The Chief Justice
1. This appeal arises from Balakrishnan v. Commissioner of Agricultural Incometax. Madras(1)). The respondent applied for composition of agricultural income-tax in June, 1966. The question was whether an extent of 29 acres and 37 cents which was in excess of the ceiling area, should be taken into account for purpose of composition. Notwithstanding the fact that the notification under S. 18(3) of the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961, was made on 23rd May, 1966, the assessing authority took the view that this extent should be taken into account for the purpose of composition in respect of the assessment year 1967-1968 and in support of this view, he relied on the proviso to S. 10 of the Madras Agricultural Income-tax Act, 1955. This view prevailed with the Commissioner, But, the composition order passed on that view was quashed by Ramaprasada Rao, J., he being of opinion that because of S. 7 of the Land Reforms Act, the stated extent of land was not liable to be taken into account for the assessment year. The revenue appeals from his order.
2. With respect, we are unable to share the learned Judge's view. S. 5 of the Land Reforms Act fixed the ceiling area which a person could hold after the commencement of the Act, which was on 6th April, 1960. S. 7 says that on and from the date of the commencement of the Act, no person shall, except as otherwise provided under the Act, but subject to the provisions of Chapter VIII, be entitled to hold land in excess of the ceiling area. The expression ‘to hold’ as defined, means “to own land as owner or to possess or enjoy land as possessory mortgagee or as tenant or as intermediary or in one or more of those capacities.” But, S. 7 read with this definition, in our opinion, merely makes a declaration that from the commencement of the Act, no person shall be entitled to hold land in excess of the ceiling area, to hold as defined in the Act, that is to say, after that date, the person concerned shall not be entitled to own land as owner, or to possess or enjoy land as possessory mortgagee or as a tenant or as an intermediary or in one or more of those capacities. But by its operation, S. 7 does not by itself divest the excess land and vest the same in the Government free of ail encumbrances. Vesting only follows a notification under S. 18(1). The effect of the notification is stated by sub-S. (3) of that section, which is that from the date of the publication of the notification, the excess land shall be deemed to have been acquired for a public purpose and vested in the Government free from all encumbrances and all right, title and interest of all persons in such lands with effect from that date be deemed to have been extinguished. It is clear from this provision that notwithstanding the declaration under S. 7 as to the excess land which the person concerned will not be entitled to hold from the date of the commencement of the Act, his title thereto is not extinguished by vesting it in the Government from the commencement of the Act. But the vesting, as we said, with reference to S. 18(3), takes place only on the date of the publication of the notification under S. 18 (1), and it is only then the title of the person who held the excess, in point of fact, though he was not entitled thereto, would stand extinguished. In our opinion, S. 7 will not, there fore, have the operation of extinguishing the ownership of a holder thereof, though he might not be entitled to the ownership in the sense that he might not be entitled to hold from the date of the commencemeet of the Act.
3. It was on that approach Kaliaperumal Nattar v. Authorised Officer; (Land Reforms, Tiruchirapalli(2), allowed a petition by a transferee of excess land between the date of the commencement of the Act and the date of the publication of the notification under S. 18 of the Land Reforms Act.
4. Counsel for the respondent, however brought to our notice Madras Act VII of 1974, which amended some of the provisions of the principal Act. S. 3 starts by saying—
“The principal Act shall, on and from the first day of March, 1972, have effect as if. .. ……”
and then we have S. 3(2)(a), which says—
“In S. 18 of the Principal Act, in sub-S. (3) for the words with effect from the date of of such publication’ the words ‘with effect from the date of the commencement of this Act’ has been substituted”.
This amendment, as we consider, will not help the respondent. S. 3 provides for two different dates for its operation with two different results. First of all, as indicated by the opening words of S. 3, the principal Act shall have effect as amended only from 1st March, 1972. Secondly, although Cl. (a) of sub-S. (2) of S. 3 of the Amending Act substituted the existing words as mentioned therein by words giving effect to the consequences of the notification from the date of the commencement of the Act, that would have application only from 1st March, 1972. In other words, the combined effect of the opening words of S. 3 and of Cl. (a) of sub-S. (2) of S. 3 is that the amended provisions will leave transactions prior to 1st March 1972, unaffected. S. 3(2)(A) of the Amending Act will have to be read accordingly. The result is that if the notification under S. 18(1) were made on or after 1st March 1972, its effect would be to vest the land in excess over the ceiling area with effect from the date of the commencement of the Act but that would not be so if the notification preceded 1st March, 1972,
5. There remains then the question as to whether where the notification prior to 1st March, 1972, took effect in the middle of the assessment year, the land, which vested in Government in consequence from the date of the publication of the notification, should be required to be included in the composition application. The answer should be clearly in the affirmative, because the proviso to S. 10 of the Madras Agricultural Income-tax Act is so clear. It says that no person, who held or holds land during any part of a financial year in excess of the exempted extent, shall be entitled to the exemption under that sub-section, even though the extent of the land held by him during the rest of the financial year may not be in excess of the exempted extent. This proviso was introduced by S. 11(1) of the Madras Plantation Agricultural Incometax Amending Act 1958, and is a complete answer to the objection raised by the assessee, that because the notification was in the middle of the financial year, the excess land was not required to be included in such composition application.
6. The appeal is allowed with costs. Counsel's fee Rs. 100.
V.C.S