SRISH CHANDRA SEN (DECEASED) AND OTHERS vs. THE COMMISSIONER OF INCOME-TAX, WEST BENGAL

CIVIL APPEAL No. 405/1957Supreme Court[1961] 2 S.C.R. 59823 November 1960Bench: 3 JudgesAuthor: S.K. DAS, M. HIDAYATULLAH, J.C. SHAH12 pages
AI SummaryDismissed

What did the Supreme Court hold?

The Supreme Court held that the lump-sum payment made in 1865 effectively redeemed the entire land revenue that was to be recovered from the land in perpetuity. This redemption meant the land became free from land revenue assessment, as if no assessment had ever existed. Consequently, the land could no longer be considered as assessed to land revenue within the meaning of Section 2(1) of the Indian Income-tax Act, 1922. Therefore, the income derived from this land could not be classified as agricultural income under that section and was not exempt from tax. The Court distinguished the case of The Collector of Bombay v. Nusserwanji Rattanji Mistri & Others. The appeal was dismissed. The Court found no ambiguity in the conveyance deed, which clearly stated the land was free from land revenue.

What were the facts?

The assessee, Srish Chandra Sen, claimed that agricultural income derived from a piece of land was not liable to income tax. This land, originally part of a permanently settled estate, was acquired by the Government of Bengal for the Justices of the Peace for Calcutta in 1864. Following the acquisition, the proprietor of the estate received an abatement of land revenue. In 1865, the Justices were required to pay a lump sum of Rs. 7,728-13-8, representing the capitalized value of the land revenue attributed to the acquired land. A conveyance in 1870 stated the land was "ever free and clear and for ever discharged from all Government land revenue whatever". A lease of this land was granted to the assessee's predecessors in 1880, allowing cultivation with sewage. The tax authorities rejected the assessee's claim, holding that the lump-sum payment redeemed the land revenue liability, making the income derived from it not agricultural income under Section 2(1) of the Indian Income-tax Act, 1922.

What were the issues?

1. Whether the income derived from the land is agricultural income within the meaning of Section 2(1) of the Indian Income-tax Act, 1922, and thus exempt from income tax. Assessee's contention: The assessee argued that the redemption of land revenue in 1865 only absolved the Justices of the Peace from the liability to pay it periodically, but did not extinguish the assessability of the land to revenue under Regulation I of 1793. Therefore, the income derived should still be considered agricultural income. Revenue's contention: The revenue contended that the payment of a lump sum in 1865 redeemed the liability to pay land revenue permanently. Consequently, the land was no longer assessed to land revenue, and the income derived from it did not qualify as agricultural income under Section 2(1) of the Act, making it taxable.

Which sections of the Income-tax Act were involved?

Section 2(1)

AI-generated summary — verify with the full judgment below

Noveinber 23. 598 SUPREME COURT REPORTS SRISH CHANDRA SEN (DECEASED) AND OTHERS v. [1961) THE COMMISSIONER OF INCOME-TAX, WEST BENGAL (S. K. DAS, l\L HrnAYATULLAH and J.C. SHAH, JJ.)

Income Tax-Agriwlt11ral income-Acquisition of land form- ing part of permanently settled estate-Redemption of liability to pay land revenue by payment of lump sum--Agricultural income from the land-Liability to income-tax-Indian Income-tax Act, z922 (II of z922), s. 2(1).

By a notification dated November 2, 1864, a piece of land forming part of the Panchannagram Estate which was permanent- ly settled under Regulation I of 1793. was acquired by the Government of Bengal at the instance of the Justices of the Peace for the Town of Calcutta, which was a corporation establi- shed under the provisions of the Calcutta Municipal Act, 1863, and the Justices were required to pay the compensation payable to the proprietor of the Estate. After the acquisition, the pro- prietor of the Estate was granted abatement of land revenue assessed on the Estate to the extent of Rs. 386-7-1, being the proportionate land revenue on the land acquired. On October 27, 1865, the Government called upon the Jus

The order continues below.

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