High Court Of Kerala
M.S.P. Family Jain Trust vs. State Of Kerala & Ors.
Section Kerala AGRL IT Act, 1991, ss. 13, 14, 41(1)
Asst. Year 1991-92 to 1993-94
C.N. Ramachandran Nair, J.
Original Petn. No. 236 of 2002
28th February, 2006
Counsel Appeared :
P.V. Jyothi Prasad, for the Petitioner : T.K. Abdul Latiff, for the Respondents
JUDGMENT
C.N. Ramachandran Nair, J. :
The petitioner is challenging Exhibits P-1 and P-2 notices proposing to revise agricultural income-tax assessments for the years 1991-92 to 1993-94 under s. 41 of the Agrl. IT Act, 1991, on the ground that the same is arbitrary and without jurisdiction. I have heard counsel appearing for the petitioner and the Government pleader. The petitioner claimed to be a charitable trust and was granted registration as such under s. 16 of the Agrl. IT Act. Even though the agricultural holding of the petitioner, namely, coffee plantation, was above 20 hectares, the limit provided for payment of tax at the compounded rate, the petitioner was granted the benefit of payment of tax by compounding by virtue of s. 13(7) of the Act, which grants eligibility to charitable trusts for payment of tax at the compounded rate above 20 hectares. Assessments were originally completed for the years 1991-92 to 1993-94 under s. 13 of the Act accepting the position that the petitioner as a charitable trust was eligible for payment of tax by compounding above 20 hectares. However, the question whether the petitioner is a charitable trust or not was pending in appeal before the Supreme Court for earlier years and the Supreme Court in the year 1998 held that the petitioner was not a charitable trust as it was formed to promote the interests of a single religious community. Consequent upon the judgment of the Supreme Court the registration granted to the petitioner as a charitable trust was cancelled and the AO issued notices stating that assessments completed at the compounded rate for the years 1991-92 to 1993-94 are untenable and therefore he took permission from the CIT to reopen assessments under s. 41 of the Agrl. IT Act. The CIT vide order dt. 4th Sept., 2001, issued under s. 41(2) of the Act granted permission to revise the assessments for 1991-92 to 1993-94 under s. 41 and the impugned notices are issued under the said provision after getting such sanction.
Counsel for the petitioner contended that assessments completed under s. 13 cannot be reopened under s. 41 as there is no escapement of income because the scheme of payment of tax at the compounded rate under s. 13 is based on the area of cultivated land and determination of income did not arise. The Government pleader on the other hand contended that s. 41 applies to escapement of income, whether the assessment is made at the compounded rate under s. 13 or whether the assessment is made under s. 35. I am in agreement with the contention of the Government pleader because s. 13(1) provides for payment of tax at the compounded rate which is in lieu of tax payable under other provisions of the Act. In other words s. 13(1) is an alternate scheme of assessment, as eligible assessees are given the option to pay tax under the said scheme which is based on cultivated area. Sec. 13 has an overriding effect over other provisions of the Act, and it is therefore an exception to . 3, namely, the charging section which provides for collection of tax at the rates provided in the Schedule to the Act. So much so, s. 13 acts as a charging section in lieu of s. 3 of the Act for those who opt for payment of tax under the scheme of compounding. Therefore, what is provided under s. 13(1) is determination of tax payable under the Act, though the same does not involve determination of income, is also agricultural income-tax payable under the Act. Moreover, s. 14 of the Act makes s. 41 applicable in respect of assessments under s. 13 involving escapement of tax. Therefore proceedings under s. 41(1) can be initiated to assess escaped tax even in respect of assessments at the compounded rate under s. 13 of the Act. In the circumstances, the petitioner’s objection against maintainability of proceedings under s. 41 (1) of the Act is overruled. Since limitation is got over by virtue of the order of the CIT under s. 41 (2) the AO is entitled to make assessments under s. 35(2) and (4) r/w s. 41(1) of the Act. Even though the petitioner has relied on the decision of this Court in Krishna Bhat vs. Agrl. ITO (1981) 130 ITR 894 : (1979) KLT 518, Commr. of Agrl. IT vs. Chullikkan Parameswara Bhat (1980) 16 CTR (Ker) 378 : (1980) 125 ITR 28 (Ker) : (1980) KLT 276 and Cochin Port Trust vs. Ernakulam Dt. L.D. & C. Labour Union (1995) 2 KLT 31, I do not find any of the above decisions applies to the facts of the case.
4. Since no other issue is considered or decided in the impugned notices, there is no need for this Court to decide the questions raised by counsel for the petitioner, such as “status of the assessee, the eligibility for compounding, if assessee is treated as tenants-in-common, etc.” I leave these issues open to be raised by the petitioner before the AO, and the AO will consider the same while completing the revised assessments. Since the matter is pending for over three years in this Court, the AO is directed to complete the assessments for 1991-92 to 1993-94 within two months from the date of production of a copy of this judgment by the petitioner, after considering the objections raised by the petitioner, which the petitioner can raise along with a copy of this judgment without any delay. Accordingly OP is disposed of upholding the impugned notices, but with the above directions.
[Citation : 289 ITR 112]
