AI Drafter 
TaxTMI 
TaxTMI 
2003 (9) TMI 14
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....ated March 1, 1982. The appellant has got 30 per cent, of rights in the property. The income from the property has been assessed under the Agricultural Income-tax Act, 1950, as tenants-in-common under the name and style of "Mrs. Thara Peter and others". After the insertion of sub-section (9B) by the Kerala Finance Act, 1994, with effect from April 1, 1994, tenants-in-common are specifically given the right to opt for compounding of agricultural income-tax under section 13(9B), provided the landed property held by that person within the State of Kerala is not extending more than 20 hectares, as provided in section 13(1) of the Act. The appellant made exhibit P2 application in Form No. 1A as prescribed under the Act, seeking permission to remit the tax at the compounded rate. She also filed exhibit P3 return disclosing the tax payable before the first respondent. As per exhibit P4 proceedings dated December 5, 1995, the first respondent dismissed exhibit P2 application for compounding of the tax on the ground that the co-tenants had not opted for compounding under section 13 of the Act, and therefore, the appellant is not entitled for compounding the tax under section 13(9B) of the A....
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....f section 13, the appellant would not have been entitled to apply for compounding. We have considered the rival submissions. Section 3 is the charging section, as per which tax at the rate or rates specified in the Schedule to the Act shall be charged for each assessment year in accordance with and subject to the provisions of this Act on the total agricultural income of the previous year of every person. Sub-section (2) provides that subject to the provisions of this Act in the case of persons holding property as tenants-in-common and deriving agricultural income, the tax shall be assessed at the rate applicable to the agricultural income of each tenant-in-common. Section 4 deals with total agricultural income and section 5 deals with computation of agricultural income. Section 6 provides for non-deduction of certain amounts in the computation of total income. Section 7 deals with depreciation and investment allowance. Section 8 deals with income forming part of the total agricultural income, on which no tax is payable and section 9 deals with rebate and deduction allowable. Section 12 deals with carrying forward of loss. Section 13 provides for composition of agricultural i....
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....ly explanatory in nature and the argument that for the first time the benefit of compounding was conferred on tenants-in-common only by the insertion of sub-section (9B) does not seem to be correct and that the scheme clearly indicates that tenants-in-common were entitled to the benefit of compounding even prior to the insertion of sub-section (9B) which is merely clarificatory. The Division Bench also rejected the contention of the Government Pleader that but for sub-section (9B) the benefit of compounding cannot be availed of by tenants-in-common under section 13(1). The Division Bench also observed that the authorities harboured the belief bona fide but erroneously that the benefit o£ compounding under section 13(1) cannot be availed of by tenants-in-common and that what was implicit earlier has been made explicit by sub-section (9B) and that the tenants-in-common will be entitled to the benefit of compounding under section 13(1). The Division Bench ultimately held that sub-section (9B) of section 13 is merely explanatory and that the tenants-in-common, who hold an extent of property not exceeding 20 hectares, are entitled to the benefit of compounding as persons under section ....
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.... to opt for compounding under section 13(1). Even under section 13(1) compounding can be had only if each of the tenants-in-common who opt for compounding holds agricultural property having an extent of 20 hectares and below. By the insertion of sub-section (9B) in section 13, the tenants-in-common are entitled to compounding under section 13(1) only if the twin conditions specified in sub-section (9B) are satisfied. We find there is logic in prescribing the condition that in order to enable a member of the tenants-in-common to opt for compounding the other members of the tenants-in-common must also agree to be governed by section 13(1) and that each of the tenants-in-common shall not hold more than 20 hectares. The logic according to us, is this; the agricultural income from the same property which was assessed hitherto in accordance with the normal provisions regarding taxation of agricultural income-tax must receive the same treatment even after b opting for compounding. If compounding is allowed in the case of only one tenant-in-common and the same is not available to or availed of by the other tenants-in-common either for the reason that they did not opt for compounding or for....