COMMISSIONER OF AGRICULTURAL INCOME TAX Vs. HANUMAN SUGAR MILLS LTD

JUDGEMENT

(1.) As required under Section 28(3) of the Bihar Agricultural Income-tax Act, 1948 (Bihar Act XXXII of 1948), hereinafter called the Act, the Board of Revenue has stated a case and referred it to the High Court on the following questions of law:

(2.) The facts stated in the statement of case are these. Before 1357 fasli, the Company had about 4440 bighas of land, consisting of several farms, out of which 12 farms covering an area of about 4004 bighas of land had been sold by the Company to about 23 persons through registered sale deeds in August, 1950. The admitted relationship of the purchasers is that they include 3 Directors and their relations who between themselves held about 95 per cent of the shares in the Company at the time of the transfer of the lands aforesaid. These sales were sanctioned at a meeting of the Directors held on the 10th of April, 1950, and ratified by the share-holders at a meeting held on the 19th of December, 1953. The assessee's stand has been that, after the sales aforesaid, it had no concern with the lands sold, possession and management of which were taken over by the purchasers and as such the agricultural income from the said lands cannot be taxed as income of the Company.

(3.) The Agricultural Income-tax Officer, Motihari, by his orders dated 27-2-53 and 15-2-54, passed in respect of the two periods, has assessed the tax on the Company with respect to the agricultural income of the entire land measuring 4440 bighas. He has held that the alleged transfers to the 23 persons are not genuine and are sham and fictitious transactions entered into for the purpose of evading tax and that the sales are illegal and void in law. On appeals being filed by the assessee, the Deputy Commissioner of Agricultural Income-tax, Bihar, has held the sales to be good sales, in fact and in law, and has directed assessment of the Company in respect of the agricultural income derived from that area of the land which was nut sold and remained with the Company. The revision applications Filed by th Commissioner of Agricultural income-tax, Bihar, failed and have been dismissed by the Board of Revenue by its order contained in the resolution dated 14th May, 1959. The Board also refused to draw up a statement of case and refer it to the High Court under Section 28(2) of the Act.