PROVINCE OF BIHAR Vs. RAI SHAMBHU LAL BOSE

JUDGEMENT

(1.) This is a reference under Section 25(2), Bihar Agricultural Income tax Act (hereinafter referred to as the Act) by the Bihar Board of Agricultural Income-tax asking the opinion of the Court on the following questions: (a) Whether the word revenue occurring in Clause (a) of Section 6, Bihar Agricultural Income-tax Act 7 [VII] of 1938 refers to and is limited to land revenue only or whether it comprises all revenue as defined in Section 136, Government of India Act. (b) Whether the assessees are entitled to deduct the agricultural income-tax paid for the previous year in computing the net income for the current year for which he is liable to be taxed.

(2.) The only facts necessary to state are that for the assessment year 1940-41 relating to the previous year 1347 Fasli, the assessees, Rai Shambhu Lal Bose and another, claimed to deduct the agricultural income tax for which they were assessed in the year before the previous year and which they paid in the year under assessment. The claim is made under Section 6(a) of the Act. That Sub- clause provides that in arriving at the assessable agricultural income a deduction shall be made from the gross amount of income of the assessee of "the sum actually paid in the previous year as revenue to the Crown or as rent to a landlord in respect of the land from which such agricultural income is derived." It is argued on behalf of the assessee that as he has paid agricultural income-tax in the previous year, this must be taken to be a sum actually paid by him as revenue to the Crown in respect of the land from which the agricultural income in the previous year was derived. The assessing authorities have overruled the contention upon the ground that the word revenue in the provision must mean the land revenue and cannot include the agricultural income-tax. In my judgment, this view is correct.

(3.) On the general principles and in accordance with the practice which prevails in England, it is well settled that income-tax paid by an assessee cannot be allowed to be deducted out of the assessable income. The reason for this practice is that income-tax is a share of the Crown in the income of the assessee and cannot be treated as an expenditure necessary to earn the income.