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TMI Blog1979 (2) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... On 15th May, 1935, a partnership deed was executed by the Raza Ltd. and the Buland Ltd. constituting a partnership firm of the two companies in equal shares known as the Agricultural Company, Rampur. In the year 1939 the Rampur State leased 2,000 acres of land and in the year 1946 another 2,000 acres of land to the Agricultural Company, Rampur. In 1949 the State of Rampur acceded to the Union of India and was merged with the State of Uttar Pradesh with effect from 1st December, 1949. The Rampur State had agreed to exempt the Raza Ltd. and the Buland Ltd. from all taxes for a period of 15 years from the date of commencement of their business. The U. P. Agricultural Income-tax Act was applied to the areas which formed part of the erstwhile State of Rampur on 1st July, 1950. The assessing authority issued notices under s. 16(4) of the U.P. Agrl. I.T. Act to the Raza Ltd. and the Buland Ltd. for furnishing returns of their agricultural incomes for the years 1357F to 1361F. It may be noted that the notice was not issued to the Agricultural Company, Rampur. The Raza Ltd. and the Buland Ltd. submitted their returns. The assessing authority assessed the two companies to agricultural incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made on the individual partners, in the present case the two companies, without proceeding against the firm. It was pleaded that the tax could be assessed either on the partnership firm or on the partners individually and that the view of the High Court that the tax can only be recovered from the firm is erroneous. The facts of the case disclose that on receipt of a notice by the assessing authority under s. 16(4) of the U.P. Agrl. I.T. Act, the two companies, Raza Ltd. and the Buland Ltd., submitted their returns relating to the income of the two companies. In the return it was stated that the income was half of the income received from the partnership firm, the Agricultural Company, Rampur. The assessment was made on the basis of the returns. The assessment was questioned before the Commissioner and in the writ petition before the High Court of Allahabad on the ground that the lands were neither assessed to land revenue in the United Provinces nor were they subject to local rate or cess assessed and collected by an officer of the Provincial Government. This contention was accepted by the High Court which directed the assessing authority to determine the question whether the lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut does not include a local authority. It may be noted that by the definition the word " person " means an individual and includes a firm or a company. The liability of the person whether he be an individual, partner, or the company for the agricultural income-tax is, therefore, beyond question. The only point that is raised in this case is as to when there is a registered firm of which the two companies were partners the assessment proceedings cannot be taken against the two partners, namely, the two companies, without proceeding against the firm. In support of this contention section 18 of the U.P Agrl. I.T. Act was strongly relied on. Section 18 confers the power to assess individual members of certain firms, associations and companies. Sub-section (1) of section 18 enables the Assistant Collector with the previous approval of the Collector of the district concerned to pass an order, under the circumstances stated in the subsection, that the sum payable as agricultural income-tax by the firm or association shall not be determined, and thereupon the share of each member in the agricultural income of the firm or association shall be included in his total agricultural income for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts option and assessed the partners individually it cannot thereafter assess the same income in the hands of the firm as an unregistered firm. It is not necessary for us to refer to the distinction that is maintained under the I.T. Act between a registered and unregistered firm for no such distinction is maintained under the U.P. Agrl. I.T. Act. The only prohibition is against double taxation. In this case no assessment proceedings have been taken against the firm much less any tax imposed on it. The principle that is applicable in tax statutes is that the income is subject to tax in the hands of the same person only once. Thus, if an association or a firm is taxed in respect of its income the same income cannot be charged again in the hands of the members individually and vice versa. The trust income cannot be taxed in the hands of the settlor and also in the hands of the trustee or beneficiary or in the hands of both the trustee as well as the beneficiary. These principles are, of course, subject to any special provision enabling double taxation in the statute. In the circumstances, we are unable to share the view of the High Court that without proceeding against the firm the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been long pending. This plea has been elaborately considered by the assessing authority which has pointed out that agreements with the Raza Sugar Co. Ltd. and the Buland Sugar Co. Ltd. show that it was stipulated that the Rampur State shall from time to time grant to the company lease of agricultural land. It was further provided that such fair equitable land revenue as may be agreed between the Rampur State and the company shall be payable in respect of such land and shall be subject to revision by agreement every 15 years. The lease also provided that fair and equitable water rates and cesses shall be payable in respect of the land. In s. 4(7) of the U.P. Land Revenue Act it is mentioned that the word " Mal Guzari " will be applicable where it has been duly assessed or has been determined by means of an auction or by any other means. On a consideration of all the relevant facts the assessing authority came to the conclusion that the agreement in favour of the companies provided for payment of land revenue and the word " rent " used in the leases has to be considered in relation to the original agreements and as such it is seen that the agreement provided for payment of land reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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