CHAKRAVARTTI, C.J. - (1.) THIS is another case of assessment of agricultural income where the partition of Bengal and the inadequate provision made for the adaptation of the old agricultural income-tax law of the undivided Province presented a problem of some complexity. The facts are such that questions far more difficult than the one raised by the taxing authorities might well have arisen, but the question actually raised by them and now referred to us almost answers itself.
(2.) THE reference is somewhat unusual in form. It comprises two separate cases of two different assessees who are co-sharers in respect of some agricultural land situated in what is now East Pakistan. THE share of each is one half. As the point involved in their assessments was the same, their appeals to the Tribunal were consolidt. and so were their applications for reference to this Court. As a result only one reference has been made and only one statement of case submitted. The two assessees concerned are one Shri Jiban Krishna Roy and one Shri Butta Krishna Roy. The paper-book includes the assessment order passed in the case of the former and the order passed by the AAC in his appeal, but the corresponding orders passed in the case of the latter have not been included. I doubt whether that has been proper. However, I may state the facts by reference to the case of Shri Jiban Krishna Roy, as was done in the argument before us. The accounting year is 1353 B. S., corresponding to April, 1946, to April, 1947, and the relative assessment year is 1947-48. The assessee has agricultural lands situated both in East and West Bengal. The general notice under s. 24(1) of the Bengal Agrl. IT Act calling for a return was issued on the 28th of April, 1947, when Bengal was still undivided. The assessee did not file any return in compliance with that notice, nor did the Agrl. ITO issue a special notice to him under s. 24(2) of the Act. Subsequently, on the 28th of May, 1948, which was after the partition, the assessee filed a return voluntarily. In that return, he showed an income of Rs. 7,220-13-0 which was the income derived by him during the accounting year from his lands in West Bengal. The income derived from lands situated in East Bengal was not included. Notices under s. 24(4) and s. 25(2) were served on the 18th of June, 1951, and on the 4th of August of that year the assessment was made. The Agrl. ITO determined the West Bengal agricultural income at Rs. 7,851 to which he added a sum of Rs. 13,422 as the East Bengal income of the assessee, including the same only for the purpose of computing the rate of tax applicable to the West Bengal income. The total agricultural income being thus determined at Rs. 21,273, the rate applicable was found to be 15.97 pies in the rupee. The Agrl. ITO might have applied that rate to Rs. 7,851 and determined the tax payable, but what he did was that he first determined the tax payable on the whole of Rs. 21,273 which was Rs. 1,769-4-0, and then he deducted therefrom the tax payable on the East Bengal income which was Rs. 1,116-6-0. The result of that process was the same as what it would have been if the Agrl. ITO had directly applied the rate already determined by him to the West Bengal income. The tax due from the assessee was found to be Rs. 652-14-0.
(3.) THE assessee objected to the inclusion of his East Bengal income in his assessment for West Bengal, even though it was included only for rate purposes. His objections were overruled. THE Agrl. ITO, the AAC and the Tribunal, all held that such inclusion was valid. THE assessee then asked for a reference of the disputed question to this Court and the Tribunal, agreeing that it was a question of law, has referred the following question : "Whether, in the matter of the assessment of the agricultural income, received by the assessee in the accounting year 1353 B. S. (corresponding to April, 1946, to March, 1947) when Bengal was undivided, that part of the said agricultural income which came to appertain to East Pakistan as a result of the partition of Bengal on 15th Aug., 1947, could be legally or validly taken into consideration for the purpose of computation of the rate of tax for that portion of the said income of the assessees which appertained exclusively to West Bengal, in the asst. yr. 1947-48." It is not clear what the Tribunal mean by the expression "that part of the said agricultural income which came to appertain to East Pakistan as a result of the partition of Bengal." They are speaking of income, not the tax payable on it. On the other hand, they are not speaking of land. The income had accrued at a time when Bengal was undivided and no East Pakistan had yet come into existence. If of such income it is said that a part of it came to appertain to East Pakistan as a result of the partition, it can hardly be meant by such language that the effect of the partition was to transfer the right to tax that income to East Pakistan. What is perhaps meant is that by reason of the partition, the land from which a part of the income had been derived came to form a part of the new State of East Pakistan and consequently, as regards its territorial origin, the income came to be connected with that State. On the merits of the question, the Tribunal held that the right to include the income from the East Bengal lands for rate purposes followed clearly from the "plain meaning" of ss. 3 and 4 of the Bengal Agrl. IT Act. Since they referred for the text of the sections to the order of the AAC, it would seem that they were thinking of the sections, as they stood before their adaptation. Their reasoning is that since s. 3 made the total agricultural income of an assessee liable to tax and since in the accounting year the lands, since fallen to East Pakistan, were a part of undivided Bengal, the total agricultural income for that year necessarily included the income from those lands as well and consequently such total would determine the rate of tax for the purpose of the asst. yr. 1947-48. In support of that view, the Tribunal referred to a number of decisions under the Indian IT Act, relating to the position of income or loss or residence in Burma prior to the separation of that country from India in relation to the assessments in India for preseparation years. It was held in those cases that since the tax was imposed on the actual income of the accounting year, facts to be taken into account were those that existed then and therefore the term "British India" was to be read in the preseparation sense and income or loss or residence in Burma before the date of the separation was to be taken as such income or loss or residence in British India for the purposes of British Indian assessments for years preceding the separation. The cases referred to by the Tribunal were CIT vs. Valliammai Achi (1938) 6 ITR 720 (Mad), Rawji Dhanji and Co., In re (1940) 8 ITR 1 (Bom), CIT vs. Papammal (1942) 10 ITR 349 (Mad), and E. M. V. Muthappa Chettiar vs. CIT, Madras (1945) 13 ITR 311.;