Chakravartti, C.J. - (1.) The points involved in this Reference are a little out of the common and have afforded some relief from the dreariness of the ordinary Income-tax Reference. The most interesting of the points raised by Dr. Pal had, however, to be ruled out, as it did not seem to us to arise out of the appellate order. Also, of the three questions referred, two were ultimately abandoned as it was conceded that, on the materials on record, they could not be answered.
(2.) The assessee is one Kumar Jagadish Chandra Sinha, who is an individual resident and ordinarily resident in India. He owns a zemindary situated wholly in the district of Jessore which, as a result of the Partition, went to Pakistan with effect from 15-8-1947. The assessee observes the Bengali Calendar year in maintaining his accounts. In the accounting year 1354 B.S., corresponding to 14-4-1947, to the 13-4-1948, the assessee received from his zemindary in Jessore an income of 1,85,380/-. It is not disputed that the money was rent derived from land used for agricultural purposes, but it was Income of a period, during a part of which the land belonged to undivided India and during the remaining part it belonged to Pakistan. There was nothing to show how much of the amount had been received up to 14-8-1947, the date immediately preceding the date of the Partition and how much from 15-8-1947, up to the end of the accounting year. In those circumstances, the Income-tax Officer who made the assessment for the assessment year 1948-49 thought that the only feasible way of apportioning the income between the two periods was to apply the rule of three on the time basis and by applying that rule, he determined the prepartition income, leaving aside annas and pies, at Rs. 61,793/- and the postpartition income at Rs. 1,23,546/-. There could be no question that the former sum was Indian income and also agricultural income, as defined in the Indian Income-tax Act and, therefore, it was excluded from the assessment. With regard to the latter sum, the assessee's contention was that that sum, also was agricultural income and, therefore, exempt from taxation altogether and that, in any event, it should not be included except for fate purposes. The income-tax Officer rejected that contention and gave his reasons in the broad form that the amount received after 14-8-1947, from land, then situated in Pakistan, did not satisfy the definition of agricultural income, as contained in Section 2(1) (a), Income-tax Act, and, therefore, it was liable to be included in the assessment.
(3.) On appeal, the decision of the Income-tax Officer was upheld. The Appellate Assistant Commissioner observed that though the income was derived from land used for agricultural purposes, the land was neither assessed to land revenue in the taxable territories, nor was it subject to a local rate, assessed and collected by the officers of the Government. The reason so given was not accurately expressed, because even after the Partition, the definition of 'agricultural income' in the Indian Income-tax Act continued to speak of 'British India' till 1950 when, for the first time, the expression 'the taxable territories' was introduced. The meaning of the Appellate Assistant Commissioner, however, was plain. When the assessee took the matter on further appeal to the Tribunal, there was a difference of opinion between the Accountant Member and the Judicial Member. The Assessee's contention before the Tribunal was that if the land, from which the income had, been derived, was assessed to land revenue in British India even for a part of the accounting year, such assessment would be sufficient to make the income of the whole year agricultural income for the purposes of an Indian assessment. The Accountant Member rejected that contention by referring to the definition of 'British India", introduced in the Income tax Act as Section 2(3A) by the India (Adaptation of Income-tax. Profits Tax and Revenue Recovery Acts) Order, 1947, and held that, according to that definition, which applied to the 1948-49 assessment, the land was not land assessed to land revenue in British India during the period subsequent to 14-8-1947. He held accordingly that the income attributable to the period subsequent to 14-8-1947, could not be treated as agricultural income and it was therefore liable to be assessed. The Judicial Member held that if at any point of time during the previous year, the land was assessed to land revenue in British India, the requirements of Section 2 (1) (a) Income- tax Act, would be satisfied and that, therefore, there was no warrant for splitting up the accounting year. The matter was then heard by a third member who was the President himself and he agreed with the Accountant Member. In the result, the assessee's appeal was dismissed.;