....accrued to them during the 5 months by treating the said income as the income for the entire year commencing from April 1, 1956, and ending on March 31, 1957, and that in that event not only their income for the said period could not have escaped taxation but would have also avoided the unjust treatment meted out to them in the rate of tax. Prima facie there appears to be some plausibility in this argument; but a closer examination discloses that though the method suggested may have been better than the method actually adopted, the hardship in individual cases cannot in any event be avoided. It is true taxation law cannot claim immunity from the equality clause of the Constitution. The taxation statute shall not also be arbitrary and oppressive, but at the same time the court cannot, for obvious reasons, meticulously scrutinize the impact of its burden on different persons or interests. Where there is more than one method of assessing tax and the legislature selects one out of them, the court will not be justified to strike down the law on the ground that the legislature should have adopted another method which, in the opinion of the court, is more reasonable, unless it is convince....
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....income for 1956-57, would be liable to tax. It is also true that if the assessee in the Madras areas area gets very high income during those 5 months and little less than the taxable income during the succeeding twelve months, his income, which would have escaped taxation, would be liable to tax. These illustrations prove that the section does not always work to the disadvantage of assessees similarly situated like the petitioner, but its effect would depend upon fortuitous circumstances, such as the quantum of income accrued during the five months and during the succeeding twelve months. That apart under the section an option is given to the assessee to select his accounting year commencing from November 1, 1956, and ending on a date within March 31, 1958, up to which his accounts have been made. If an agriculturist in the Malabar area had made up his accounts on a date which does not exceed a period of twelve months from November 1, 1956, he cannot have any complaint on the score that the rate fixed is arbitrary. But it is said that agriculturists in the Madras area do not keep accounts or at any rate would not have kept accounts before the Amending Act, therefore, this argument ....
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....ee November to March September to April Rubber Lemon grass June to September September It shows that in Cannanore, which includes Kasaragod Taluk, only arecanut, pepper, tea, coffee and rubber are harvested after November, but in the case of paddy, tapioca, coconut and lemongrass the harvesting season is before November; cardamom is gathered partly before November and partly after November. The same is the position in regard to the entire State except in respect of arecanut; even in respect of arecanut, it is harvested in the Madras area other than Cannanore before November. The net result of this analysis is that in regard to a large extent of land cultivated in Kerala the harvesting season is the same in respect of all the crops except arecanut and even in the case of arecanut out of 1,23,833 acres cultivated with that crop the harvesting season in regard to 20,771 acres alone commences after November. In such a situation it cannot be said that the legislature has arbitrarily, with an evil eye, selected the most advantageous period for the purpose of fixing the rate of taxation. The said discussion lead to the only conclusion that the legislature in its since....