HARRIES, C.J. - This is a reference made by the Assam Agricultural Income-tax Board in compliance with an order of this Court dated March 5, 1946. The reference deals with the assessment of the Maharaja of Tripura to agricultural income-tax for the years 1942-43 and 1943-44. The facts giving rise to the reference can shortly be stated as follows. The Income sought to be taxed is the agricultural income derived from the Chakla Roshanabad estate situate within the Province of Assam and which belongs to the assessee.
The assessee was called upon to make a return of his agricultural income derived from properties within the Province of Assam for the year 1942-43 and an assessment was made but the assessee was assessed as an association of individuals. An appeal was preferred from this assessment and the Appellate Assistant Commissioner set aside the assessment and directed the agricultural Income-tax officer to make a fresh assessment upon the Maharaja personally. Notice was served upon Babu Narendra Narayan Chowdhury to show cause as to why he should not be treated as the agent of non-resident assessee, his Highness the Maharaja for the purpose of assessment of agricultural income-tax on agricultural income derived from lands situate within the province of Assam. The Income-tax Officer by an order treated the said person as the agent of the non-resident assessee and proceeded to assess him for the year 1942-43.
Similarly an assessment was made for the year 1943-44.
The assessee objected toassessment for the year 1942-43 and mov ed the Commissioner for review under Section 27 of the Act, but the Commissioner rejected the petition. Thereupon the petitioner filed applications before the Assam Agricultural Income-tax Board for referring certain question of law arising out of the earlier orders to the High Court for its decision.
The Assam Agricultural Income-tax Board stated a case under Section 28(2) of the Act referring three questions of law for the decision of the High Court. The matter came before the Gentle and Ormond, JJ., and during the hearing the parties submitted a set of agreed questions and prayed for an order directing a fresh reference by yhe Board with its opinion on all such questions. The Board were directed by this Court to make a fresh reference on the agreed questions and this is the reference which is now before us.
The five questions set out in the reference are as follows :-
(1) Whether the zemindary of Chakla Roshanabad is, as a matter of law, the property of the Tripura State or of His Highness the Maharaja of Tripura personally.
(2) Is the income from Chakla Roshanabad State liable to tax under the Assam Agricultural Income-tax Act by the assessment upon the Tripura State or by assessment upon His Highness the Maharaja of Tripura personally or otherwise.
(3) Whether the Assam Agricultural Income-tax Act is ultra vires the Provincial Legislature if and so far as it authorises the assessment upon the Maharaja of Tripura.
(4) Whether rule 22 of the Rules under the Assam Agricultural Income-tax Act is ultra vires the Government of Assam.
(5) Whether the assessee is in law liable to be assessed as agent of His Highness the Maharaja of Tripura in his personal capacity or in his capacity as the ruler of the Tripura State.
The most important questions are questions 1, 2 and 3 and I have already dealt with these questions in my judgment in Income-tax Reference No. 7 of 1943. In that judgment I have held that Chakla Roshanabad is not the personal property of His Highness the Maharaja of Tripura, but is property belonging to His Highness in his capacity of ruler of the State; in other words, it is the property of the Tripura State and not the private property of the person who for the time being occupies the gaddee. I have further held that the income from Chakla Roshanabad is not liable to be taxed under the Assam Agricultural Income-tax Act as upon a true construction of the Assam Agricultural Income-tax Act it can have no application to income of an independent ruler or sovereign.
Further it appers to me that the question whether the Agricultural Income-tax Act is ultra vires the Provincial Legislature does not arise. The legislature did not in terms purport to tax the Maharajas income and as I have already held in Income-tax Reference No. 7 of 1943, that Act must be construed as not conflicting with the well-known rules of international of law and comity. On a true construction of the Act it does not apply to income of an independent sovereign or ruling prince and, therefore, the question as to whether the Act is ultra vires does not really arise as it does not authorise the assessment of the Maharaja who is an independent sovereign or ruling prince.
For these reasons the answer to question I must, therefore, be that Chakla Roshanabad is property of His Highness the Maharaja of Tripura in his capacity as ruler.
The answer to question 2 must be that the income from Chakla Roshanabad is not liable to be assessed for agricultural income-tax under the Assam Agricultural Income-tax Act.
The answer to question 3 must be that the Assam Agricultural Income-tax Act is not ultra vires the Provincial Legislature as on its true constructions it does not authorise the assessment of agricultural income-tax on the Maharaja of Tripura.
Question 4 - Whether Rule 22 of the Rules under the Assam Agricultural Income-tax Act is ultra vires the Government of Assam.
This raises the question whether Rule 22 of the Rules under the Assam Agricultural Income-tax Act is ultra vires the powers of the Provincial Legislature.
Rule 22 of the Assam Agricultural Income-tax Rules, 1939, is in these terms :-
'Any person employed by or working on behalf of a person residing out of the Province of Assam or temporarily absent therefrom or through whom such person is in receipt of any agricultural income arising from lands situated in Assam, upon whom the Agricultural Income-tax Office has caused a notice to be served of his intention of treating him as the agent of the non-resident person shall for all the purposes of the act and rules made thereunder, be deemed to be such agent :
Provided that no person shall be deemed to be the agent of a non-resident person unless he has had an opportunity of being heard by the Agricultural Income-tax officer as to his liability and in no case shall the liability of such agents extend beyond the assets of the non-resident assessee, in his actual possession.'
As I have stated earlier, notice was served upon the agent to show cause why he should not be treated as the agent of the non-resident owner, His Highness the Maharaja of Tripura. It appears that the agent asked for time as he contended that the notice served upon him was delayed in transit and that he, the agent, and had title item to contest the matter. Eventually the Income-tax Officer refused to grant time and by an order treated Babu Narendra Narayan Chowdhury as agent and, therefore, the assessee in the proceedings. It is to be observed that in the order of the Agricultural Income-tax Officer there is no finding that this person held any assets of the Maharaja in his actual possession.
It has been urged on behalf of the assessee that Rule 22 of the Assam Agricultural Income-tax Rules is ultra vires the powers of the legislature. This procedure of appointing an agent for a non-resident assessee finds place in the Indian Income-tax Act and the provisions are set out in section 42 of the Act itself. The Assam Agricultural Income-tax Act contains no provision for the appointment of an agent, through by section 50 it is provided that the Provincial Government may make rules for carrying out the purposes of the Act. The contention of the assessee is that as the statute does not itself provide for the appointment of an agent as representing a non-resident assessee, no rule to that effect can possibly by valid as authorized by the Act itself.
In my judgment the Act itself contemplates the promulgation of a rules such as Rule 22. Section 50(2) provides that the Local Government in particular may make rules upon certain subject and clause (i) of this sub-section is to the effect that rules made under Section 50 may prescribe the method by which the assessment of agricultural income as determined under Section 7 or Section 8 shall be made in the case of an assessee who does not reside in the Province of Assam, or of an assessee whom ordinarily resides in the Province of Assam and is temporarily absent therefrom. From this provision it is clear that the legislature delegated its powers to the rule making authority to make rules relating to the assessment of the agricultural income of a non-resident assesses. In short, the statute itself contemplates rules being framed to deal with the situation which arose in this case, namely, the assessment of the agricultural income of a non-resident assessee. The rule which follows the provisions of section 42 of the Indian Income-tax Act is to my mind clearly a rule made within the powers conferred by Section 50 of the Assam Agricultural Income-tax Act and, therefore, it cannot be said that the rule is ultra vires. That being so, question 4 must be answered in the negative. This was also the view of the Board.
Question 5 - Whether the assessee is in law liable to be assessed as agent of His Highness the Maharaja of Tripura in his personal capacity or in his capacity as the ruler of the Tripura State.
I have already held that this income is not liable to be assessed under the Assam Agricultural Income-tax Act and therefore the agent of the Maharaja even if properly appointed, cannot be assessed because the agent cannot possibly be liable if the non-resident assessee is not himself liable. The answer to question 5, therefore, must be in the negative. I cannot accept the view of the Board that such agent is liable.
The assessee is entitled to his cost of this reference which we assess at two gold mohurs, to be paid by the Assam Government. The deposit, if any will be returned to the assessee.
MUKHERJEA J. - I agree.
Reference answered accordingly.