Somnath Iyer, J.:— This application is for prohibition restraining the Agricultural Income-tax Officer of Bagalkot from proceeding with the assessment, which he proposed to make in respect of the agricultural income of the petitioner for the assessment year 1957–58.
2. The petitioner, who is a resident of Mudhol in the district of Bijapur, was called upon by the Income-tax Officer by a notice issued to him on June 10, 1958, to file his return in respect of his agricultural income for the assessment year 1957–58. Although the petitioner did furnish the return he was called upon to furnish he asserts in this application that the Income-tax Officer had no jurisdiction to assess his agricultural income for the year 1957–58.
3. The challenge made to the competence of the Income-tax Officer is based on the ground that since during a part of the previous year to which that assessment year related, the lands from which the petitioner derived his agricultural income were not within the new State of Mysore, that income did not attract the tax imposed by the Mysore Agricultural Income-tax Act. The taluk of Mudhol in which the lands belonging to the petitioner are situate, originally formed part of the State of Bombay. That taluk became part of the new State of Mysore on and from November 1, 1956, on which date there was the reorganisation of States.
4. The Mysore Agricultural Income-tax Act came into force on October 1, 1957, and it is under the provisions of this Act that the Income-tax Officer required the petitioner to furnish his return. Whether any part of the Agricultural income of the petitioner derived by him during the year previous to the year of assessment is taxable under the provisions of this Act, is the question arising in this case.
5. Sub-section (1) of section 3 of the Act which is the charging section reads:
“Agricultural income-tax at the rate or rates specified in Part I of the Schedule to this Act shall be charged for each financial year commencing from the 1st of April, 1957, in accordance with and subject to the provisions of this Act, on the total Agricultural income of the previous year of every person.”
6. It is clear from the provisions of this section that the charge of agricultural income-tax is on the “total agricultural income of the previous year”. The “previous year” referred to in this sub-section is defined by section 2(1)(s) of the Act and that definition reads:
“(s) ‘previous year’ means—
(i) the twelve months ending on the 31st day of March preceding the year for which the assessment is to be made, or, if the accounts of the assessee have been made up to a date within the said twelve months in respect of a year ending on any date other than the said 31st day of March, then at the option of the assessee the year ending on the day to which his accounts have been so made up:
Provided that, if the option has once been exercised by an assessee, he shall not exercise it again so as to vary the meaning of the expression ‘previous year’ as then applicable to him except with the consent of the Agricultural Income-tax Officer and upon such conditions as he may think fit;………..
Since the petitioner in this case did not exercise any option under clause (i), his previous year in respect of the assessment year 1957–58 was the period which began on April 1, 1956, and ended on March 31, 1957. The expression “total agricultural income” occurring in section 3 is again defined by section 2(1)(w) of the Act and that definition reads:
“(w) ‘total agricultural income’ means the aggregate of all agricultural income derived by a person from land situated in the State of Mysore whether received by him within or without the State computed in accordance with the provisions of section 5 and includes all income of the description specified in section 11 and all receipts of the description specified in clauses (a), (c) and (d) of section 12 and any sum which is exempt from tax under clause (e) or clause (q) of section 12 or under section 13”.
7. Since under section 3 what may be taxed is the “total agricultural income” derived by the petitioner between April 1, 1956, and March 31, 1957, the question is whether during that period there was any taxable total agricultural income derived by the petitioner.
8. The answer to this question depends very largely on the definition of “total agricultural income” contained in section 2(1)(w) of the Act. According to that definition, a person's income is “agricultural income” within the meaning of that definition only if it is derived by him from land situated in the State of Mysore. During the period between April 1, 1956, and November 1, 1956, the lands belonging to the petitioner from which he is stated to have derived taxable income were not situated in the State of Mysore but were in the State of Bombay. Part of that income was thus income derived at a time when the lands which formed the source of income were outside the State of Mysore and not situate within it. The question which arises is whether in order to constitute the “total agricultural income” as defined by the Act, it is necessary that the lands from which that income is derived should have been situated within the State of Mysore during the entire period constituting the previous year or whether it is enough if those lands are situate in the State of Mysore during the assessment year;
9. Mr. Mahajan, appearing on behalf of the petitioner, submitted the argument that according to the plain meaning of the definition contained in section 2(1)(w), the requirement of the Act before any tax can be imposed is that the income sought to be taxed should have been derived from lands situate in the State of Mysore during the previous year and that it was not enough if they were situate in the State of Mysore only during the assessment year. The Government Pleader strenuously contended to the contrary and his argument was that so long as the source of the income was within the State of Mysore during the assessment year, the scheme of the Act being the assessment of the income for the assessment year which was derived during the previous year, it was enough if the source was within the State of Mysore during the assessment year.
10. It seems to me that section 3 of the Act on its true construction charges income-tax only on income derived from a land which was situated within the State of Mysore during the previous year. The expression “income derived by a person from a land situated within the State of Mysore” is unambiguous and creates no difficulty in its interpretation. What is taxable under section 3 is the income of the previous year and section 3 expressly says so. That section makes it also clear that it is the total agricultural income of the previous year which is taxable.
11. Now, if section 2(1)(w) states that such total agricultural income is income derived from lands situated in the State of Mysore, there would be small reason for supposing that the Act does not require that that income should have been derived during the previous year from a land then situate in the State of Mysore. The expression “situated” occurring in section 2(1)(w) makes it manifest that during the entire period constituting the previous year of an assessee the land forming the source of his agricultural income should have been situated in the State of Mysore.
12. Any other view would be possible only by adding words to section 3 and section 2(1)(w) of the Act not contained in it. Now, it is a safe rule of construction that one must look at the words of the enactment to ascertain the legislative intent and if, in so construing the statute, the language is ambiguous or there is a doubt that the tax is attracted, the doubt must be resolved in favour of the taxpayer.
13. In Coltness Iron Company v. Black 1881 6 App. Cas. 315., Lord Blackburn observed at page 330:
“No tax can be imposed on the subject without words in an Act of Parliament clearly shewing an intention to lay a burden on him”.
14. In Russell v. Scott [1948] A.C 422., Lord Simonds observed on page 433:
“My Lords, there is a maxim of income-tax law which, though it may sometimes be overstressed, yet ought not to be forgotten. It is that the subject is not to be taxed unless the words of the taxing statute unambiguously, impose the tax upon him. It is necessary that this maxim should on occasion be reasserted and this is such an occasion.”
15. So construed, section 3 in my opinion is incapable of any other meaning than that the lands, the income from which is sought to be taxed, must be situated within the State of Mysore when the income was derived from the assessee therefrom.
16. This conclusion leads to the result that the agricultural income of the petitioner for the period between April 1, 1966, and November 1, 1956, was not taxable under the provisions of the Mysore Agricultural Income-tax Act.
17. In Anantanarayana Iyer…* v. Agricultural Income-Tax & Sales-Tax Officer & Another…, their Lordships of the High Court of Kerala in effect came to the same conclusion. That was a case in which part of the Agricultural Income-tax Act was enacted after the inclusion of the District of Malabar which originally formed part of the State of Madras in the new State of Kerala. The question was whether under the provisions of that Act, tax on agricultural income derived by the assessee from lands which were not during the entire period of the previous year, situate in the new State of Kerala, could be demanded under that Act. The postulate on which a full bench of that High Court proceeded to hold that it was not, so taxable was that for the purpose of attracting tax under that Act it was necessary that during the entire period of the previous year those lands should have been situate within the State of Kerala. With this view, I respectfully agree.
18. It next remains to be considered whether the income derived by the petitioner from his lands from November 1, 1956, till April 1, 1957, was in any event taxable. Mr. Mahajan advanced the argument that that income is not the “total agricultural income” of the petitioner for the previous year and was, therefore, not taxable. He depends, not unnaturally, upon the provisions of section 3(1) of the Act which charges income-tax on the “total agricultural income” of the previous year. The income of the petitioner for the period commencing on November 1, 1956, and ending on March 31, 1957, is not, according to Mr. Mahajan, the “total agricultural income”. of the previous year, but forms part of it and, therefore, not falling within section 3(1) of the Act so as to attract the tax charged by it.
19. In my opinion, this contention has to succeed. The taxable quantum on which section 3(1) charges tax being clearly the “total agricultural income” derived during the previous year, what attracts the tax is the aggregate of the income derived from the lands situate within the State of Mysore during the entire period of twelve months constituting the previous year.
20. As pointed out by Rowlatt J. in Luipaard's Vlei Estate and Gold Mining Co. Ltd. v. Commissioners of Inland Revenue, income-tax which was charged by the Income Tax Act, 1918 (8 & 9 Geo. V, c. 40), was an annual tax not only in the sense that it is annually imposed by the Finance Act, but in the sense that it is annual in its structure and organisation. That was also the view taken in Bowles v. Attorney-General, in which Parker J. observed:
“The tax is still, as a matter of form, imposed as a temporary tax only, the period of imposition being for one year,………”
21. The previous year or the assessment year as under the Income-tax Act is even under the Agricultural Income-tax Act a distinct unit. Broken periods of that period not constituting either a previous year or an assessment year, and each year being thus one complete and indivisible unit, the income derived by a person during that complete period is the only income taxable under the Agricultural Income-tax Act also. It could not, in my opinion, be said that an income derived by a person during only a few months of a previous year is his total agricultural income for the entire previous year. The Income-tax Officer, before he could assess the income of a person under the Agricultural Income-tax Act, must find and compute the total agricultural income of that person during the previous year. In other words, he must compute his entire income during that previous year and then determine the tax payable in respect of such income. If he can find no total agricultural income falling within the net of the provisions of the Agricultural Income-tax Act, can it be said that he can separate that part of the total agricultural income which is taxable from the other part which is not taxable and call it total agricultural income for the entire period of twelve months and tax it? In my opinion, it is not within his competence to do so. It is, I think, plain from the provisions of sections (2)(1)(s) and (w) and 3(1) of the Act that what is taxable is the income derived by the assessee during the entire period of twelve months. That income, if it may be so called, is an amalgam consisting of income derived by the assessee during every day of that period of twelve months and it is that aggregate income alone which can be made the subject-matter of assessment. If part of that income is not taxable, there being no total agricultural income taxable under the Act, no part of that entire income, it is clear, is taxable either. When a law states that an aggregate amount consisting of the entire annual income is what may be taxed, if that quantum which is so taxable is composed of taxable and non-taxable elements, those taxable elements which have merged in the non-taxable integrants cannot, in my opinion, be separated and taxed. To permit a taxation of a part of the total agricultural income separating it from the non-taxable part of the income is to permit the invention of a liability not created by the Act and any tax demanded in that way would clearly amount to an illegal exaction.
22. In my opinion, it was not within the competence of the Income-tax Officer in this case to assess even that part of the income of the petitioner derived by him even after his lands became part of the new State of Mysore on November 1, 1956.
23. The view that I take was also what was taken by their Lordships of the Orissa High Court in Biswambar Singh v. Collector of Agricultural Income-tax. The assessee in that case was a zamindar owning an estate which formed part of the State of Gangapur. The Act was extended to the State of Gangapur on January 19, 1949, and the State finally merged in the Province of Orissa on August 1, 1949. The question was whether the agricultural income which accrued to the assessee during the previous year 1948–49 was liable to be assessed to agricultural income-tax in the assessment year 1949–50 under the Orissa Agricultural Income-tax Act. Their Lordships held it was not and at page 392 of the report their Lordships observed:
“So far as the Orissa Agricultural Income-tax Act is concerned, tax is to be levied for each financial year on the total agricultural income of the previous year, and the expression ‘total agricultural income’ means the aggregate of the amounts of agricultural income derived from land situated in the Province of Orissa, and received whether within or without the province. Therefore, the ground on which the Rajasthan decision was set aside by their Lordships of the Supreme Court does not hold good in the present case. The present case would be entirely governed by the reasoning of the Rajasthan High Court, viz., that the income of the previous year having been derived from land which was not a part of the taxable territory during the previous year, the assessment in question must be held to be illegal and invalid.”
24. Even on this question the pronouncement of their Lordships of the High Court of Kerala in Anantanarayana Iyer…* v. Agricultural Income-Tax & Sales-Tax Officer & Another…, accords with the view taken by their Lordships of the Orissa High Court referred to above. In my opinion, this application must succeed; the notice issued by the Income-tax Officer, Bagalkot, on June 10, 1958, is quashed and he is restrained from proceeding to make the proposed assessment in accordance with that notice. The petitioner is entitled to the costs of this application, the advocate's fee being fixed at Rs. 100.
Mir Iqbal Hussain, J.:— I agree.
25. Petition allowed.