New Ambadi Estates P. Ltd. Vs. Commissioner of Agricultural Income Tax Bangalore and anr. - Court Judgment

Govinda Bhat, J.

1. This matter arises under the Coorg Agricultural Income tax Act, 1951, hereinafter called 'the Act'. For the assessment year 1952-53, the petitioner was assessed to tax under the Act by the Agricultural Income tax Officer of Coorg, overruling the claim of the petitioner that certain sums revived did not constitute income in its hands and that the net result of the year was one of loss. The petitioner's appeal was unsuccessful; but on a reference to this court in C.J. No. 89 of 1956 its contention was accepted. The order of this court was taken up by the Commissioner of Agricultural Income tax in Civil Appeal No. 696 of 1965, to the Supreme Court which by its judgment dated October 12, 1966, affirmed the decision of this court. Thereafter on December 21, 1967, the Agricultural Income tax Officer respondent No. 2, in this writ petition passed an order to give effect to the order of this court as confirmed by the order of the Supreme Court. By the said order, he determined the unabsorbed loss of the petitioner at Rs. 51,143 which he directed should be carried forward to the next year for being set off against the income of that year. It stated :

'This loss of Rs. 51,143 is ordered to be carried forward to the next year for being set off against the income of the that year.'

2. Long before the decision of this court in C. P. No. 89 of 1956 aforesaid, the assessment for 1952-53 was completed on the basis that there was no loss from 1952-53 to be carried forward for being set off against the profits of 1953-54. To give effect his own order and the decision of this court what the second respondent should have done was to revise his order of assessment for the assessment year 1953-54 by setting off the loss of Rs. 51,143 carried forward from 1952-53 against the profits of 1953-54. When the petitioner wrote to the second respondent to give effect to his order dated December 21, 1967, he informed the petitioner that instructions from the Commissioner of Commercial Taxes (respondent No. 1) had been solicited in the matter. By a letter dated March 26, 1968, the second respondent informed the petitioner that the matter of revision of assessment order for 1953-54 was receiving the attention of the Government. By a letter dated August 6, 1969, the first respondent informed the petitioner that his request for revision of the assessment order for 1953-54 cannot be made as the same was not acceptable to the Government. Left with no other remedy the petitioner approached this court for relief under article 226 of the Constitution of India.

3. Originally, the Commissioner of Agricultural Income tax alone had been imploded as the sole respondent to the writ petition. We directed the petitioner to implied the Agricultural Income tax Officer of Coorg and make the necessary consequential amendments According to our direction the Agricultural Income tax Officer of Coorg was impleaded as the second respondent and the writ petition was amended seeking a direction to the second respondent to revise the assessment for the year 1953-54 so as to give effect his order dated December 21, 1967.

Section 14 of the Act, which is in pari materia with section 24(2) of the Indian Income tax Act, 1922, reads :

'Where any person sustains a loss in agricultural income in any year the loss shall be carried forward to the following year and set off against the agricultural income for that year and if it cannot be wholly so set off the amount of loss not so set off shall be carried forward to the following year and so on; but no loss shall be carried forward for more than six years.'

4. It is clear from the above provision that the assessee has a statutory right and the assessing authority has a corresponding duty to set off the loss carried forward from not year to the following year. Where the assessment for 1953-54 was completed before the assessment for 1952-53 was finalized which resulted in a loss to be carried forward to the following year the department cannot refuse to revise the assessment for 1953-54 on the ground that it has become final. The department is bound to give effect to the provisions of section 14 by setting off the loss of the preceding year carried forward against the income of the following year. The stand of the first respondent amounts to denial of the benefit of the decision of this court of this court to the assessee. The second respondent has in fact ordered on December 21, 1967, that the loss of Rs. 51,143 shall be carried forward to the next year for being set off against the income of that year. But after making a correct order he failed to give effect to the same when he sought the instructions of the first respondent who under directions of the Government not authorised by law refused the request of the petitioner. In our opinion the second respondent was bound to give effect to his order dated December 21, 1967, which is in accordance with the provisions of section 14, by revising his order of assessment for the assessment year 1953-54. Since he has filed to carry out his statutory duty we issue a writ directing the second respondent to give effect to his order dated December 21, 1967. In the circumstances we make no order as to costs.