Chakravartti C. J. - (1.) This Reference under Section 63 (1) of the Bengal Agricultural Income-tax Act involves one aspect of a point which has many aspects and some of which are pending examination in other References made to this Court. The answer to the narrow point which arises for consideration in the present case appears to be comparatively simple. It also appears that there has been a confusion of thought on the part of all concerned.
(2.) The material facts are as follows : In the accounting year 1358 B. S., the assessee, Manmatha Nath Mukherjee, received 1,8361/2 maunds of paddy, no part of which was sold during that year. In the next year, that is to say, in 1359 B. S., 1992 maunds of paddy were seized from his possession by the Procurement Authorities, out of which 1,6511/2 maunds were paddy harvested in 1358 B. S. To make the position a little clearer, out of 1,8361/2 maunds of paddy harvested by the assessee in 1358 B. S., 1,6511/2 maunds were seized by the Procurement Authorities in 1359 B. S. along with a certain further quantity. The paddy seized was paid for at the rate of Rs. 8-8-0 per maund which was the rate fixed by Government. The balance of 185 maunds of paddy out of the stock of 1358 B. S. was not seized by Government and does not appear to have been sold even in 1359. It has, however, been found that the price at which paddy was being sold in the open market in 1358 B. S. was Rs. 18/- per maund.
(3.) Under Section 7 of the Bengal Agricultural Income-tax Act, tax was payable by the assessee in respect of his agricultural income of 1,836 maunds of paddy received by him during the year 1358 B. S. The Act, however, does not know of income in kind. It has provided in column VII of Schedule B to the Form of Return that the market-value of the agricultural produce is to be shown. What market-value means for the purposes of the Act, is the subject-matter of Rule 4 of the rules framed under Section 57. Leaving aside an exceptional case referred to in the opening paragraph of the rule which is not material here, market-value is to be determined in the following manner, namely, (1) if the agricultural produce was sold in the market, the market value is to be deemed to be the price for which such produce was sold; and (2) if the agricultural produce has not been sold in the market, the market price is to be deemed to be, where such produce is ordinarily sold in the market, either in a raw state or in a processed condition, 'the value calculated according to the average price at which such produce has been so sold in the locality during the previous year in respect of which the assessment is made'. I need not reproduce Clause (b) of the rule which is not relevant for our present purpose.;