TaxTMI 
TaxTMI 
1956 (5) TMI 38
X X X X Extracts X X X X
X X X X Extracts X X X X
....or a prior year. The statement of the case, again, is wholly useless. In form, it is merely the order passed by the Tribunal on the assessee's application for a reference refusing its request in respect of several questions and acceding to it in respect of only one. As regards the question referred, no facts are stated, nor is it stated how the question arises, nor are the grounds of the Appellate Tribunal's decision set out. We have had to collect the facts from the several orders over which they lay scattered and from the documents referred to in the appellate order of which copies were supplied to us by the parties. Briefly stated, the facts are as follows: The assessee, a Hindu undivided family, holds a square mile of land situated in the southern suburbs of Calcutta under a long lease granted by the Calcutta Corporation. It appears that the land was acquired in 1865 by the then Government of Bengal for the Corporation of Calcutta in order that it might be used by the Corporation for the conservancy purposes of the town. It is still used for those purposes, being chiefly utilised for the drainage outfall for the city's sewage and for dumping the city's refuse,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....44, 1944-45, 1945-46 and 1946-47. Before we can deal with the question, it is necessary to state certain further facts and to refer to certain provisions of law. The Corporation of Calcutta was constituted by Bengal Act No. VI of 1863 and was then constituted, as would appear from section III of the Act of "Justices of the Peace for the Town of Calcutta," which meant all Justices of the Peace for Bengal, Bihar and Orissa, resident in the Town and all Justices of the Peace for the Town itself. The object of the Act was to vest the property of the Town of Calcutta and the management of its municipal affairs in a Corporation and to make better provision for, inter alia, the conservancy and improvement of the Town. For the purpose of carrying out its duties, the Corporation was authorised to acquire lands by purchase, but the Act also provided by section CXIII that if the method of purchase was found ineffective in any particular case, the land required might be obtained through acquisition by the Government of Bengal. The actual language of the section was as follows: "When there is any hindrance to the acquisition by purchase of any land or building required for the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ars that the declaration that the land was required to be taken for a public purpose was published in the Calcutta Gazette of the 2nd of November, 1864. The amount of compensation payable to the persons interested in the land was determined at ₹ 55,071-2-9 and in August, 1865, the Corporation was called upon to pay the amount. The Corporation having paid it, the acquisition was completed in the same year and possession of the land was delivered to the Corporation on the 10th of November. Prior thereto, on the 27th of October, 1865, the Government appears to have passed an order that the Corporation should be required to pay a further sum of ₹ 7,728-13-8 as the "20 years" purchase of the rental, viz., ₹ 386-7-1, on account of the land acquired for its use. It appears from the explanatory notes in the revenue roll of the Touzi that the owner of the estate was granted abatement of land revenue to the extent of the same sum, i.e., ₹ 386-7-1 on account of the acquisition of 2005 bighas, 8 cottahs and 4 chittacks of land "for conservancy, i.e., for cleansing roads and streets." By a letter, dated the 5th of January, 1866, the Deputy Collector o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....denture witnesseth that for effectuating the premises and in consideration thereof and in order that the said lands and hereditaments may be vested in the said Justices of the Peace, the said Secretary of State for India in Council doth by these presents grant and convey unto the said Justices of the Peace for the Town of Calcutta and their successors all those several pieces or parcels and strips of land as per aforesaid schedule and all ways, rights, easements members and appurtenances to the said pieces or parcels of lands or any of them or any part thereof belonging or appertaining or reputed so to be and which the said Secretary of State in Council can convey and all the estate right title and interest of the said Secretary of State for India in Council into or out of the land or any part thereof………..unto the said Justices of the Peace for the Town of Calcutta and their successors for ever free and clear and for ever discharged from all Government land revenue whatever or any payment or charge in the nature thereof to the end and intent that the said land may be used for a public purpose namely for the conservancy of the town upon the trusts and subject to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....minister a fund subscribed by the public for that purpose, one of the contentions in the case was that the site of the asylum was exempt from land tax as Crown land, even if it could not claim exemption as the site of a hospital. The Court held that the land was not Crown land and then added, as the second ground for repelling the asylum's contention, that the land having been chargeable with land tax when belonging to the previous owner, would be chargeable even in the hands of the Crown if it was directly purchased by the Crown, although there might be some difficulty in enforcing payment of the tax. That view was taken, as the Court made it clear, because of the nature of the tax imposed by the Land Tax Act. By that Act, the King was provided with a grant of two millions thirty-seven thousand six hundred and twenty-seven pounds, nine shillings and one farthing to be "raised, levied and paid……….by such proportions and in such manner and form" as the Act proceeded to specify and out of that sum, an amount of one million nine hundred eighty-nine thousand six hundred seventy-three pounds, seven shillings and ten-pence farthing was to be assessed an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n to the public revenues of the State or the consolidated fund, nor was the revenue assessed on individual estates fixed on the basis of any quota. The amount of the revenue was matter of settlement in each individual case on principles laid down in the several regulations and even in the case of the permanently settled estates it was only the settlement made at the decennial settlement which was made permanent. It is thus not possible to apply the case cited to the land revenue in Bengal, because the foundation on which the decision rests is wanting here. Besides, what we have to consider in the present case is not the nature of the impost of land revenue as such, but the effect of an acquisition of land under section VIII of Act VI of 1857. Quite recently, that section fell to be construed by the Supreme Court in the case of Collector of Bombay v. Nusserwanji Rattanji Mistri and Others [1955] 1 SCR 1311 in connection with an acquisition of some Foras lands in Bombay which had been subsequently transferred by Government to a third party. The transferee was contending, that he was at least entitled to hold the lands at the assessment which they bore under the Foras Act (Bombay Act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of 1859 as well. Both "estate" and "revenue" thus presuppose an engagement between a proprietor and the Government in respect of some land constituted into an estate, under which Government is paid an annual sum charged on the land as revenue. Thus, the charge of revenue does not exist de hors the engagement and does not run with the land as a liability inherent in its composition, but it is the product of an assessment made in connection with the engagement and payable in pursuance of one of its terms. When the land vests in the Government freed of all other interests, the interest of the proprietor and with such interest his engagement to pay the land revenue disappears. On such disappearance the assessment to land revenue cannot survive. That consequence is made clear by rules Nos. 1, 3 and 4 of the rules framed under section 55 of the present Land Acquisition Act (Act 1 of 1894) which has the force of law under sub-section (3) of the section. Those rules provide that when any revenue-paying land is acquired under the Land Acquisition Act, the proprietor shall be relieved of the liability to pay revenue to the extent of Government demand upon the said land. N....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is not a question of any practical importance in the present case. After the acquisition, Government called for a payment of the capitalised value of the revenue which they described as "the rental...of the square mile in Dhappa" and, on receiving the amount, conveyed the land as revenue-free. It may be argued with some plausibility that when they asked the Corporation to make an additional payment of ₹ 7,728-13-8 they treated the land as then subject to a land revenue of ₹ 386-7-1. In that view of the facts, even if the original assessment did not survive, as I think it did not, an assessment of an equal amount must be taken to have come into existence and the only hypothesis on which the revival of the land revenue can be explained is that Government made a fresh assessment. It was pointed out by the Supreme Court in the case to which I have referred that while an acquisition under Act VI of 1857 extinguished all existing tenures and assessments, it did not extinguish Government's right to levy assessment on the land. In the facts of the present case, if the amount of ₹ 7,728-13-8 is taken to be not an extraneous sum but the capitalised value of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ulations, I find myself wholly unable to accept the concept of land revenue under the permanent settlement which underlay Mr. Sen's argument. The permanent settlement of an estate or of the revenue payable on it meant that the amount of assessment, as payable by the proprietor with whom the estate had been settled or his successors in interest, was made permanent; and section VI, article V of the Regulation means not that Government would be bound, if it transferred any land which had become its property, to transfer it at an assessment, but that the transferee would be entitled to hold that land for ever at the assessment at which it might be transferred, if it was transferred at an assessment. Indeed even if section VI, article V of Regulation II of 1793 implies that any transfer made would have to be made at an assessment, it does not say that such assessment would be the original assessment or at least would have to be its equivalent in value and therefore the section furnishes no ground for saying that the assessment, confirmed at the Permanent Settlement, was inextinguishable and unalterable. Neither article III of section IV, nor article V of section VI of Regulation I o....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., however, was not a tax on the land itself, but represented the levy of a share of the produce from the subject holding the land and, therefore, although it might have been imposed by a statute and made permanent, the permanence did not mean that it had been impressed on the land for all time and could not be altered or extinguished, but meant only that so long as the land continued to be held under the settlement, the quantum of the revenue would remain fixed. The continuance of the assessment itself, however, depended on the subsistence of the tenure, but if the holding by a subject ceased, the assessment also ceased to exist, because there could be no longer any question of a right to a share of the produce. Besides, the right to the revenue, being a right of the Crown, the Crown could always alienate or remit it. There is thus no ground for saying that the assessment of land revenue, confirmed and made permanent at the permanent settlement, could never be modified or removed from the land and that nothing and no power could affect it in any way. I have so far refrained from citing authorities in support of propositions which I consider to be well settled, but shall now cite on....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that as regards the effect of an acquisition of revenue-paying land on the revenue assessed on it, some light is thrown by the practice, now followed, with regard to the disposal of surplus land after the purposes of the acquisition have been served. The practice is certainly not in itself the law, nor have the executive instructions where the practice is to be found stated statutory force, but they indicate what the effect of an acquisition under the Land Acquisition Act is, section 16 of the present Act being more or less in the same terms as section VIII of the Act of 1857. It appears from rule 146 of the Executive Instructions that in the case of acquisition of lands appertaining to permanently settled estates, surplus land is to be offered in the first instance to the original holder on condition that it will be re-absorbed into the estate of which it originally formed part and if abatement of revenue was granted at the time of acquisition, the amount originally remitted should be added to the revenue. Rule 147 provides that in the case of lands relinquished by Railways, if the original owners or their representatives cannot be found, the lands are to be sold, either as tempo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nal's statement that the notifications published in the Calcutta Gazette in the issues of the 2nd November, 1864, and the 14th July, 1864, showed that all lands acquired under the Land Acquisition Act for public purposes were redeemed or rendered revenue-free on payment of 20 years' revenue at a time is also erroneous. The notifications are merely declarations that certain areas of land were required for public purposes and, of the two, only the notification of the 2nd November, related to the present land. Secondly, they say nothing about redemption of land revenue. It would seem that the Tribunal did not refer to the actual notifications at all, but merely reproduced paragraph 10 of the Appellate Assistant Commissioner's order and, in doing so, made the mistake of taking what appeared in that order after the reference to the notifications as a statement of the general law or practice, as a statement of the contents of the notifications. Be that as it may, neither the law in force at the time under which land revenue was redeemed on payment of a capital sum, nor the actual terms on which the further payment was made by or received from the Corporation, are known. The p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ld encourage the investment of British capital in India and the second would cause contentment and loyalty among the indigenous proprietors. But Sir Charles Wood apparently did not share the enthusiasm of his predecessor. Ultimately it was decided that permission to redeem the land revenue should be given at the discretion of the Local Governments only in a limited number of cases such as in cases of lands required for dwelling houses, factories, gardens, plantations and other similar purposes. If redemption was granted in respect of lands comprised within zemindaries the revenue payable on which was not redeemed, a proportionate reduction of the revenue was to be granted to the proprietor. The basis on which the scheme of redemption rested appears to have been as follows: The land revenue of the country is the security for its public debt supporting the public credit and the Government pays the interest on that debt out of its receipts from land revenue. For the Government, the revenue is an annuity and for the person holding the land assessed to revenue, it is an annual charge. It was thought that if persons holding lands subject to an assessment to revenue were enabled to get ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... case of permanently settled lands, it would convert the annuity into the payment of a lump sum, placed at the disposal of the Government once and for all. The resolution of the Government of India adopted on the 17th October, 1861, which was based on Lord Stanley's proposal stated that if the scheme was ultimately approved of, suitable provision for giving effect to it would be made by a legal enactment which would also provide that all sums paid in redemption of land revenue should be paid to certain commissioners who would invest them periodically in such manner as the law might direct. The despatch of Sir Charles Wood suggested that the moneys should be invested, not periodically but as soon as practicable and as a rule in the 4 per cent. loan. No law passed for the purpose could, however, be traced. That a practice of allowing redemption of the land revenue of a much wider character than authorised by Sir Charles Wood's despatch is now in existence admits of no doubt. Rule 203 of the Touzi Manual, for example, provides as follows: "Proprietors of permanently-settled holdings in Calcutta, Panchonnogram, Paranagore and Sahiban Pagicha may redeem their yearly rent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nual interest received by the Government on the consolidated sum deposited by him in lieu of annual payments. Such, according to Dr. Pal, was the position in the present case and, therefore, a sum of ₹ 7,728-13-8 having been paid by the Corporation as the capitalised value of the revenue payable on the square mile of land, the land stood assessed to land revenue. The argument advanced by Dr. Pal is undoubtedly a very attractive one, but on the facts of the present case, I do not find it possible to hold in his favour. We have to decide the point more or less in vacuo, because the facts are obscure and the relevant law unknown. If the principles of the English Redemption Acts are to be applied, it would seem that what happens at a redemption of land revenue is not that a new method of payment is substituted, but that the land is wholly freed and exonerated from the tax charged thereon. That is the actual language of section 38 of the Act of 1802. In Halsbury's Laws of England, Hailsham Edition, Vol. 19, at page 615, the effect of redemption is stated to be "to relieve the lands and their natural production and profits from further tax" ; and as regards Crown lan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the circumstances is that instead of the revenue being paid directly, it is paid indirectly from a fund. The theory of a substituted mode of payment might perhaps be a plausible theory if the capitalised sum, deposited with Government, remained the property of the depositor, but since it becomes the property of the Government, the true position appears to be that it is not an amount of capital invested by the owner of the land for the purpose of providing for payment of the land revenue by the interest flowing from it, but it is consideration paid to Government for releasing the land from the revenue charge. If so, the land in the present case is not assessed to land revenue. It appears to me that, for the purposes of the present case, it is not necessary to decide the general question as to whether even when a proprietor of an estate, assessed to land revenue, redeems it or a part of it and continues to hold the land himself, the land remains assessed to land revenue. The facts here are difficult to reconcile with a continuance of the assessment. The land was acquired under Act VI of 1857 and upon such acquisition the tenure of the original owner ceased to exist. All interests ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nnual amount of revenue remitted when the land appertains to a revenue-paying permanently-settled holding in Calcutta, Panchannagram, Baranagar and Sahiban Bagicha in the district of 24 Parganas and at 25 times the annual amount of revenue remitted when the land appertains to any revenue-paying holdings or estates in other places." Under whatever authority the additional payment was asked for, the fact remains that it was realised. But it is to be noticed that in 1866, when the payment was made the Corporation had merely been put in possession of the land, but had no other interest in it. There is nothing to show that the land was settled with the Corporation at an assessment of revenue and that it was for the redemption of that revenue that the payment was called for. The position of the Corporation in regard to the land was therefore very different from that of a person who already holds land, assessed to revenue, as a proprietor and obtains redemption of the whole or a part of the revenue chargeable on the land which he continues to hold in his old capacity. The Corporation was a newcomer and it was a party in whom the land was going to be vested and who, at the relevant ti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he question whether on redemption of the revenue, charged on some land, by the payment of a capitalised sum, the assessment is extinguished or it subsists, being discharged in another form, does not really arise in the present case. On the facts, the true position here is that there was no redemption of revenue at all. What happened was that the Government, on acquiring a piece of revenue-paying land from the proprietor under the provisions of the Land Acquisition Act and granting him an abatement of revenue for the land so taken out of his estate, got the land with the existing assessment wiped out and then, in conveying the land to a third party for whose benefit it had been acquired and who had yet no interest in the land, took from him a sum of money, not as the redemption value of any revenue, because there was no revenue payable by him to be redeemed, but as compensation for the loss it was going to suffer by being no longer able to realise the revenue, either from the original proprietor or from the third party to whom the land was going to be conveyed as revenue-free, the compensation being the price of the right to buy an assessment on the land and its measure being the va....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cases of redemption of revenue, the claim, the holder of the land and the land itself are all separately released from the charge and then the land is granted " free and for ever discharged from all and every claim and demand." The certificate placed before us is one granted in favour of one Khaja Abdul Gani, presumably the old Nawab of Dacca of that name, and the material portion reads thus: "Now therefore the said Secretary of State for India in Council, in consideration of the said sum so paid as aforesaid, doth hereby release and for ever quit the claim of and discharge as well the said Khaja Abdul Gani and his heirs and assigns for ever, as also the said land and premises, so by the said Khaja Abdul Gani held…………….as aforesaid of and from the said rent or sum of rupees ten, annas thirteen and pies two (Rs. 10-13-2) per annum payable to the said Secretary of State for India in Council for the same, and doth hereby grant and assign to the said Khaja Abdul Gani and his heirs and assigns for ever the said land and premises free, and for ever discharged from all and every claim and demand of him, the said Secretary of State for I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....evenue on the land, whether the old assessment or one newly imposed, and that it was redeemed by the payment, the effect of the redemption was to extinguish the assessment. Lastly, in any event, in 1870, the Secretary of State for India, who was entitled in law to convey Government land on any terms he liked, conveyed the land to the Corporation "for ever free and clear and for ever free and discharged from all Government land revenue whatever or any payment or charge in the nature thereof" and, therefore, whatever the previous condition of the land, it is, since the conveyance, no longer charged to land revenue but, on the other hand, stands discharged from it. For the reasons given above, the answer to the question referred should, in my opinion, be in the affirmative. In view of the difficulty of the point, I would make no order for costs. Sarkar, J.-I agree with the opinion expressed by my Lord the Chief Justice but I confess that I do so not without a certain amount of hesitation. As I am not differing from the views of the Learned Chief Justice I do not think it necessary to deal with the matter at large. I shall only record here the doubts that have assailed me. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urchase of the rental, viz., ₹ 386-7-1, of the square mile in Dhappa acquired for the Justices for a public purpose." The square mile in Dhappa is the land with which we are concerned and that land is within the jurisdiction of the Collector of 24-Pargannahs. Rental in this letter means land revenue. This is not in dispute. In fact the sum of ₹ 386-7-1 is the amount by which the land revenue payable by the owner of the towzie out of which the land was acquired was reduced because of the acquisition. Next there is another letter dated January 12, 1866, from the Collector of Calcutta to the Collector of 24-Pargannahs forwarding "Bank of Bengal Receipt from the Calcutta Justices for ₹ 7,728-13-8 in your favour being the amount of remission of Government Revenue for the square mile at Dhappa payable by the Justices under the Order of Government No. 5986 dated 27th October, 1865." This letter shows that under the orders of the Government of Bengal the Justices paid into the Bank of Bengal to the credit of the Collector of 24-Pargannahs the sum of ₹ 7,728-13-8 on account of remission of Government revenue, i.e., land revenue for the land, and that t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing, then the land must still be deemed assessed to land revenue. If on the other hand the money was accepted as consideration for removing the assessment that was there or for not making any assessment if there was no assessment then made, then the land cannot be said to be assessed to land revenue. Therefore it is all a question of what was done when ₹ 7,728-13-8 was paid. What was then done has to be gathered from the two letters to which I have referred and there is no other evidence on the matter. The two letters really say the same thing. The first letter demands the sum for the purchase of the rental, i.e., the land revenue. The second letter shows that the amount was paid by the Justices under an order of the Government to obtain "remission of Government revenue". These are the terms of the receipt, as appears in the letter, granted by the Bank of Bengal for the payment by the Justices to it to the credit of the Collector of 24-Pargannahs and therefore to the credit of the Government of Bengal. The Government of Bengal, as I have said, accepted the payment. It may therefore be said that there was an agreement made between the Justices and that Government by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....from denying the existence of an assessment. All this is of course on the basis that remission or purchase of land revenue means what I have earlier stated. This estoppel also arises from another point of view. The money having been paid to obtain the remission of land revenue, as the receipt mentioned in the letter of 12th January, 1866, shows, and the Government having accepted the payment, it is estopped from denying that it was paid for that purpose: Croft v. Sumley 6 HIC 672 at 706 . From this estoppel also the consequences mentioned in the preceding paragraph would follow. The Department however contended that there could in fact be no assessment of the land to land revenue at the date of the payment of ₹ 7,728-13-8 for then it had not been vested in the Justices. It was said that the vesting in the Justices did not take place till the conveyance was executed on 5th December, 1870. The Department's point was that at the date of the aforesaid payment, the Government being the owner of the land, it was not legally possible to assess it to land revenue. But then the answer to this may be twofold. First, as it was contended on behalf of the assessee, prior to the date....