TMI Blog1986 (3) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... revision order of a claim of deduction in respect of the payment of bonus made by petitioner No. 1 in respect of certain part of the bonus paid by petitioner No. 1 in the previous year relevant to the assessment year 1962-63. The relevant previous year in this case is the previous year ending on March 31, 1962. The petitioner company, at the material time, earned income from agricultural activities as well as their other business activities. Petitioner No. 1 filed its return in respect of agricultural income-tax for the assessment year 1962-63 some time in 1967. That return was filed on the footing of the relevant previous year being the previous year ending on March 31, 1962. Claims for allowance of several expenses were made in this return and one of these claims was for an amount of Rs. 2,77,251 being the bonus paid by petitioner No. 1 to its staff working in its agricultural operations and part of the bonus paid to the head office staff. The Income-tax Officer concerned held that an amount of Rs. 5,44,401 paid by petitioner No. 1 as bonus to its staff engaged in its agricultural activities as well as the staff engaged at the head office was expenditure incurred for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner allowed certain other deductions which had been disallowed by the Agricultural Income-tax Officer. The company went in appeal against the order of the Appellate Assistant Commissioner before the Sales Tax Tribunal. By its order dated December 29, 1970, the Tribunal held that the company was entitled to exercise its option and treat the previous year April 1, 1961, to March 31, 1962 as the relevant previous year. The Tribunal allowed certain deductions which had been disallowed by the authorities below and also a claim for depreciation made by the company. We shall come to the order passed by the Tribunal in some detail at a, later stage. It is sufficient to note here that the Tribunal directed that in view of the decision of the Appellate Assistant Commissioner on the " previous year " having been set aside, the order of the Agricultural Income-tax Officer which had been substantially upheld by the Appellate Assistant Commissioner, was also set aside and that the assessee company should be assessed afresh in the light of the findings given by the Tribunal. Pursuant to this decision of the Tribunal on October 31, 1974, the Agricultural Income-tax Officer made a fresh order of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst submission made by him was that the order of revision which was passed on November 4, 1976, is barred by limitation, because it was passed beyond the period prescribed under section 41(2) of the Maharashtra Agricultural Income-tax Act (referred to hereinafter as " the said Act "). The next submission urged by Mr. Joshi was that the order of assessment passed by the Agricultural Income-tax Officer on April 26, 1968, had merged with the order passed by the Sales Tax Tribunal on December 29, 1970, and hence it could not be subjected to the revisional powers of the Deputy Commissioner and the order in revision passed by the Deputy Commissioner was beyond his jurisdiction. The third submission was that, in effect, what the Deputy Commissioner had sought to do was to revise the order of the Sales Tax Tribunal, which he had no jurisdiction to do. The fourth and the last submission made by Mr. Joshi was that the revisional order was passed on an erroneous view of law and hence was liable to be set aside. It was submitted by Mr. Joshi that as the payment of bonus had been made during the relevant previous year, the company was entitled to claim a deduction in respect of the same in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come by way of adjustment of accounts with any other person. " Section 8 deals with the computation of tax and allowances under the head " Agricultural income from agriculture ". Relevant portion of section 8 runs as follows : " Agricultural income-tax shall be payable by an assessee under the head 'Agricultural income from agriculture' in respect of all agricultural income derived from land referred to in sub-clause (b) of clause (1) of section 2 included in his total agricultural income and received by him in the previous year, subject to the following allowances, namely :--....... (9) any other expenditure of the assessee (not being in the nature of capital expenditure or personal expenditure) laid out wholly and exclusively for the purpose of deriving agricultural income from such land ". Very briefly stated, under sub-section (5) of section 20, the Deputy Commissioner is entitled to exercise the powers conferred on the Commissioner in the area within his jurisdiction, save as set out therein. Section 23 deals with "assessment". Sub-sections (1) to (4) of that section deal with assessment pursuant to a return and sub-section (5) deals with best judgment assessment or as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssistant Commissioner or to the Tribunal, the time within which such appeal may be made has not expired; or (b) the order is pending on an appeal before the Appellate Assistant Commissioner or has been made the subject of an appeal to the Tribunal; or (c) the order has been made more than two years previously." We now propose to consider the question as to whether the Deputy Commissioner had jurisdiction to revise the aforesaid order of assessment passed by the Agricultural Income-tax Officer on October 31, 1974. In this regard, the admitted position is that the power of revision can be exercised by the Commissioner or the Deputy Commissioner only in respect of orders passed by officers subordinate to the Commissioner. It is again common ground, and indeed beyond doubt, that an Agricultural Income-tax Officer is subordinate to the Commissioner, but the Tribunal is certainly not subordinate to the Commissioner or any other authority under the provisions of the said Act. If an authority were required for that proposition, reference may be made to the decision of this court in CIT v. Tejaji Farasram Kharawala [1953] 23 ITR 412. In that case, it was held that section 33B of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it be disposed of on its merits. " When the matter went back to the Appellate Assistant Commissioner, he not only inquired into the facts relating to the relief in respect of super-tax but went further, suo motu, into the question whether there was a discontinuance of the business earlier in 1933, and held there was discontinuance of business and, therefore, no relief could be granted to the assessee under section 25(4) ; and after giving notice of enhancement, withdrew the order for relief even in respect of income-tax. It was held by the Division Bench of this court that the order of the Appellate Tribunal, when read in the proper context, restricted the scope of enquiry by the Appellate Assistant Commissioner only to the question of merits affecting the claim of the assessee for relief from super-tax and, therefore, the Appellate Assistant Commissioner had no jurisdiction to issue the notice of enhancement and to withdraw the relief in respect of income-tax granted by the Income-tax Officer under section 25(4). In our view, the principles laid down by the Division Bench in this case are clearly applicable to the case before us. We have set out the facts earlier. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wances and deductions. The Tribunal has, in terms, observed as follows: " As the view of the lower authorities on the question of 'previous year' is being set aside, the orders of assessment made by the Agricultural Income-tax Officer in all the five cases and upheld by the Appellate Assistant Commissioner will be set aside and it will be directed that the appellant company be assessed afresh in the light of the findings given above. " A fair reading of this order clearly shows that what the Tribunal had directed was not a fresh assessment as such but a fresh assessment in order to carry out the directions given by the Tribunal, namely, to grant the allowances and deductions which had been allowed by the Tribunal and to recalculate the income and the deductions in accordance with the earlier orders of the Appellate Assistant Commissioner subject to the modification as directed by the Tribunal. The order passed by the Agricultural Income-tax Officer on October 31, 1974, in our opinion, was not a fresh order of assessment as such but an order implementing the directions of the Tribunal as set out above. If the order of the Agricultural Income-tax Officer is regarded as an order i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny mistake in carrying out the directions given by the Tribunal, to that extent his order would be liable to be revised by the Deputy Commissioner or the Commissioner. However, it is clear that in allowing the claim of the company for bonus, the Agricultural Income-tax Officer was, in fact, implementing the direction of the Tribunal, and was not violating any of the directions given by the Tribunal, and hence the order was not liable to be revised. We may mention that the view which we have taken also finds support to some extent in the decision of a Division Bench of the Andhra Pradesh High Court in Sri Lakshmi Satyanaryana Castor Oil Mills v. Dy. Commr. of C.T. [1977] 39 STC 100, where it was held that under the provisions of the Andhra Pradesh General Sales Tax Act, 1957, the Commercial Tax Officer was bound to carry out the directions given to him by the Appellate Assistant Commissioner and so long as the order of the Appellate Assistant Commissioner was not set aside, it could not be said that there was any irregularity or illegality committed by the Commercial Tax Officer in passing the order in question implementing the order of the Appellate Assistant Commissioner. As a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Commissioner was implemented. It was held that the consequential order dated September 22, 1971, was not liable to be revised by the Board and the Board had no jurisdiction to revise that order. The aforesaid decisions cited by us support the view that the Deputy Commissioner or the Commissioner can have no jurisdiction to revise an order passed by an Agricultural Income-tax Officer in implementation of the orders of the Tribunal. We come next to the question as to whether the revisional order of the Deputy Commissioner dated November 4, 1976, discloses any error of law and is liable to be interfered with on that ground. In that connection, we find that the Deputy Commissioner has taken the view that the bonus in question paid by the assessee company to the workers engaged in its agricultural operations and the head office staff related to the income of the company for the accounting years 1957-58 and 1958-59 and hence it was not liable to be allowed as deduction in the assessment for the assessment year 1962-63 which corresponded to the relevant previous year ending on March 31, 1962. In this connection, it was sought to be urged by Mr. Jetly that there is nothing to show t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l agricultural income derived from land but on the total agricultural income derived from land within the State and received by the assessee within or without the State ". In regard to the claims for allowances, the Division -Bench held as follows : " We have set out the relevant provisions above, but when we look at the whole section (section 8) we find that, apart from the case of depreciation which is covered by sub-sections (6) and (7) of that section and apart from sub-section (9), every other sub-section speaks of the expenditure incurred in the previous year. The very wording of sub-section (9) would show that it too refers to the expenditure incurred in the previous year. That sub-section uses the expression " any other expenditure ". Further, it refers to expenditure which is not in the nature of capital or personal expenditure, that is, it is revenue expenditure of a nature different from that specified in the earlier sub-sections which deal with revenue expenditure. It is obvious that revenue expenditure for a period prior to the previous year cannot be brought into the previous year in order to reduce the taxable income of the previous year. According to the method ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able as a deduction, the expenditure must have been incurred in order to earn the income of the relevant previous year or must relate to the income of the previous year, and to import such requirement into the provisions of the Maharashtra Agricultural Income-tax Act and particularly into the provisions of sub-section (9) of section 8 thereof would lead to the result that in a case like this, even if an assessee has incurred the revenue expenditure wholly and exclusively for the purpose of earning agricultural income, he would be debarred from claiming it as a deduction in any year. This could not have been the intention of the Legislature and there is no reason why we should stretch the language of sub-section (9) of section 8 to bring about such an unjust result. We may observe that as far as payment of bonus is concerned, calculation of the bonus to be paid or the determination of the quantum of bonus can only be made after the end of the year in which the income in question was earned and hence, if we take a view that the assessee can claim the deduction for the payment of bonus only in the assessment year in whose relevant previous year the bonus was paid, no assessee could su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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