JUDGMENT PHATAK J. - The Agricultural Income-tax Board has made this reference on the following two questions :
"1. Whether there is any material on record to support the finding that the holdings recorded in the names of the wife and the son of Maharaj Kumar were being managed by a common manager along with property belonging to the assessee, and the income from the said holdings accrued to the joint Hindu family ?
2. Whether, on the facts and circumstances of the case, the finding of the Revision Board that income from the holdings recorded in the name of the wife and son of Maharaj Kumar was the income of the assessees family is legally sustainable ?"
The assessee is a Hindu undivided family of which Dr. Vijaya Anand, Vizianagaram, was the karta. In assessment proceedings for the year 1361F. under the U. P. Agricultural Income-tax Act, the Sub-Divisional Officer as the assessing authority found that the villages, Bari Mahewa and Ghori, were recorded as the tenancy land of the son and wife, respectively, of the karta and treating these villages as the tenancy of the Hindu undivided family he included the income therefrom in the total income of the Hindu undivided family for the purpose of assessment. An appeal by the Hindu undivided family was allowed by the Agricultural Income-tax Commissioner. The Commissioner found that the wife and the son continued to be recorded as tenants in respect of the land in the two villages ever since 1354F. and right up to 1359F. and thereafter they appear to have become bhumidhars. He saw no reason to treat the land as part of the Hindu undivided family property and declined to raise the presumption that the tenancy rights were acquired by the wife and the son from the property of the Hindu undivided family and that the wife and son had no property of their own from which they could acquire the tenancy rights. He proceeded on the view that no funds were required for the acquisition of the tenancy rights inasmuch as the payment of nazrana had been made illegal by section 90 of the U. P. Tenancy Act. The state of U. P. applied in revision and revision application was allowed by the Revision Board, which set aside the order of the Commissioner and restored that of the Sub-divisional Officer. An application was made to the Revision Board by the assessee for a reference to this court under section 24 (1) of the U. P. Agricultural Income-tax Act, and the reference being denied by the Revision Board, an application was then made by the assessee under section 24 (4) of the Act to this court. The reference application was allowed and this court required the Revision Board to refer the case to this court for its decision on the questions of law arising therefrom. The Revision Board made a reference, and this court found that the statement of the case and the questions referred were inadequately framed and, accordingly, called for a better statement of the case and clear and definite questions of law. The revision Board has now made this reference on the two questions set out above.
On both the questions we are clearly of opinion that the answer should be in the negative and in favour of the assessee.
The case of the assessee was that the land in village Bari Mahewa was leased out to Kunwar Vishwa Nath Vankateshwar Alakh Narain Singh, the minor son of Dr. Vijaya Anand, under a lease deed dated April 8, 1945 (registered on May 23, 1947) by the Raja Saheb of Kasauta Bara Raj, who was a minor under the guardianship of Raja Anand Brahm Shah of Barhar State. As regards the land in village Ghori it was said that the land was acquired by Smt. Bhagirathi, wife of Dr. Vijaya Anand, under a registered lease deed dated September 25, 1947, executed by Mahant Shyam Narain Gir (minor) through his guardian, Dr. Vijaya Anand. Upon the execution of the two leases the wife and the son were duly recorded in the khasra and khatauni as hereditary tenants and thereafter as bhumidhars. The extracts of the khasra and khatauni, respectively, were filed during the course of hearing before the Sub-Divisional Officer in the assessment proceedings. The assessee also examined Bhuneshar Pandey, an employee, on February 21, 1955, who stated that the land acquired by Smt. Bhagirathi was her stridhan property. An affidavit of Shobh Nath, another employee, was filed on April 9, 1955, stating that the land in village Ghori was acquired by Smt. Bhagirathi as her stridhan property and that she was in possession thereof and carried on cultivation therein.
The Sub-Divisional Officer relied upon the provisions of section 10 of the Act and held that the total income of these holdings was liable to be treated as the income of the assessee accruing jointly from the holdings recorded in the names of the karta, his wife and son. The finding, as we have pointed out above, was set aside by the Commissioner. In revision, the Revision Board proceeded on the view that "the entire income from the joint family property plus the land covered by these two leases" should be treated as one unit because the land was managed jointly. An attempt has been made to explain the finding of the Revision Board. It is urged that in the absence of the original lease deeds, the assessing authority and the Revision Board drew the obvious conclusion that the management of all the properties, that is, of the karta, his wife and son, was joint and as the income from the said holdings accrued to the Hindu undivided family the case was covered by the provisions of section 10 of the Act.
It seems to us that the findings of the Revision Board are vitiated by a complete lack of appreciation of the true legal position. Section 10 of the Act comes into play only upon the assumption that the agricultural income in question belongs to the Hindu undivided family. It is a provision intended to lighten the burden of the tax in those cases where the Hindu undivided family consists of a number of branches, because it declares that the tax shall be assessed as if each branch was a separate assessee. Section 10 cannot be employed for the purpose of including in the total income of a Hindu undivided family the income which accrues from the separate properties of the members of the family.
It is urged that the order made by the Revision Board is supported by the provisions of section 3 of the Act. Now, section 3 is the charging provision and requires that agricultural income-tax and super-tax shall be charged for each year in accordance with the provision of the Act and the Rules on the total agricultural income of the previous year of every person. We fail to see how the provisions of section 3 justify the inclusion of the income from the lands standing in the names of the wife and son in the total income of Hindu undivided family.
During the course of hearing, learned counsel for the state attempted to justify the inclusion of the income of the wife and son by reference to section 4A of the Act. Section 4A can be invoked only in a case where the agricultural income of an individual is computed. Section 4A cannot be employed for the purpose of computing the income of a Hindu undivided family.
Then, it is urged on behalf of the State that a presumption arises in Hindu law that property standing in the name of a member of the Hindu undivided family must be presumed to have been acquired from Hindu undivided family funds, and, therefore, to be Hindu undivided family property, where the member of the family does not possess sufficient funds of his own for the purpose of acquiring the property. It does not appear that the Revision Board applied its mind to this aspect of the matter and we do not find anything in the order of the Revision Board which shows that the wife and son of Dr. Vijaya Anand did not have sufficient funds for the purpose of acquiring these properties. In any event, there is a finding of the Commissioner that no funds were required because payment of nazrana for the acquisition of these tenancy lands had been declared illegal by law. The finding of the Commissioner has not been disturbed by the Revision Board. In a case where acquisition of the property does not require any expenditure of funds, the presumption upon which reliance is placed by learned counsel for the state cannot be raised.
Learned counsel for the state has been unable to point to any material on the record on the basis of which the Revision Board could in law hold that the holdings in question belonged to the Hindu undivided family and that the income therefrom accrued to the family.
Upon the aforesaid considerations, we answer both the questions referred to this court in the negative.
The assessee is entitled to its costs which we assess at Rs. 200. Counsels fee is assessed in the same figure.