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P. Cheradappa Pai Vs. Agricultural Income-tax Officer, Puttur - Court Judgment

SooperKanoon Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberWrit Petition Nos. 1769 and 1770 of 1967
Judge
Reported in[1970]77ITR313(KAR); [1970]77ITR313(Karn); (1970)1MysLJ260
ActsMysore Agrl. Income Tax Act, 1957
AppellantP. Cheradappa Pai
RespondentAgricultural Income-tax Officer, Puttur
Appellant AdvocateU.L. Narayana Rao, Adv.
Respondent AdvocateS.R. Rajasekharamurthy, Adv.
Excerpt:
.....be termed as court for purpose of section 168 (2) of the act. there is no question of violation of principles of natural justice or mandatory requirement of law under section 168(2). plea that state election commissioner has no power to administer oath and record evidence, inasmuch as said power is not conferred expressly on him by act is not tenable. - 2 and 5 shall enjoy the said properties on the basis of equal rights. rama subba aiyan, that the true test of partition of property according to hindu law is the intention of the members of the family to become separate owners and that intention being the real test, it follows that an agreement between the members of a joint family to hold and enjoy the property in defined shares as separate owners operates as a partition,..........f of the partition deed there was no partition and the family held the properties as joint family properties. on the basis that the status of the assessee is that of the hindu undivided family, the respondents computed the income derived from the areca gardens in question for the assessment years 1965-66 and 1966-67 and levied agricultural income-tax. aggrieved by the said order, the petition has approached this court for the relief under article 226 of the constitution of india. 2. the first ground urged in support of the writ petitions by sri u. l. narayana rao, the learned counsel for the petitioner, is that the petitioner derives agricultural income from land which is not more than 50 acres of eighth class of land specified in part ii of the schedule to the act, and therefore.....
Judgment:

Govinda Bhat, J.

1. These two writ petitions arise under the Mysore Agricultural Income-tax Act, 1957, hereinafter called 'the Act'. Pursuant to a notice issued on 26th September, 1966, the petitioner filed two returns for the assessment year 1965-66 and 1966-67 furnishing only the extent of the areca gardens from which he derived agricultural income with their survey and sub-division numbers; but he did not furnish the particulars of the income, expenses, etc. In response to the Form No. 5 notice, the petitioner appeared before the respondents and produced before him copies of a registered partition deed dated 10th January, 1958, and three term lease deeds in respect of the areca gardens from which income is derived. On perusal of the documents produced by the petitioner and hearing his contentions the respondents came to the conclusions that there was only a partial partition in the family under the partition deed, dated 10th January, 1958, and that in respect of the properties described in schedule F of the partition deed there was no partition and the family held the properties as joint family properties. On the basis that the status of the assessee is that of the Hindu undivided family, the respondents computed the income derived from the areca gardens in question for the assessment years 1965-66 and 1966-67 and levied agricultural income-tax. Aggrieved by the said order, the petition has approached this court for the relief under article 226 of the Constitution of India.

2. The first ground urged in support of the writ petitions by Sri U. L. Narayana Rao, the learned counsel for the petitioner, is that the petitioner derives agricultural income from land which is not more than 50 acres of eighth class of land specified in Part II of the Schedule to the Act, and therefore no agricultural income-tax is payable under the Act. The second ground is that the respondent, on an erroneous construction of the partition deed, has held that there was only a partial partition and that the areca gardens comprised in Schedule F of the partition deed are owned by the petitioner as karta of his Hindu undivided family consisting of the petitioner and his brothers, and that on a true construction of the partition deed it should be held that the petitioner and his three brothers own the areca garden as tenants-in-common.

3. The total extent of the areca gardens comprised in schedule F of the partition deed is 13.27 acres; the said areca gardens, which at the time of partition had been granted on long term leases, were not divided by metes and bounds, but were allotted to the shares of the petitioner and his three younger brothers and each of the brothers held a 1/4th share.

4. In order to appreciate the contentions urged in these writ petitions it is necessary to refer to the terms of the registered partition deed dated 10th January, 1968. That was a partition deed entered into between Gopal Pai and his four sons, via., Cheradappa Pai, Vittal Pai, Venkatesha Pai and Narasimha Pai. The joint family of the said Gopal Pai, at the time of the partition, owned lands and other properties. All the properties of the family except the areca gardens described in Schedule F and the outstanding described in schedule G were partitioned by metes and bounds and the properties described in schedules A, B, C, D and E were respectively allotted to the share of Gopal Pai, Cheradappa Pai, Vittal Pai, Venkatesha Pai and Narasimha Pai. The F and G schedule properties were allotted jointly to the shares of the petitioner, Cheradappa Pai, and his three brothers. The partition deed states that in the F and G schedule properties only parties Nos. 2 to 5 to the document have rights and that party No. 1, Gopal Pai, has no interest. It further states that parties Nos. 2 and 5 shall enjoy the said properties on the basis of equal rights. It is clear, on a perusal of the partition deed, that there was a complete partition and not a partial partition as held by the respondent. A partition is said to be partial as to the property where the members of the joint family make a division and severance of interest in respect of a part of the joint estate, while retaining their status as a joint family and holding the rest as the properties of a joint and undivided family : vide Mulla's Hindu Law, 13th edition, page 381. The same learned author further states that where there is evidence to show that the parties intended to sever, then the joint family status is put an end to, and with regard to any portion of the property which remained undivided the presumption would be that the members of the family would hold it as tenants-in-common unless and until a special agreement to hold as joint tenants is proved. It has been laid down by the Judicial Committee of Privy Council in Appovier v. Rama Subba Aiyan, that the true test of partition of property according to Hindu law is the intention of the members of the family to become separate owners and that intention being the real test, it follows that an agreement between the members of a joint family to hold and enjoy the property in defined shares as separate owners operates as a partition, although there may have been no actual division of the property by metes and bounds. In the instant case, all the properties belonging to the joint family of which Gopal Pai was the karta, before the date of partition, were divided. After the partition, the F schedule properties or the G schedule properties did not remain as the joint and undivided properties of the parties to the deed. The F schedule properties were not divided, for the reason that they had been granted on long term leases under three registered documents before the date of the partition deed and the family had only the right to receive the rents. The rights of the petitioner and his three brothers were clearly defined as equal. Therefore, it is clear that the F schedule properties did not remain as the family properties but as the properties of the four brothers as tenants-in-common. When the properties are held as tenants-in-common, the petitioner cannot be assessed in the status of a Hindu undivided family. The appropriate provision for assessment of persons holding property as tenants-in-common and deriving agricultural income as defined under the Act is sub-section (3) of section 3 of the Act. Section 3 is the charging section under the Act and sub-section (3) states that 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. Therefore, the respondent was clearly in error in treating the petitioner as karta of a Hindu undivided family consisting of himself and his three younger brothers. The petitioner and his brothers should have been assessed as tenants-in-common and not in the status of a Hindu undivided family.

5. In regard to the first ground, the argument of the learned counsel for the petitioner is that the total extent of the areca garden is 13.27 acres in which the petitioner has a 1/4th share, and, therefore, the share of the petitioner is 3.31 acres of areca garden which is less than 5 acres of the second class specified in Part II of the Schedule. Areca gardens come under the second class in Part II. One acre of areca garden is equal to 10 acres of the eighth class of land. Therefore, it is contended that under the proviso to Part I of the Schedule, the petitioner is not chargeable to tax. The relevant proviso to Part I of the Schedule to the Act states that no agricultural income-tax shall be payable by a person who derives agricultural income from land of not more than fifty acres of the eighth class of land or an extent equivalent thereto consisting of any one or more of the classes of land specified in Part II. By virtue of the said proviso a person who derived agricultural income from 5 acres or less of areca garden is not chargeable to tax. We have already referred to the partition deed under which F Schedule areca gardens were allotted jointly to the shares of the petitioner and his three brothers. The total extent of the said areca gardens is 13.27 acres in which the petitioner has a 1/4th share. The said areca gardens have not been divided by metes and bounds between the petitioner and his three brothers. Therefore, the petitioner cannot say that he derives agricultural income from 3.31 acres of areca garden only; he derives agricultural income from 13.27 acres of areca garden, but his interest is a 1/4th share. In such cases, a person having an undivided interest in properties held in common cannot contend that his share, if partitioned out by metes and bounds, would fall below the taxable limit. Since the petitioner derives agricultural income from 13.27 acres of areca garden although his interest therein is 1/4th share, he does not fall within the proviso to Part I of the Schedule to the Act. Therefore, we reject the first contention urged by the learned counsel for the petitioner.

6. The petition succeeds on the second ground urged by the petitioner, viz., that the respondent is in error in assessing the petitioner in the status of a Hindu undivided family. That being a clear error apparent on the face of the record, we quash the impugned orders of assessment made by the respondent. The respondent is at liberty to assess the petitioner and his brothers for the relevant assessment years in accordance with law and in the light of this judgment.

7. No costs.


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