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Venkataraman Annayya Hedge Vs. Agricultural Income-tax Officer, Sirsi and anr. - Court Judgment

SooperKanoon Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberWrit Petition No. 2400 of 1965
Judge
Reported in[1967]64ITR555(KAR); [1967]64ITR555(Karn); (1966)2MysLJ327
ActsMysore Agricultural Income-tax Act, 1957 - Sections 2(1), 66 and 67
AppellantVenkataraman Annayya Hedge
RespondentAgricultural Income-tax Officer, Sirsi and anr.
Appellant AdvocateB.V. Krishnaswamy Rao, Adv.
Respondent AdvocateU.L. Narayana Rao, Adv.
Excerpt:
.....grow commercial crop on their land - land on which commercial crop is grown, whatever may be other crop grown on it, is a land used for growing commercial crop - land belonging to petitioner would belong to second class as per section 66 since primary and main use for which land was employed by petitioner was for growing areca although he also grew pepper and cardamom in addition - refusal of composition by agricultural income-tax officer unsupportable - appeal allowed. - constitution of india article 226; [anand byrareddy, j] establishment of petrol bunk prescription of distance of 300 meters between two adjacent fuel stations held, the prescription is in respect of fuel filling stations situated adjacent to each other and not to stations which are on opposite sides of road. there is..........which is prescribed by the 32nd rule of mysore agricultural income-tax rules, 1957, that the main crop grown by the petitioner on the land belonging to him is the areca crop and that, if he has grown any pepper or cardamom as stated by the income-tax officer, that crop could only have been a subsidiary crop. 14. the argument maintained by mr. krishnaswamy rao appearing for the petitioner and by mr. s. p. bhat who intervened during the argument in this writ petition on behalf of the petitioner in w. p. no. 66 and w. p. no. 150 of 1966 is that a land is used for growing a commercial crop within the meaning of section 67 if it is used mainly for growing such commercial crop, and that, so long as the petitioner grew the areca crop which is a commercial crop as defined by section 2 (1) (e),.....
Judgment:

Somnath Iyer, J.

1. The petitioner is a resident of the village of Manjaavalli in the District of North Kanara, in which he owns 8 acres and 21 guntas of agricultural land. On May 26, 1964, he made an application under section 67 of the Mysore Agricultural Income-tax Act, 1957, for composition of the agricultural Income-tax payable by him. By an order made on July 20, 1964, the Agricultural Income-tax Officer refused composition on the ground that he had 'learnt' that the assessee had reaped and derived an income from pepper and cardamom which are plantation crops as defined by section 2 (1) (q) of the Act.

2. The view take by the Income-tax Officer was that, since the assessee not only grew on his land area which is a commercial crop as defined by section 2 (1) (e), but also derived income from pepper and cardamom which are plantation crops as defined by section 2 (1) (q), no classification for composition was possible under section 66, and so no composition could be sought under section 67.

3. In this writ petition, the petitioner calls in question the order made by the Income-tax Officer in this way.

4. It is asserted on behalf of the petitioner by his learned advocate, Mr. Krishnaswamy Rao, that, since the petitioner grew on his land areca, he was clearly entitled to seek composition, since area is a commercial crop, notwithstanding the fact that some subsidiary income was derived by the petitioner in the form of income from plantation crops such as pepper and cardamom. It is admitted before us by Mr. Krishnaswamy Rao that the petitioner does grow pepper and cardamom on the land with which were are concerned. But his submission was that the main crop which he was growing on the land was the area crop.

5. It would now the necessary to allude to the relevant statutory provisions. It is seen from the preamble to the Act that its purpose is to charge Income-tax on agricultural income from lands on which commercial crops are raised. Section 2 (1) (a) defines agricultural income as including income derived from a land by agriculture. So, it is seen from this including income derived from a land by agriculture. So, it is seen from his definition that since the income which the petitioner derives from growing area on his land is income derived by agriculture, that income is agricultural income. Section 2 (1) (e) defines a commercial crop thus :

''Commercial crop' means any plantation crop, are, castor, chillies, coconut, coriander, cotton, ganja, garlic, ginger, grapes, groundnut, karad, mango, mulberry, mustard, nigar, onion, plantain (irrigated), potato, sesamum (til), sugarcane, timber, tobacco or turmeric.'

6. A plantation crop is, according to this definition, also a commercial crop, and section 2 (1) (q) defines a plantation crop thus :

''Plantation crop' means cardamom, coffee, linaloe, orange, pepper, rubber or tea.'

7. That was how the definition stood during the period with which we are concerned which is the year 1963-64, which is the previous year for the assessment year 1964-65.

8. Sections 66 and 67 are the other two sections to which we should now refer. They read :

'66. Classification of land for composition of agricultural Income-tax, etc. - (1) Lands used for growing commercial crops other than plantation crops, ganja or timber shall be classified into eight classes as specified in Part II of the Schedule for determining -

(i) the extent of land entitled to exemption from payment of agricultural Income-tax under clause (ii) of the first proviso to Part I of the Schedule; and

(ii) the extent of the land and the rates for lump sum payment to be made for purposes of composition of the agricultural Income-tax under section 67. .........

67. Composition of agricultural Income-tax. - (1) Any person who derives agricultural income from land not exceeding one hundred and fifty acres in extent 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 of the Schedule may apply to the prescribed officer for permission to compound the agricultural Income-tax and super-tax payable by him and to pay in lieu thereof a lump sum at the rate specified in sub-section (2)............'

9. It is clear from these two sections that a person who can claim composition under section 67 is one who derives agricultural income from a land whose extent does not exceed 150 acres of the eighth class of land or an area which is equivalent to those 150 acres if the land belongs to the remaining seven classes in Part II.

10. The land which belongs to the petitioner is in the second class since the land is used by him for growing area. So, in order to be able to seek composition, the extent of the land on which he grows area should not exceed 15 acres according to the formula of equivalents which Part II to the Act incorporates. That formula reads :

'B. Formula for determining equivalent extent of land of different classes. - Fifty acres of eighth class of land = 25 acres of seventh class of land = 18 acres of sixth class of land = 15 acres of fifth class of land = 12 acres of fourth class of land = 6 acres of third class of land = 5 acres of second class of land = 3 acres of first class of land.'

So, fifty acres of the eighth class are equivalent to five acres of second class and hundred and fifty of the eighth class will, therefore be equivalent to fifteen acres of the second class. So if the land of the petitioner did not exceed 15 acres in extent, he could seek composition under section 67.

11. It is not disputed that the area of the land belonging to the petitioner measures 8 acres and 21 guntas, and so the extent was well within the limit prescribed by the section.

12. But the Income-tax Officer was of the view that no classification could be made, although he did not say so in so many words, of a land on which not only areca was grown, but also crops such as pepper and cardamom, since such land did not fall within the 66th section and so no composition was possible under section 67. It is obvious that in his pepper and cardamom, did not fall within the 66th section and so no classification of that land under the formula in Part II was possible, the composition was impracticable.

13. It is seen from the application presented by the petitioner to the Income-tax Officer that on all the 8 acres and 21 guntas of land belonging to him, the crop raised by him was the areca crop except on S. No. 140, which measures only 2 guntas in extent. It is also seen from the information furnished by him in the form which is prescribed by the 32nd rule of Mysore Agricultural Income-tax Rules, 1957, that the main crop grown by the petitioner on the land belonging to him is the areca crop and that, if he has grown any pepper or cardamom as stated by the Income-tax Officer, that crop could only have been a subsidiary crop.

14. The argument maintained by Mr. Krishnaswamy Rao appearing for the petitioner and by Mr. S. P. Bhat who intervened during the argument in this writ petition on behalf of the petitioner in W. P. No. 66 and W. P. No. 150 of 1966 is that a land is used for growing a commercial crop within the meaning of section 67 if it is used mainly for growing such commercial crop, and that, so long as the petitioner grew the areca crop which is a commercial crop as defined by section 2 (1) (e), the classification enjoined by section 66 should be made on that basis, although some pepper and cardamom might have been grown as subsidiary crops.

15. Our decision in this writ petition would turn upon the interpretation which we should place upon the expression 'lands used for growing commercial crops other than plantation crops, ganja or timber' with which section 66 opens. While it is contended by Mr. Narayana Rao appearing on behalf of the Income-tax Officer that the use to which the section refers is the exclusive use, the competing interpretation placed before us for the petitioner is that the section speaks of the main use of the land and not of any exclusive use.

16. If we can say that a land which is mainly used for growing commercial crops, other than plantation crops, ganja or timber, is a land in respect of which a classification could be made under section 66, it would be easy to say that a composition could be sought under section 67 in respect of the agricultural income derived from such land. If, on the contrary, section 66 speaks of a land which is exclusively used for growing a commercial crop other than plantation crops, ganja or timber, no composition under section 67 would be permissible.

17. Now, the land to which section 66 refers is a land used for growing commercial crops other than plantation crops, ganja or timber. The petitioner also grows pepper and cardamom on his land in addition to areca. Areca is a commercial crop, and pepper and cardamom are plantation crops. It is, however, clear that the main crop is the areca crop and pepper and cardamom crops are the subsidiary crops. So the question is whether, notwithstanding the fact that the land is used for growing areca which is the main crop grown by the petitioner, the fact that he also grows subsidiary crops like pepper and cardamom would disentitle him to composition.

18. We must give section 66 the meaning which its language allows and permits. What we cannot overlook is that sections 66 and 67 have, for their aim and purpose, a composition in respect of persons with small holdings, who, perhaps, by reason of many limitations such as illiteracy and the like, cannot or are not in the habit of maintaining accounts with respect to agricultural income derived from such small holdings. It is to those persons that it was intended that the benefit of a composition should be made available. Out endeavour in interpreting a provision like section 66 should be to promote the legislative intent and to pay rational regard to the true aim and intention of the legislative provision to the extent it is possible to do so, without doing violence to the language of the section.

19. When we attempt to understand section 66 in that way, what we should first do is to ask ourselves whether the land with which we are concerned is or is not used for growing a commercial crop. The answer to that question should be that it is used for growing a commercial crop, since areca is a commercial crop. But the difficulty, according to Mr. Narayana Rao, is presented by the words, 'other than plantation crops, ganja or timber' occurring after the words, 'commercial crops' in that section. The argument constructed on these words was that, since pepper and cardamom are plantation crops and they are also grown on the land, no classification is possible under the provisions of the section.

20. We do not find it possible to read the section in that way. It does not speak of land exclusively used for growing commercial crops. Every land on which a commercial crop is grown, whatever may be the other crop grown on it, is a land used, in our opinion, for growing a commercial crop according to the plain meaning of the section, if nothing else could be said about it.

21. If a land is used exclusively for growing commercial crops other than ganja or timber, there would be no difficulty in interpreting the provisions of the section. The perplexity comes into being only when there is a land on which a commercial crop to which the section refers is grown, and, in addition, a plantation crop or ganja or timber is also grown. The perplexity becomes enhanced by the classification made by Part II of the Act. For instance, a land used for growing areca is in the second class and a land used for growing chillies is in the fourth class. In respect of both classes of land, a classification is possible and so a composition. But in the case of a land on which both crops are grown, the question would be whether it is in the fourth class because chillies are also grown on it. The solution to the difficulty so presented, in the context of the purpose and the scheme of sections 66 and 67, is to understand the user to which section 66 refers as the dominant or main use for which the land is employed. The word 'used' occurring in that section has reference to the employment or application of the land for a particular purpose, and remembering the difficulty presented, if that or is literally understood as having reference to exclusive user, it would be proper and reasonable to say that the main or dominant user is what determines the application or otherwise of the provisions of the section. We, therefore, think that a land is used for the purpose to which the section refers, when it is mainly or primarily used for that purpose, although a subsidiary use of the land was also made.

22. This view which we take receives support from the decision of this court in Writ Petition No. 1264 of 1960 in which this court expressed the view that the words 'which is used' occurring in section 2 (1) (a) (i) have reference to primary user and not exclusive user.

23. So understood, the land belonging to the petitioner would belong to the second class within the meaning of section 66, since the primary and main use for which the land was employed by the petitioner was for growing areca, although he also grew pepper and cardamom in addition.

24. But, Mr. Narayana Rao contended that that interpretation becomes impermissible by reason of an amendment made to the definition of a plantation crop which section 2 (1) (q) of the Act contains. That definition, as it stood before April 1, 1963, when it was amended, read :

''Plantation crop' means cardamom, coffee, linaloe, orange, pepper, rubber or tea.

Explanation. - Plantation crop shall not include cardamom or pepper when grown on land on which areca is grown as the main crop.'

25. What was accomplished by the amendment made with the effect from April 1, 1963, was the deletion of the Explanation, and after such deletion the definition reads :

'Plantation crop' means cardamom, coffee, linaloe, orange, pepper, rubber or tea.'

26. It is undisputed that for the years preceding the amendment of this definition, composition was allowed even with respect to agricultural income derived from a land in which, in addition to areca, a plantation crop was grown, presumably on the basis of the Explanation which has since disappeared.

27. The stress of the argument placed before us by Mr. Narayana Rao was that the only meaning which could be given to the deletion of the Explanation is that cardamom or pepper grown on land on which areca was grown as the main crop main crop became a plantation crop for all purposes from April 1, 1963, and took the land on which they were grown out of the provisions of the 66th section making classification and composition equally impossible.

28. We were asked to say that, until the definition was amended, pepper and cardamom grown as subsidiary crops on a land, on which areca was grown as the main crop, were not plantation crops by reason of the Explanation and so there was no impediment to the application of the 66th section to such land. We were asked to say that once they were accorded the status of plantation crops with the removal of the Explanation to section 2 (1) (q), the land became one on which a plantation crop was grown and was taken outside the orbit of the 66th section.

29. This submission at first sight might appear to provide some sustenance to the interpretation suggested by the Mr. Narayana Rao. But we are of the view that the amendment made to the definition makes no difference to the question whether a land on which a subsidiary crop such as pepper and cardamom is grown, when the main crop grown is area, is or is not within the second class in Part II. We are of the opinion that it continues to be within that classification, and we may state briefly the reasons for our saying so.

30. The view that we take is that our interpretation of the 66th section and of the words 'land used for growing commercial crops' therein should net in any manner be made to depend upon the definition of a plantation crop occurring in section 2 (1) (q) or the transformation which that definition under went in consequence of such amendment. If the word 'used' occurring in section 66 has reference to the main or the primary or dominant use, as we think it to be, whether pepper and cardamom became plantation crops even when they were grown as subsidiary crops, will not take a land outside the provisions of section 66 if it really is inside it, as the land with which we are concerned in this case is.

31. Further, as Mr. Bhat appearing as an intervener has explained, the amendment to the definition contained in section 2 (1) (q) may be explained as having been made for a purpose very different from that suggested by Mr. Narayana Rao. It was submitted to us by Mr. Bhat that when the old definition was operating, income from a subsidiary plantation crop such as pepper or cardamom was not agricultural income which could be amended for the purpose of bringing into the net such income, although the income was subsidiary to the main income derived from areca. It seems to us that that really was the aim of the deletion of the Explanation from the definition.

32. If pepper and cardamom, according to the Explanation, were not plantation crops, when they were grown as subsidiary crops, then they were not derived from that crops within the meaning of section 2 (1) (e), and so the income derived from that crop would escape taxation. It is, we think, plain that the intendment of the amendment was to make the taxation of even that income possible and that it was for that purpose that the Explanation was removed from the definition.

33. In that view of the matter, the fact that the Explanation was deleted from the definition ceases to have any materiality.

34. Mr. Narayana Rao, however, suggested that our interpretation of the 66th section may produce difficulties. It was suggested that, if that land on which a commercial crop was grown as the main crop was within the 66th section and so a composition crops such as pepper and cardamom which are grown as subsidiary crops may escape assessment.

35. We do not think so. If agricultural income from the area crop in the case before us is made the subject-matter of a composition under section 67, such composition would lead to the consequence that there would be no assessment in respect of such agricultural income. There would thereafter be no impediment to the assessment of the other agricultural income such as income derived from plantation crops which the Agricultural Income-tax Officer could very properly assess.

36. In our opinion, the refusal of composition by the Agricultural Income-tax Officer, which is attributable to his misinterpretation of the provisions of section 66 and 67, is unsupportable.

37. We accordingly set aside the impugned order made by him and we make a direction that the Agricultural Income-tax Officer should not proceed to allow composition under section 67 according to law.

38. In the circumstances, we make no order as to costs.

39. Appeal allowed.


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