judgement:
: Criminal Appeal No. 79 of 1984.
From the Judgment and Order dated 5.10.1983 of the Punjab and Haryana High Court in Criminal Original Contempt Petition No. 27 of 1983.
R.K. Garg, Mahabir Singh and S.Srinivasan for the Appellant.
Kapil Sibal, R.N. Karanjawala, Mrs. M.Karanjawala,and Ejaz Maqbool for theRespondents.
The Judgment of the Court was delivered by DUTT, J.
This appeal under section 19(1) of the Contempt of Courts Act, hereinafter referred to as 'the Act ', is directed against the judgment and order of the Punjab & Haryana High Court dismissing the application for contempt filed by the appellant against Shri Bhajan Lal, who was then the Chief Minister of the State.
In the application for contempt, it was, inter alia, alleged by the appellant that one Shri Devinder Sharma was a Forest Minister in the Council of Ministers headed by Shri Bhajan Lal.
The said Devinder Sharma was defeated in the legislative assembly election held in 1982.
Shri Bhajan Lal, because of his political and personal relations with Shri Devinder Sharma, was personally very keen on giving him an office of profit.
In order to achieve this objective, Bhajan Lal got an Ordinance being Ordinance No. 44 of 1982 promulgated by the Governor.
The Ordinance, inter alia, provided the constitution of a Forest Development Board.
According to the appellant, such Board was constituted with a view to appointing the said Devinder Sharma as its Chairman.
It was further alleged by the appellant that the constitutional validity of the said Ordinance was challenged by twelve Indian Forest Officers including the appellant by filing a writ petition in the High Court.
It was alleged that the respondent, Bhajan Lal, through Shri R.K. Vashisth, the Superintendent of Police, pressurised and threatened the writ petitioners to withdraw the said writ petition and, pursuant to that, eleven officers withdrew from the petition.
It was only the appellant who continued to prosecute the writ petition and, as a consequence of which, the appellant was transferred from the Forest Expert Special Project Cell to the Forest Department, Haryana, on 891 March 18, 1983.
The further allegation of the appellant was that after having failed to threaten and demoralise the appellant through indirect means the respondent, Bhajan Lal, called him to his official residence on July 26, 1983 through the Acting Chief Conservator of Forests and criminally intimidated him to withdraw the writ petition.
Thereafter, the appellant filed an application for contempt against the respondent, Bhajan Lal, in the High Court complaining of interference by the respondent with the due course of judicial proceedings.
The application was admitted and a rule nisi was issued upon the respondent.
The respondent appeared in the rule and opposed the same by filing an affidavit denying all the allegations made against him by the appellant.
The learned Single Judge of the High Court, after considering the application, affidavits and the submissions made on behalf of the parties, took the view that there were circumstances to indicate that it was not a fit case in which the court should exercise its jurisdiction under the Act.
In that view of the matter, the learned Judge dismissed the application and discharged the rule nisi.
It is apparent from the facts stated above that the allegations made by the appellant, if proved would consitute a criminal contempt.
It is also not disputed by the parties that it was a case of criminal contempt as defined in section 2(c) of the Act.
The scope and ambit of this judgment will, therefore, be confined to criminal contempt.
Mr. Sibbal, learned Counsel appearing on behalf of the respondent, has taken a preliminary objection to the maintainability of the appeal under section 19(1) of the Act.
It is contended by him that as no punishment was imposed on the respondent by the High Court in exercise of its jurisdiction to punish for contempt, section 19(1) is inapplicable and the appeal is incompetent.
Section 19(1) provides as follows: "19(1).
An appeal shall lie as of right from any order or decision of a High Court in the exercise of its jurisdiction to punish for contempt (a) where the order or decision is that of a single judge, to a Bench of not less than two Judges of the Court; 892 (b) where the order or decision is that of a Bench, to the Supreme Court.
Provided that where the order or decision is that of the Court of the Judicial Commissioner in any Union territory, such appeal shall lie to the Supreme Court.
" The right of appeal will be available under sub section (1) of section 19 only against any decision or order of a High Court passed in the exercise of its jurisdiction to punish for contempt.
In this connection, it is pertinent to refer to the provision of Article 215 of the Constitution which provides that every High Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself.
Article 215 confers on the High Court the power to punish for contempt of itself.
In other words, the High Court derives its jurisdiction to punish for contempt from Article 215 of the Constitution.
As has been noticed earlier, an appeal will lie under section 19(1) of the Act only when the High Court makes an order or decision in exercise of its jurisdiction to punish for contempt.
It is submitted on behalf of the respondent and, in our opinion rightly, that the High Court exercises its jurisdiction or power as conferred on it by Article 215 of the Constitution when it imposes a punishment for contempt.
When the High Court does not impose any punishment on the alleged contemnor, the High Court does not exercise its jurisdiction or power to punish for contempt.
The jurisdiction of the High Court is to punish.
When no punishment is imposed by the High Court, it is difficult to say that the High Court has exercised its jurisdiction or power as conferred on it by Article 215 of the Constitution.
It is, however, strenuously urged by Mr. R.K. Garg, learned Counsel appearing on behalf of the appellant, that when the High Court acquits a contemnor after hearing the parties and after considering the facts and circumstances of the case, the High Court does so also in the exercise of its jurisdiction as conferred by Article 215 of the Constitution.
Counsel submits that jurisdiction to punish for contempt includes also the jurisdiction to dispose of the case either by punishing the contemnor or by acquitting him.
In support of the contention much reliance has been placed on behalf of the appellant on a decision of this Court in Smt.
Ujjam Bai vs State of Uttar Pradesh, [1963] 1 SCR 778 wherein S.K. Das, J. observed "jurisdiction means authority to decide." Relying upon the said observation it is submitted by Mr. Garg that the jurisdiction of the High Court to punish for contempt also includes the jurisdiction to decide whether such punishment 893 should be imposed or not and when the High Court comes to the finding that such punishment should not be imposed on the contemnor or that no contempt has been committed by the alleged contemnor and acquits him, such decision of the High Court acquitting the contemnor is made in the exercise of its jurisdiction to punish for contempt.
We are unable to accept this contention.
The said observation, in our opinion, should not be read dehors the context in which it was made.
In that case, the Sales Tax Officer disallowed the claim of the petitioner to exemption from payment of Sales Tax under a certain notification.
An appeal preferred by the petitioner to the Court of the Judge (Appeals), Sales Tax, Allahabad, was dismissed.
The question that came up for consideration before this Court was whether a writ of certiorari could be issued for quashing the order of Assessment on the ground that the authority concerned had erroneously exercised its jurisdiction by not granting exemption to the petitioner.
In that context the said observations was made and which was immediately followed by further observation: "Whenever a judicial or quasi judicial tribunal is empowered or required to enquire into a question of law or fact for the purpose of giving a decision on it, its findings thereon cannot be impeached collaterally or on an application for certiorari but are binding until reversed on appeal.
Where a quasi judicial authority has jurisdiction to decide a matter, it does not lose its jurisdiction by coming to a wrong conclusion whether it is wrong in law or in fact.
" There can be no doubt that whenever a court, tribunal or authority is vested with a jurisdiction to decide a matter, such jurisdiction can be exercised in deciding the matter in favour or against a person.
For example, a civil court is conferred with the jurisdiction to decide a suit; the civil court will have undoubtedly the jurisdiction to decree the suit or dismiss the same.
But when a court is conferred with the power or jurisdiction to act in a particular manner, the exercise of jurisdiction or the power will involve the acting in that particular manner and in no other.
Article 215 confers jurisdiction or power on the High Court to punish for contempt.
The High Court can exercise its jurisdiction only by punishing for contempt.
It is true that in considering a question whether the alleged contemnor is guilty of contempt or not, the court hears the parties and considers the materials produced before it and, if necessary, examines witnesses and, thereafter, passes an order either acquitting or punishing him for contempt.
When the High Court acquits the contemnor, the High Court does not exercise its jurisdic 894 tion for contempt, for such exercise will mean that the High Court should act in a particular manner, that is to say, by imposing punishment for contempt.
So long as no punishment is imposed by the High Court, the High Court cannot be said to be exercising its jurisdiction or power to punish for contempt under Article 215 of the Constitution.
It does not, however, mean that when the High Court erroneously acquits a contemnor guilty of criminal contempt, the petitioner who is interested in maintaining the dignity of the court will not be without any remedy.
Even though no appeal is maintainable under section 19(1) of the Act, the petitioner in such a case can move this Court under Article 136 of the Constitution.
Therefore, the contention, as advanced on behalf of the appellant, that there would be no remedy against the erroneous or perverse decision of the High Court in not exercising its jurisdiction to punish for contempt, is not correct.
But, in such a case there would be no right of appeal under section 19(1), as there is no exercise of jurisdiction or power by the High Court to punish for contempt.
The view which we take finds support from a decision of this Court in Paradakanta Mishra vs Mr. Justice Gatikrushna Mishra; , Right of appeal is a creature of the statute and the question whether there is a right of appeal or not will have to be considered on an interpretation of the provision of the statute and not on the ground of porpriety or any other consideration.
In this connection, it may be noticed that there was no right of appeal under the .
It is for the first time that under section 19(1) of the Act, a right of appeal has been provided for.
A contempt is a matter between the court and the alleged contemnor.
Any person who moves the machinery of the court for contempt only brings to the notice of the court certain facts constituting contempt of court.
After furnishing such information he may still assist the court, but it must always be borne in mind that in a contempt proceeding there are only two parties, namely, the court and the contemnor.
It may be one of the reasons which weighed with the Legislature in not conferring any right of appeal on the petitioner for contempt.
The aggrieved party under section 19(1) can only be the contemnor who has been punished for contempt of court.
For the reasons aforesaid, there is substance in the preliminary objection raised as to the maintainability of the appeal.
In our view the appeal is incompetent and is, accordingly, dismissed.
There will, however, be no order as to costs.
H.S.K. Appeal dismissed.

summary:
The appellant filed an application for contempt against the respondent in the High Court complaining of interference by the respondent with the due course of judicial proceedings.
A Single Judge of the High Court after considering the application, affidavits and submissions made on behalf of the parties took the view that it was not a fit case in which the court should exercise its jurisdiction under the contempt of Courts Act and dismissed the application.
The appellant filed the instant appeal under section 19(1) of the Act.
The respondent took a preliminary objection to the maintainability of the appeal under section 19(1).
While upholding the objection and dismissing the Appeal, this Court, ^ HELD: The High Court derives its jurisdiction to punish for contempt from Article 215 of the Constitution.
The appeal will lie under Section 19(1) of the Act only when the High Court makes an order or decision in exercise of its jurisdiction to punish for contempt.
The High Court exercises its jurisdiction or power as conferred on it by Article 215 of the Constitution when it imposes a punishment for contempt.
When the High Court does not impose any punishment on the alleged 889 contemnor the High court does not exercise its jurisdiction or power to punish for contempt.
The jurisdiction of the High Court is to punish.
When no punishment is imposed by the High Court, it is difficult to say that the High Court has exercised its jurisdiction or power as conferred on it by Article 215 of the Constitution.
[892C E] Whenever a court, tribunal or authority is vested with a jurisdiction to decide a matter, such jurisdiction can be exercised in deciding the matter in favour or against a person.
For example, a civil court is conferred with the jurisdiction to decide a suit; the civil court will have undoubtedly the jurisdiction to decree the suit or dismiss the same.
But when a court is conferred with the power or jurisdiction to act in a particular manner, the exercise of jurisdiction or the power will involve the acting in that particular manner and in no other.
Article 215 confers jurisdiction or power on the High court to punish for contempt.
The High Court can exercise its jurisdiction only by punishing for contempt.[893F G] The contention of the appellant that there would be no remedy against the erroneous or perverse decision of the High Court in not exercising its jurisdiction to punish for contempt, is not correct.
When the High Court erroneously acquits a contemnor guilty of criminal contempt, the petitioner who is interested in maintaining the dignity of the Court will not be without any remedy.
Even though no appeal is maintainable under section 19(1) of the Act, the petitioner in such a case can move this Court under Article 136 of the Constitution.
[894B C] Right of appeal is a creature of the statute and the question whether there is a right of appeal or not will have to be considered on an interpretation of the provision of the statute and not on the ground of propriety or any other consideration.
[894D E] A contempt is a matter between the court and the alleged contemnor.
Any person who moves the machinery of the court for contempt only brings to the notice of the court certain facts constituting contempt of court.
After furnishing such information he may still assist the court, but the aggrieved party under section 19(1) can only be the contemnor who has been punished for contempt of court.
[894E G] Smt.
Ujjam Bai vs State of Uttar Pradesh, [1963] 1 S.C.R. 778 and Paradakanta Mishra vs Mr. Justice Gatikrushna Mishra, [1975]1 S.C.R. 524, referred to. 890


judgement:
it Petitions Nos.
5409 10, 5411 12/80, 358 & 12807 12808/84.
(Under Article 32 of the Constitution) Dr. Devi Paul, Ms. M. Seal, H.K. Dutt for the petitioners in WP.
Nos. 5409 12/80, 12807 12808/84.
Dr. V. Gauri Shankar, P.N. Tiwari, Manoj Arora, section Rajappa and S.R. Srivastava for the petitioners in WP.
No. 358/84 P.S. Poti, V.J. Francis and N.M. Popli, for Respondents in WP.
5411 12/80 S.C. Manchanda, B.B. Ahuja and Ms. A. Subhashini for the U.O.I. Tapas Ray, H.K. Puri, G.S. Chatterjee and Dalip Sinha for Respondents in 12807 08, 5409 10/80 D.P. Mukherjee, for the Intervenor.
The Judgment of the Court was delivered by KANIA, J.
These writ petitions are filed by Public Limited Companies growing and manufacturing tea in the States of West Bengal and Kerala respectively.
Although, there are some differences in the facts, the material facts are largely common and the questions raised in the petitions can be fairly regarded as common questions of law.
They are, therefore, being disposed of together by this common judgment.
The Petitioners in Civil Writ Petitions Nos.
5409 10 of 1980 are the Tata Tea Limited and a shareholder of the said Company.
These petitions are directed against the State of West Bengal, Commissioner of Agricultural Income tax of West Bengal, West Bengal Agricultural 966 Income tax Officer, Calcutta Range I, Union of India and Income tax Officer, O Ward, Companies District II, Calcutta.
The Petitioners in Civil Writ Petitions Nos.
5411 12 of 1980 are also the Tata Tea Limited and a shareholder thereof.
The Respondents are State of Kerala, Commissioner and Assistant Commissioner of Agricultural Income tax at Kerala, Union of India and the concerned Income tax Officer.
The Petitioners in other writ petitions are Tea Companies and shareholders thereof and the Respondents are ranged on similar lines as above.
The Petitioners are Public Limited Companies growing as well as manufacturing tea and selling the same.
As far as the petitions directed against the State of West Bengal are concerned, the challenge therein is to the constitutional validity of Sections 3 & 5 of the Bengal Agricultural Income tax (Amendment) Act, 1980.
The Bengal Agricultural Income tax Act, 1944 provides for the levy and collection of agricultural income tax in the then Province of Bengal, the predecessor Province to the present State of West Bengal and, after the coming into force of the Constitution, the State of West Bengal.
By the said amending Act, for the first time, sub sections (2) & (2A) of Section 8 of the Bengal Agricultural Income tax Act were omitted and always deemed to have been omitted.
It is alleged by the Petitioners that as a result of the omission of sub sections (2) & (2A) of Section 8 of the Bengal Agricultural Income tax Act, 1944, the State Legislature has sought to assume the power, competence and jurisdiction to impose agricultural income tax on the entire income derived from the sale of tea grown and manufactured by a seller and has thereby transgressed the constitutional limitations contained in Article 246(3) of the Constitution of India read with Entry 46 of List II of the Seventh Schedule to the Constitution of India.
In the aforesaid Writ Petitions Nos.
5409 10 of 1980 the process of manufacturing tea has been described in some detail.
To put it very briefly, the green tea grown by the tea growers is withered by exposure to air under natural or controlled conditions.
Certain machinery and equipment is required for the aforesaid process.
The object of withering is partial dehydration of shoots to make them leathery and flaccid for rolling and chemical changes.
The change brounght about is the increase in caffeline, soluble sugars and amino acids.
The second process involves rupture and distortion of tea shoots into smaller sizes to allow mixing of enzymes and substrates.
This is known as rolling.
The process of rolling is carried out by mechanical bruising, tearing, cutting, crushing breaking and twisting tea leaves for which crank roller/ 967 rotorvane/C.T.C. machines are employed.
The third process is of fermentation which involves exposure to air under controlled temprature.
For this the equipment required is fermentation chamber/trags/floor/troughs.
As a result of this process, the colour of tea changes from green to coppery.
The next process is of drying or roasting for stoppage of fermentation: dehydration to ensure keeping the quality of the product.
Drying or roasting has to be done at a temperature of 30 degree celsius and humidity exposure to blast of hot air in a counter current dryer.
The equipment required for this is a conventional tea dryer.
As a result of this process, the moisture in the tea is reduced to 4 per cent and it becomes black in colour.
This manufacturing process is applied to tea leaves in a factory which is situated within the garden area owned by the Petitioner and licensed under the Factories Act.
It is averred that the carrying out of the aforesaid processes is a specialised operation involving the application of modern methods of bio chemical engineering.
The cleaning of the tea is then done with machines according to various sizes like broken pekoe, broken orange pekoe, pekoe dust, dust, churmani dust and so on.
There are other also other brands of tea produced by the aforesaid process.
It is needless to consider these processes in detail except to state that they are quite elaborate and, in the cases before us, valuable machinery is being used for carrying out these processes which are carried out in factories.
The case of the Petitioners is that the income derived from the sale of tea grown and manufactured as aforesaid is derived partly from agriculture and partly from manufacture.
Under the Indian Income tax Act, 1922 (referred to hereinafter as "the Act of 1922") and the Rules framed thereunder the income derived from the sale of tea grown and manufactured by a seller, has to be computed in the manner laid down in Rule 24 of the Income tax Rules, 1922 and 40 per cent of the income so computed is treated as income other than agricultural income and the remaining 60 per cent is treated as agricultural income.
In respect of the income other than agricultural income, it is the Union Parliament which has and before the coming into force of the Constitution the Centre Legislature which had the power to legislate in respect of taxes; and in respect of the agricultural income, the legislative power in respect of taxation was left to the Provinces under the Government of India Act, 1935 and to the States under the Constitution.
The Bengal Agricultural Income tax Act, 1944 enacted by the Provincial Legislature of Bengal defined agricultural income in identical terms as contained in Section 2(1) of the Act of 1922.
The Bengal Agricultural Income tax Act further provided by sub section (2) of 968 Section 8 that notwithstanding anything contained that Act, in the case of tea grown in West Bengal and sold by the grower himself or his agents after manufacture, the agricultural income derived therefrom shall be deemed to be that portion of the income computed as aforesaid under the Act of 1922 on which income tax was not payable under the Act of 1922 and agricultural income tax was levied on the whole of such agricultural income.
As a result of this, the position was that the income of an assessee who grew, manufactured and sold tea in West Bengal was computed in the manner laid down in the Act of 1922 read with Income tax Rules, 1922 and agricultural income tax was levied only in respect of 60 per cent of that income.
On coming into force of the Income tax Act, 1961 which replaced the Act of 1922, the position remained the same.
The Income tax Act, 1961 (referred to hereinafter as "the Act of 1961") came into effect from 1st April, 1962.
The definition of agricultural income in the Act of 1961 is contained in sub section (1) of Section 2 of that Act and is in pari materia with the definition of the said term in the Act of 1922.
Rule 8 of the Income tax Rules, 1962 is in pari materia with Rule 24 of the Income tax Rules, 1922.
As a result of this even after the Act of 1961 and the Income tax Rules, 1962 came into force, a State Legislature could only legislate in respect of taxes regarding that part of the income computed by the Income tax Officer concerned as aforesaid which is treated as agricultural income,namely, 60 per cent of it.
In 1979, the Legislature of the State of West Bengal enacted the Bengal Agricultural Income tax (Amendment) Act, 1979.
By the said Amendment Act, sub section (2A) was added after sub section (2) in Section 8 of the Bengal Agricultural Income tax Act, 1944.
Very briefly put, the said sub section (2A) gave powers to the Agricultural Income tax Officer to make the computation of income derived from tea in cases where it had not been computed for the purposes of assessment of income tax under the Act of 1961 or, although computed, the assessment under the Act of 1961 had been annulled or set aside under that Act and no order of assessment under Section 25 had been made within six years from the end of the year in which the agricultural income was first assessable in the manner and subject to the limitations and conditions set out in the said sub section.
It is not really necessary for us to consider this provision further in the view which we have taken.
Moreover, this Amendment Act remained in force only for the period 1979 80 after which it was replaced by the Amendment Act of 1980.
The West Bengal Legislature in 1980 amended the Bengal Agricultural Income tax Act by the Bengal Agricultural Income tax (Amendment) Act, 1980.
By the said Amendment Act, sub sections 969 (2) and (2A) of Section 8 of the Bengal Agricultural Income tax were deleted and always deemed to have been deleted as already pointed out and Section 25(4) of that Act was omitted.
Section 7 of the Amendment Act provided for cases where the asessment under the Act of 1961 of any agricultural income derived from tea was made before coming into force of the Amendment Act but we are not concerned with that section.
Under the petition, the challenge is to the validity of Sections 3 and 5 of the Amendment Act whereby the aforesaid sub sections (2) and (2A) of Section 8 were omitted with retrospective effect and Section 25(4) was omitted.
It is submitted in the petition that, from the speech of the Finance Minister at the time of introducing the Bill for carrying out the amendments, as well as from the affidavit in reply filed by the State of West Bengal, it is clear that the entire object of the amendments was to subject to the levy of agricultural income tax, the entire income derived by an assessee from the sale of tea grown and manufactured by him.
We come next to the petitions against the State of Kerala.
Under the Agricultural Income tax Act, 1950 passed by the Legislature of the State of Kerala, "agricultural income" is defined in the same maner as under the Act of 1922 and there was an Explanation after clause (2) in Section 2 (a) stating that agricultural income derived from land used for agricultural purposes by the cultivation of tea leaves means that portion of the income derived from the cultivation, manufacture and sale of tea as is defined to be agricultural income for the purposes of enactments relating to the Indian Income tax Act.
By an Act called "The Agricultural income tax (Amendment) Act, 1980" (Kerala Act No. 17 of 1980), the Kerala Agricultural Income tax Act was amended and the said Explanation was deleted.
It was submitted that this deletion was made with a view to make the entire income earned by an assessee who grew and manufactured tea from the sale of tea subject to the levy of agricultural income tax.
Here again, it was pointed out that, from the speech of the Finance Minister at the time of introducing the Bill concerned and the stand taken in Court by the State of Kerala, it was clear that the entire object of the amendment was to make the entire income derived by an assessee as aforestated liable to the levy of agricultural income tax.
These submissions were adopted by the learned Counsel who appeared for the other Petitioners and by Mr. Manchanda who appeare for the Union of India.
It is submitted by Dr. Paul, learned Counsel for the Tata Tea Company that the aforesaid amendments, in so far as they purport to confer power on the respective legislatures of the State of West Bengal and the State of Kerala to legislate regarding taxes on the income from the sale of tea 970 grown and manufactured by an assessee in excess of 60 per cent of such income computed in the manner prescribed under the law relating to income tax are void and of no legal effect as they are beyond the legislative competence of the respective legislatures of the States of West Bengal and Kerala respectively in view of the provisions of Article 246 of the Constitution read with Entry 82 in List I and Entry 46 in List II in the Seventh Schedule to the Constitution and the relevant provisions of the law relating to income tax.
Dr. Paul, learned Counsel for Tata Tea Company and Tata Finlay Company further submitted that, if the entire income derived from the sale of tea grown and manufactured by an assessee were to be regarded as agricultural income, the result would be that the Parliament would not have any competence to legislate in respect of taxes on the same with the result that the provisions of the Act of 1922 and the Act of 1961 imposing the levy of income tax on any part of such income would become ultra vires.
This particular submission was not supported by Dr. Gauri Shankar who appeared for Petitioner in W.P. No. 358 of 1984 and was opposed by Mr. Manchanda who appeared for the Union of India.
As far as the State of West Bengal and the State of Kerala are concerned, they are represented by learned Counsel, Mr. Potti and Mr. Tapas Ray respectively.
It was urged by Mr. Potti and Mr. Ray that Article 366(1) of the Constitution merely states that the term 'agricultural income" has the same meaning as given to it in the enactments relating to income tax, that the definition of the said term in the Act of 1922 and the Act of 1961 did not prescribe that only a particular portion of the income derived by an assessee from the sale of tea grown and manufactured by him can be regarded as agricultural income and hence it was open to the State Legislatures concerned to levy agricultural income tax on such entire income.
Alternatively, it was submitted by them that, in any event, in law, the entire income derived from the sale of tea by an assessee growing and manufacturing tea must be held to be agricultural income in view of the decision of the Supreme Court in the case of Bist & Co. (which we propose to refer to more particularly hereinafter) and hence the State Legislature was entitled to levy agricultural income tax on the same.
The Parliament had no power to legislate in respect of such income.
In order to examine the correctness of these contentions, certain relevant provisions of law may be noted at this stage.
Under Article 246(1) of the Constitution, Parliament has exclusive power to legislate 971 with respect to any of the matters enumerated in List I in the Seventh Schedule to the Constitution which is referred to in the Constitution as the "Union List".
Clause (3) of that Article prescribes that a Legislature of a State has exclusive power to make laws with respect to any of the matters enumerated in List II in the Seventh Schedule (referred to in the Constitution as the "State List").
Clause (2) of the said Article provides that both Parliament and State Legislatures have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule called the "Concurrent List".
Entry 82 in List I or the Union List reads "taxes on income other than agricultural income.
" Entry 46 of List II (State List) reads "taxes on agricultural income".
Article 366 of the Constitution contains definitions and sub Article (1) thereof reads as follows: "Agricultural income means agricultural income as defined for the purposes of the enactments relating to Indian Income tax Act.
" The material portion of sub section (1) of Section 2 of the Act of 1922 (Indian Income tax Act, 1922) defines agricultural income as follows: "Agricultural income means: (a) any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land revenue in the taxable territories or subject to a local rate assessed and collected by officers of the Government as such; (b) any income derived from such land by (i) agriculture, or (ii) the performance by a cultivator or receiver of rent in kind of any process ordinarily employed by a cultivator or receiver of rent in kind to render the produce raised or received by him fit to be taken to market, or (iii)the sale by a cultivator or receiver of rent in kind of the produce raised or received by him, in respect of which no process has been performed 972 other than a process of the nature described in sub clause (ii); x x x x" Clause (c) of the said sub section and the Proviso thereto are not material for our purposes.
Section 59 of the Act of 1922 deals with the powers to make rules.
Sub section (1) confers power on the Central Board of Revenue, subject to the control of the Central Government, to make rules for carrying out the purposes of the Act of 1922 and for the ascertainment and determination of any class of income.
The material portion of sub section (2) of that section runs as follows: "Without prejudice to the generality of the foregoing power, such rules may (a) prescribe the manner in which, and the procedure by which, the income, profits and gains shall be arrived at in the case of (i) incomes derived in part from agriculture and in part from business; x x x x" Sub section (5) of Section 59 reads as follows: "Rules made under this section shall be published in the Official Gazette, and shall thereupon have effect as if enacted in this Act.
" Rule 24 of the Income tax Rules, 1922 deals with the computation of income derived from the sale of tea grown and manufactured by the seller and that rule runs as follows: "Income derived from the sale of tea grown and manufactured by the seller in the taxable territories shall be computed as if it were income derived from business, and 40 per cent of such income shall be deemed to be income, profits and gains liable to tax: 973 Provided that in computing such income an allowance shall be made in respect of the cost of planting bushes in replacement of bushes that have died or become permanently useless in an area already planted, unless such area has previously been abandoned.
" Sub section (1) of Section 2 of the Act of 1961 (Income tax Act, 1961) defines the term "agricultural income".
The material portion of that definition is similar to the definition contained in the Act of 1922 and runs as follows: "(1) "agricultural income" means (a) any rent or revenue derived from land which is situated in India and is used for agricultural purposes; (b) any income derived from such land by (i) agriculture; or (ii) the performance by a cultivator or receiver of rent in kind of any process ordinarily employed by a cultivator or receiver of rent in kind to render the produce raised or received by him fit to be taken to market; or (iii) the sale by a cultivator or receiver of rent in kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii) of this sub clause".
Clause (c) of the said sub section is not material for our purpose.
Section 295 of the Act of 1961 deals with the power to make rules.
The relevant portion of that section runs as follows: "(1) The Board may, subject to the control of the Central Government, by notification in the Gazette of India, make rules for the whole or any part of India for carrying out the purposes of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all 974 or any of the following matters (a) the ascertainment and determination of any class of income; (b) the manner in which and the procedure by which the income shall be arrived at in the case of (i) income derived in part from agriculture and in part from business; x x x x x" The Board referred to in Section 295(1) is the Central Board of Direct taxes.
Section 296 provides inter alia that a rule framed under Section 295 shall be laid, as soon as may be after the rule is made, before each House of Parliament and shall have effect subject to any modification or deletion made by both Houses of Parliament.
Rule 7 of the Incometax Rules, 1962 made under Section 295 of the Act of 1961 deals with income which is partially agricultural and partially from business.
Rule 8 deals with income from the manufacture of tea and the said rule runs as follows: "(1) Income derived from the sale of tea grown and manufactured by the seller in India shall be computed as if it were income derived from business, and forty per cent of such income shall be deemed to be income liable to tax.
(2) In computing such income an allowance shall be made in respect of the cost of planting bushes in replacement of bushes that have died or become permanently useless in an area already planted, if such area has not previously been abandoned, and for the purpose of determining such cost, no deduction shall be made in respect of the amount of any subsidy which, under the provisions of clause (30) of Section 10, is not includible in the total income.
" Section 7 of the Bengal Agricultural Income tax Act, 1944 deals with the computation of tax and allowances under the head "AGRICULTURAL INCOME FROM AGRICULTURE".
Section 8 of that Act deals with the computation of tax on mixed income.
Sub section 975 (1) of Section 8, very briefly stated, prescribes that in case of such mixed income which is partly agricultural and is assessable under the said Bengal Act and partly chargeable under the Indian Income tax Act of 1922 under the head "Business", agricultural income tax would be payable by an assessee in respect of the market value of agricultural produce which has been raised by the assessee or received by him as rent in kind and which has been utilised by him as raw material in such business or the sale receipts of which are included in the accounts of the business subject to allowances permissible under that Act.
Clause (a) of the Proviso to that sub section makes it clear that if, for the purposes of assessment of income tax under the Act of 1922, the market value of the produce had been determined that would be accepted as market value also for the said Bengal Act.
Clause (b) of the Proviso deals with common charges on agricultural income and income chargeable under the Act of 1922.
The material portion of sub sections (2) and (3) of the said section ran as follows: "(2) Notwithstanding anything contained in this Act, in the case of tea the plant Camellia Thea (Linn.) grown in West Bengal and sold by the grower himself or his agent after manufacture, the agricultural income derived therefrom shall, as long as for the purposes of assessment of income tax under the Indian Income tax Act, 1922, the income derived therefrom is computed under that Act in such manner as to include agricultural income, be deemed to be that portion of such income as so computed on which income tax is not payable under that Act, and agricultural income tax at the rates specified in the Schedule shall be payable on the whole of such agricultural income as so computed.
X X X X X (3) For the purpose of the assessment of agricultural income tax under this section or any rule made thereunder a certified copy of an order of an assessment under the Indian Income tax Act, 1922, or a certified copy of an order of any appellate or revising authority or of the High Court or of the Supreme Court altering or amending such order of assessment under the provisions of that Act shall be conclusive evidence of the contents of such order.
" The Bengal Agricultural Income tax (Amendment) Act,1980 976 (referred to hereinafter as "the Bengal Amendment Act of 1980") was passed by the Legislature of the State of West Bengal and published in the Gazette on 31st March, 1980.
By Section 2 of that Act, Section 7A was inserted into the Bengal Agricultural Income tax Act, 1944 and that section runs as follows: "7A: Notwithstanding anything to the contrary contained in this Act, in the case of an assessee being a company or a firm or other association of persons, the agricultural income of such assessee shall be computed in accordance with the method of accounting regularly employed by such assessee for such computation: Provided that if, in any case, the method of accounting as aforesaid is such that, in the opinion of the Agricultural Income tax Officer, the agricultural income cannot be computed, the computation shall be made on such basis and in such manner as the Agricultural Income tax Officer may determine." Section 3 of the Amendment Act of 1980 provides that subsections (2) and (2A) of Section 8 of the Bengal Act of 1944 shall be omitted and shall be always deemed to have been omitted.
Section 7 of the Bengal Amendment Act of 1980 runs as follows: "(7) Notwithstanding any judgment, decree or order of any court, tribunal, or authority to the contrary, where any assessment under the Income tax Act, 1961 of any agricultural income derived from tea has been made before the coming into force of this Act, the proceeding relating to such assessment may be taken and continued under the principal Act as if this Act had not been passed.
" It may be mentioned here that by the Bengal Agricultural Income tax (Amendment) Act, 1979, sub section (2A) was inserted after sub section (2) in Section 8 of the Bengal Act of 1944.
That Act remained in force only for a period of one year.
The material portion of sub section (2A) ran as follows: "(2A) Where the computation of the income derived from tea has not been completed for the purposes of assessment of income tax under the Income tax Act, 1961, or where such computation has been completed but the 977 assessment under the Income tax Act, 1961, has been annulled or set aside under that Act and no order of assessment under Section 25 has been made within six years from the end of the year in which the agricultural income was first assessable, the Agricultural Income tax Officer shall, notwithstanding anything to the contrary contained in this Act, assess the agricultural income derived from tea in such manner and within such period as may be prescribed and shall determine the sum payable by the assessee on the basis of such assessment: X X X X X" In the State of Kerala, agricultural income tax was sought to be imposed by the Agricultural Income tax Act, 1950 passed by the Legislature of the State of Kerala.
The definition of the term "agricultural income" is contained in sub section (a) of Section 2 of the Kerala Agricultural Income tax Act.
The said definition is in line with the definition of the said term under the Act of 1922.
There was an Explanation after clause (2) of sub section (a) of Section 2.
The material part of sub section (a) runs as follows: "2(a) "agricultural income" means (1) any rent or revenue derived from land which is used for agricultural purposes; (2) any income derived from such land by (i) agriculture; or (ii) the performance by a cultivator or receiver of rent in kind of any process ordinarily employed by a cultivator or receiver of rent in kind to render the produce raised or received by him fit to be taken to market; or (iii) the sale by a cultivator or receiver of rent in kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in sub clause (ii); x x x x x" 978 The Explanation referred to above, which followed clause 2 ran as follows: "Agricultural income derived from such land by the cultivation of tea means that portion of the income derived from the cultivation, manufacture and sale of tea as is defined to be agricultural income for the purposes of the enactments relating to Indian Income tax" By Section 2 of the Agricultural Income tax Amendment Act, 1980 (Kerala Act 17 of 1980), the said Explanation was omitted with effect from 1.4.1980.
The affidavit in reply filed on behalf of the State of Kerala as well as the speech of the Finance Minister of the said State at the time of introducing of the Bill which was passed as the Kerala Amendment Act of 1980, make it clear that the intention behind deleting of Explanation was to make the entire income earned by a person from the sale of tea grown and manufactured by him in the State liable to the levy of agricultural income tax.
The main question which we have to consider is whether the aforesaid provisios in the Bengal Amendment Act of 1980 are in excess of the legislative competence of the West Bengal State Legislature.
It will also have to be considered whether by reason of the deletion of the aforesaid Explanation effected by the Kerala Amendment Act of 1980 the definition of the term "agricultural income" in sub section (a) of Section 2 of the Kerala Agricultural Income tax became void as in excess of the legislative competence of the State Legislature.
A perusal of Entry 82 of List I in the Seventh Schedule and Entry 46 in List II makes it clear the respective Legislatures of the State of West Bengal and the State of Kerala could pass laws imposing taxes only in respect of agricultural income; and in respect of income other than agricultural income, it is only Parliament which has the power to legislate in respect of taxes on such income.
sub article (1) of Article 366 of the Constitution states that "agricultural income" means such income as is defined as "agricultural income" for the purposes of enactments relating to Indian income tax.
It is significant that the words used are not "as defined by the enactments relating to Indian income tax" but "as defined for the purposes of the enactments relating to Indian income tax." (emphasis supplied).
We have already set out the definition of the term "agricultural income" under the Act of 1922 as well as that in the Act of 1961 which replaced the Act of 1922.
If these definitions are read by themselves, it would be difficult to say 979 that there is any conflict between them and the definition of the term "agricultural income" contained in the Bengal Agricultural Incometax Act, 1944 after its amendment in 1980 or the definition of the said term in the Kerala Agricultural Income tax Act of 1950, even after the deletion of the aforesaid Explanation.
However, it must be realised that Section 59 of the Act of 1922 and Section 295 of the Act of 1961 both deal with rule making powers.
Under the Act of 1922 that power is given to the Central Board of Revenue and under the Act of 1961 that power is given to the Central Board of Direct Taxes.
Clause (a) of sub section (2) of Section 59 of the Act of 1922 specifically confers powers on the Central Board of Revenue to make rules prescribing the manner in which and the procedure by which income, profits and gains shall be arrived at in the case of income derived in part from agriculture and in part from business.
A similar power is conferred under Section 295 of the Act of 1961 on the Central Board of Direct Taxes to make rules in respect of income derived in part from agriculture and in part from business.
The only difference between Section 59 of the Act of 1922 and Section 295 of the Act of 1961 in this connection, to which our attention was drawn by Mr. Potti, is that sub section (5) of Section 59 provides that the rules made under the said Section shall be published in the Official Gazette and shall thereupon have effect as if enacted in the Act of 1922 whereas Section 296 of the Act of 1961 provides that the rules made under the Act of 1961 have to be laid before each House of Parliament in the manner prescribed in Section 296 and both Houses of Parliament are entitled to make such changes therein as they may resolve or they might direct that the rule should not be given effect to.
This, however, does not make much difference.
Rule 24 of the Income tax Rules, 1922 and Rule 8 of the Income tax Rules; 1962 framed under Section 295 of the Act of 1961 are in pari materia.
It may be mentioned here that Rule 7 of the Income tax Rules, 1962 deals with the computation of income which is partially agricultural and partially from business and Rule 8 is the specific rule dealing with income derived from the sale of tea grown and manufactured by the seller in India.
Under sub rule (1) of Rule 8, it is provided that such income shall be computed as if it were income derived from business and 40 per cent of such income is deemed to be income liable to tax.
A perusal of the aforesaid Rule 8(1) makes it clear that under the said rule, income from the sale of tea grown and manufactured by a seller in India has to be computed as if it were income derived from 980 business which would imply that the deductions allowable under the Act of 1961 in respect of income derived from business would be allowable in the case of income derived from the sale of tea grown and manufactured by a seller and further allowance would be granted as set out in Rule 8(2) and 40 per cent of the income so computed would be deemed to be income liable to the levy of income tax and the balance of the income would be liable to tax as agricultural income subject to such further deductions as the law pertaining to the levy of agricultural income tax might allow.
The question is whether Rule 24 of the Income tax Rules, 1922 and Rule 8 of the Income tax Rules, 1962 can be said to form part of the definition of the term "agricultural income" under the Act of 1922 and the Act of 1961 respectively.
In Karimtharuvi Tea Estates Ltd. & Anr.
vs State of Kerala & Ors., a Bench comprising of five learned Judges of this Court was called upon to consider the question of the power of a State Legislature to make a law in respect of taxes on agricultural income arising from tea plantations and the Bench took the view that the power of the State Legislatures in this connection is limited to legislating with respect to agricultural income determined in accordance with Rule 24 of the Indian Income tax Rules, 1922, under which income derived from the sale of tea grown and manufactured by the seller is first to be computed under Section 10 of the Act of 1922, as if it were income derived from business.
Any expenditure by the assessee, not being an allowance described in clauses (i) to (xiv) of Section 10(2) of the Act of 1922 and not being in the nature of capital expenditure or personal expenses of the assessee, laid out or expended wholly and exclusively for the purposes of such business would be deductible.
Of the income so computed, 40 per cent, being under Rule 24 of the Indian Income tax Rules, 1922 treated as income liable to income tax, the other 60 per cent alone will be "agricultural income".
The State Legislature is free in the exercise of its plenary legislative power to allow further deductions from such computed agricultural income in the case of tea plantations as it considers fit but it cannot add to the amount of agricultural income so computed by providing that certain items of expenditure deducted in the computation of the income from business under the provisions of the Indian Income tax Act, 1922 be not deducted and be considered to be a part of the taxable agricultural income.
The State Legislature cannot enact such a provision which would make agricultural income from tea plantations higher than what it would be if computed in accordance with Rule 24 read with Section 10 of the Indian Income tax Act.
In that case, the provision of the Kerala Agricultural Income tax Act which had to be considered was 981 Explanation 2 to Section 5 added by an amending Act in 1961 which deals with the computation of agricultural income.
The provisions of Section 2 of the Kerala Agricultural Income tax Act which defines "agricultural income" for the purposes of that Act and the Explanation to clause (2) of sub section (a) of that Section, which Explanation has now been deleted by the impugned Amendment Act, were also considered.
It was pointed out (p. 91 of the Report) that: "`Agricultural income ' as defined in the Constitution means 'agricultural income for the purpose of the enactments relating to income tax '.
One such enactment is the Income tax Act.
Rule 24 of the Income tax Rules 1922 has been made under the power conferred by Section 59 of the Income tax Act and has effect as if enacted in that Act.
When Section 59 of the Income tax Act provides for the Rules made under that Act to prescribe the proportions of income from business and income from agriculture in the entire income derived in part from agriculture and in part from business, the proportion so prescribed must be taken to be prescribed by the Act.
These rules were in existence in 1950 when the Constitution incorporated the definition of "agricultural income" from the Income tax Act by reference.
The definition of the term was bound up with the Rules." (emphasis supplied).
It was pointed out by Mr. Potti that there is a reference in the aforesaid judgment to the said Explanation contained in Section 2(a)(2) of the Kerala Agricultural Income tax Act, which is now deleted, and which substantially incorporated the provisions of Rule 24 of the Income tax Rules, 1922 about the computation of income derived by an assessee from the sale of tea grown and manufactured by him and the respective proportions of the same which could be regarded as agricultural income and other income respectively.
It is, however, not possible to say that the aforesaid decision is essentially based on the said Explanation as contended by Mr. Potti.
The question whether computation of income by the Central Income tax authorities could be disregarded by an Agricultural Income tax Officer acting under the Kerala Agricultural Income tax Act came up for consideration before another Bench of five learned Judges of this Court in Anglo American Direct Tea Trading Co. Ltd. etc.
vs Commissioner of Agricultural Income tax, Kerala, In that case the year in question were 1958 59 to 1961 62, 982 with the result that the provisions of the Act of 1922 as well as the Act of 1961 and of the Income tax Rules, 1922 as well as the Income tax Rules, 1962 had to be taken into account.
This Court followed its decision in the case of Karimtharuvi Tea Estates Ltd. & Anr.
vs State of Kerala & Ors., and held that income from the sale of tea grown and manufactured by an assessee is derived partly from business and partly from agriculture.
This income is computed as if it were income from business under the Central Income tax Act and the Rules made thereunder.
Of the income so computed as aforesaid, 40 per cent is deemed to be income derived from business and assessable to non agricultural income tax.
The balance of 60 per cent of the income so computed is agricultural income within the meaning of the Central Income tax Act and the Constitution of India and the power of the State Legislature to make a law in respect of taxes on agricultural income arising from tea plantations is limited to legislating with respect to the agricultural income so determined.
It was also pointed out that the Explanation to Section 2(a)(2) of the Kerala Agricultural Income tax Act, 1950 adopted this rule of computation.
It was held in that case that the Agricultural Income tax Officer acting under the Kerala Act was bound to accept the computation of the tea income already made by the Central Income tax authorities and to assess only 60 per cent of the income so computed, less deductions allowable under Section 5 of the Kerala Act in so far as the same had not been allowed in the assessment under the Central Income tax Act.
The Court also held that if, before Agricultural Income tax Officer proceeds to make the assessment under the Kerala Act, an assessment of income by the Income tax Officer under Rule 24 of the Income tax Rules, 1922 or Rule 8 of the Income tax Rules, 1962 had been made, then the Agricultural Income tax Officer acting under the Kerala Act is bound to accept the computation of the tea income already made by the Central Income tax Authorities as aforesaid.
In the case of State of Tamil Nadu vs Kannan Devan Hills Produce Co. Ltd., a Division Bench comprising of two learned Judges of this Court followed the aforesaid decisions.
In the case of Tea Estate India P. Ltd. vs Commissioner of Income tax, West Bengal II, a Bench comprising of two learned Judges of this Court observed (at P. 795) as follows: "Income which is realised by sale of tea by a tea company which grows tea on its land and thereafter subjects it to manufacturing process in its factory is an integrated income.
Such income consists of two elements or com 983 ponents.
One element or component consists of the agricultural income which is yielded in the form of green leaves purely by the land over which tea plants are grown.
The second element or component consists of non agricultural income which is the result of subjecting green leaves which are plucked from the tea plants grown on the land to a particular manufacturing process in the factory of the tea company.
" The decisions in the cases of Karimtharuvi Tea Estates Ltd. & Anglo American Direct Tea Trading Co. Ltd., , referred to earlier have been cited with approval by a Division Bench of this Court in Commissioner of Income tax, Madras vs R.M. Chidambaram Pillai, etc., A reading of Article 245 of the Constitution with Entry 82 of List I and Entry 46 of List II in the Seventh Schedule makes it clear that the State Legislature has exclusive jurisdiction to legislate in respect of taxes on agricultural income; and in respect of taxes on other income, it is Parliament alone which can legislate.
The term "agricultural income" used in that Entry has to be construed in accordance with the definition of the said term in Article 366(1) of the Constitution of India and that sub article states that agricultural income means "agricultural income as defined for the purposes of the enactments relating to Indian Income tax".
A scrutiny of the aforesaid decisions of this Court in Karimatharuvi Tea Estates Ltd. (supra) and Anglo American Direct Tea Trading Co. Ltd., shows that this Court has consistently taken the view that the definition of the term "agricultural income" for the purposes of the Act of 1922 and tha Act of 1961, being Acts pertaining to the levy of income tax, has to be considered in the light of Rule 24 of the Income tax Rules, 1922 in the case of the Act of 1922 and Rules 7 and 8 of the Income tax Rules, 1962 as far as the Act of 1961 is concerned.
An analysis of the said decisions shows that this Court has taken the view that, in case of income from the sale of tea grown and manufactured by an assessee, Rule 24 of the Income tax Rules, 1922 and Rule 8 of the Income tax Rules, 1962 although at first glance they appear to be rules of apportionment and computation, must be treated as incorporated in the definition of the term "agricultural income" in the Act of 1922 and the Act of 1961 respectively.
It is true that in both the cases, Karimtharuvi Tea Estates Ltd. (supra) & Anglo American Direct Tea Trading Co. Ltd., it has been noticed by this Court that the said Explanation to Section 2(a)(2) to the Kerala Agricultural Income tax Act 984 was in line with the provisions of Rule 24 of the Income tax Rules, 1922 and Rule 8 of the Income tax Rules, 1962 but that by itself does not make any difference and the reading of the aforesaid decisions makes it perfectly clear that even without that Explanation the position would have been the same.
The conclusion which must follow is that although the Explanation has been deleted from clause (2) of sub section (a) of Section 2 of the Kerala Agricultural Income tax Act and in spite of the amendments carried out by the Amendment Act of 1979 and thereafter the Amendment Act of 1980 in the case of the Bengal Agricultural Income tax Act, an Agricultural Income tax Officer acting under the Kerala Agricultural Income tax Act or the Bengal Agricultural Income tax Act has no power to levy agricultural income tax except in respect of 60 per cent of the income derived by an assessee from the sale of tea grown and manufactured by him and computed in the manner laid down under the relevant Central Incometax Act and the Rules framed thereunder.
It was, however, contended by Mr. Potti on behalf of the State of Kerala and Mr. Tapas Ray on behalf of the State of West Bengal that the position as emerging from the aforesaid decisions of this Court has been altered by the decision of this Court in the case of Commissioner of Sales Tax, Lucknow vs D.S. Bist & Ors., [1979] 44 S.T.C. 392.
In that case the assessee owned some tea gardens in the State of U.P. and sold the tea leaves grown by him in his gardens after processing and packing the same.
A question arose whether the tea leaves sold by the assessee were agricultural produce grown by himself and the sales were, therefore, not exigible to sales tax under the Proviso to Section 2(i) of the U.P. Sales Tax Act, 1948.
The contention of the revenue was that the goods in question, namely, tea leaves grown and processed as aforestated had ceased to be an agricultural produce after processing and were, therefore, exigible to sales tax.
The processes to which tea leaves were subjected by the assessee was described by the Revising Authority as follows (p. 394): "(1) The tea leaves were first of all subjected to withering in shadow in rooms on a wooden floor for about 14 hours.
(2) Then they were crushed by hand or foot and were then roasted for about 15 minutes.
(3) Later they were roasted on mats for about 15 minutes.
985 (4) And then they were covered by wet sheets for generating fermentation.
During this process the colour of leaves was changed from green to yellowish.
(5) he leaves were then subjected to grading with sieves of various sizes.
Fanning machines are also used in completing the grading process.
(6) The produce was then finally roasted with charcoal for obtaining suitable flavour and colours.
(7) It is this final product which was eventually sold by the assessee.
" It was observed by the Supreme Court that if the tea leaves sold by the assessee substantially retained the character of being an agricultural produce, the assessee 's sales would not be exigible to sales tax.
If, on the other hand, the leaves had undergone such vital changes by processing that they lost their character of being an agricultural produce and became a different commodity, then the sales made by the assessee were exigible to sales tax.
The Court held that, on the findings recorded by the revising authority, it could not be justifiably held in law that the tea leaves lost their character of being an agricultural produce and became something different.
All the processes applied by the assessee were necessary for the purpose of saving the tea leaves from perishing, making them fit for transporting and marketing them.
It was submitted by learned Counsel that this decision laid down that the processes involved in producing marketable tea were only such as would be carried out by an agriculturist to make his produce marketable and hence the entire income derived from the sale of such tea leaves should be regarded as agricultural income.
In our view, it is impossible to accept this contention.
In the first place, the question before the Court in that case was not relating to agricultural income tax at all but relating to sales tax.
Moreover, what the Court was called upon to consider, and what it did to consider, was only whether the tea leaves after undergoing the processes set out earlier continued to be agricultural produce or whether they became a different commodity which could not be regarded as an agricultural produce.
It is significant that the aforesaid decisions rendered by Benches comparising five learned Judges of this Court in Karimatharuvi and Anglo American 's, Cases, as well the other decisions referred to earlier, have not been referred to in that decision at all, and rightly so, because the Division Bench in Bist 's Case was called upon to consider 986 a question which was essentially a different question.
The ratio of the decision in Bist 's Case has no application to the cases before us.
That decision is, therefore, of no assistance to learned Counsel for the State of Kerala and the State of West Bengal.
We find that the judgment in Bist 's Case referred to above has been distinguished by a learned Single Judge of the Kerala High Court in High Land Produces Co. Ltd. & Anr. etc.
vs Inspecting Asstt.
Commr.
of Agricultural Income tax & Sales Tax (Special), Kottayam, and Ors.
, in considering the scope of the power of the State Legislature to tax agricultural income.
That case arose after the aforesaid amendment of Section 2(a) of the Kerala Agricultural Income tax Act, 1950 whereby the Explanation at the end of Section 2(a)(2) thereof was deleted.
It has been pointed out by the learned Judge that the Explanation to Section 2(a) of the Kerala Agricultural Income tax Act, 1950 was, in substance, in harmony with the concept of mixed income contemplated by Section 295(2)(b) of the Act of 1961 and Rule 8 of Income tax Rules, 1962.
The Explanation specifically referred to that portion of the income from tea as was defined by the Central Act and Rule 8 to be agricultural income by exclusion from total income computed under the Central Act.
This Explanation has been omitted by the Amendment Act of 1980.
The State Legislature is perfectly competent to omit any provision which it has enacted.
However, it cannot thereby widen the ambit of the State Act so as to bring to tax the entire income derived from the sale of tea grown and manufactured by an assessee.
It has been pointed out by the learned Judge in his judgment that none of the observations in Bist 's Case could be read to mean that the entirety of the income derived from the sale of tea grown and manufactured by the assessee would be chargeable to agricultural income tax, for such a construction would not only be unwarranted by the facts and reasoning of that case, but would also be directly in conflict with the Central statute and the principle laid down by a larger Benches comprising five learned Judges of the Supreme Court in the aforesaid two decisions.
It was contended by Mr. Potti and Mr. Ray, learned Counsel for the Respondent States that Rule 8 of the Income tax Rules, 1962 was not a part of an enactment and could not be regarded as an enactment and hence it need not be taken into account in considering the definition of the term "agricultural income" under the Constitution.
It was pointed out by them that, unlike sub section (5) of Section 59 of the Act of 1922 which provided that the rules made under the said section would have effect, after publication in the Gazette, as if enacted in 987 that Act, Section 296 of the Act of 1961 merely provided inter alia that a rule framed under Section 295 had to be laid, as soon as may be, before each House of Parliament while it is in Session for a total period of thirty days and unless it was directed to be deleted or amended by both Houses of Parliament it would be given effect to.
It was pointed out by them that Rule 8, therefore, could not be said to be enactment and hence it could not affect the definition of the term "agricultural income" under Article 366(1) of the Constitution.
We are unable to accept this submission.
What Article 366(1) provides is that the term "agricultural income" has the same meaning as attributed to it for the purposes of enactments relating to Indian incometax and in our view, it is quite clear that Rule 8 of the Income tax Rules, 1962 as well as Rule 24 of the Income tax Rules, 1922, pertain to and are bound up with the definition of the term "agricultural income" for the purposes of laws or enactments pertaining to Indian income tax and hence the provisions of those rules have to be taken into account in considering the meaning of the term "agricultural income" under sub article (1) of Article 366 of the Constitution.
It was next contended by Mr. Potti & Mr. Ray that Rule 8 went beyond the scope of the rule making power conferred by Section 295 of the Act of 1961 and hence was ultra vires.
This submission has to be rejected.
Clause (b) of sub section (2) of Section 295 specifically confers power on the rule making authority to make rules relating to the manner in which and the procedure by which income for the purposes of the Act of 1961 would be arrived at in the case of income derived in part from agriculture and in part from business and Rule 8 clearly provides for the manner in which computation of income for the purposes of the Act of 1961 is to be made in the case of income derived from the sale of tea grown and manufactured by a seller in India and hence we totally fail to see how it can be said that the said rule goes beyond the scope of the rule making power conferred under Section 295.
In view of what we have discussed above, it appears to us that although the Explanation to Section 2(a)(2) of the Kerala Agricultural Income tax Act, 1950 has been deleted by the Amendment Act of 1980, the result would still be the same, namely, that the Kerala State Legislature can impose tax only in respect of 60 per cent of the income derived by an assessee who sells tea grown and manufactured by him in India and such income has to be computed in the manner laid down in the Act of 1922 and thereafter in the Act of 1961 for computation of business income.
The same is the position in respect of the powers of 988 the legislature of the State of West Bengal in spite of the amendments made by the said legislature by the Amendment Act of 1980 and earlier under the amending Act of 1979 which was in force only for one year as we have stated before.
It is not necessary to strike down the said amendments because they do not directly conflict with the definition of the term "agricultural income" under the Constitution as we have pointed out earlier, but we may make it clear that they do not confer any wider power on the State Legislature to impose taxes on agricultural income than what we have set out earlier.
Before parting with the matter, it must be mentioned that the validity of the aforesaid amendments to the Bengal Agricultural Income tax Act, 1944 made in 1980 and the deletion of the Explanation in Section 2(a)(2) of the Kerala Agricultural Income tax Act were challenged as being ultra vires and invalid in law on several other grounds.
We have not thought it necessary to go into these grounds in view of what we have held, as set out above.
Dr. Pal on behalf of Tata Tea Co. and Tata Finlay Co. also challenged the amendment carried out in 1980 in the Bengal Agricultural Income tax Act on the ground of being its retrospective in operation.
It also appears to us unnecessary to go into this question in view of what we have already held.
In the result, although none of the prayers in the petitions is granted in terms, the Petitioners substantially succeed in the Petitions.
There will be a declaration in terms of the last but one paragraph in favour of the Petitioners.
Considering the facts and circumstances of the case, however, we feel that the parties should bear and pay their own costs and we direct accordingly.
S.L. Petitions disposed of.

dataset_name: IN-Abs

summary:
These Writ Petitions, filed in this Court by Public Limited Companies growing, manufacturing and selling tea in the States of West Bengal and Kerala raised common questions of law.
The Writ Petitions relating to the State of West Bengal challenged the constitutional validity of sections 3 and 5 of the Bengal Agricultural Income tax (Amendment) Act, 1980, whereby sub section (2) and (2A) of section 8 of the Bengal Agricultural Income tax Act, 1944 were omitted and always deemed to be omitted.
The petitioners alleged that as a result of the omission of the said Sub sections (2) and (2A) of section 8, the State Legislature had sought to assume the power, competence and jurisdiction to impose agricultural income tax on the entire income from the sale of tea grown and manufactured by a seller and had thereby transgressed the constitutional limitations contained in Article 246(3) of the Constitution of India.
The petitioners contended that the income derived from the sale of tea grown and manufactured by them was derived partly from agriculture and partly from manufacture by elaborate processes through valuable machinery.
Prior to the said amendment Act, the position was that the income of an assessee who grew, manufactured and sold tea in West Bengal, was computed under the Indian Income tax Act, 1922 (the Act of 1922) read with the Income tax Rules, 1922, and agricultural income tax was levied only in respect of 60 per cent of that income.
After the coming into force of the Income tax Act, 1961 and the Income tax Rules, 1962 also a State Legislature 962 could only legislate in respect of 60 per cent of the income, treated as agricultural income.
The object of the impugned amendment Act, was to subject to the levy of agricultural income tax, the entire income derived by an assessee from the sale of tea grown and manufactured by him.
The writ petition relating to Kerala State challenged the amendment made by the Agricultural Income tax (Amendment) Act, 1980 (Kerala Act No. 17 of 1980) deleting the Explanation after clause (2) of section 2(a) of the Agricultural Income tax Act, 1950, with a view to making the entire income from sale of tea earned by an assessee who grew and manufactured tea in that State subject to the levy of agricultural income tax.
The petitioners urged that these amendments, in so far as they purported to confer power on the respective legislatures of the States of West Bengal and Kerala to legislate regarding taxes on the income from the sale of tea grown and manufactured by the assessees in excess of 60 per cent of such income computed in the manner prescribed under the law relating to income tax were void and beyond the legislative competence of the legislatures of the States of West Bengal and Kerala in view of the provisions of Article 246 of the Constitution of India read with the entry 82 in List I and Entry 46 in the List II of the Seventh Schedule to the Constitution and the relevant provisions of the law relating to income tax.
The respondents contended that Article 366(1) of the Constitution merely stated that the term "agricultural income" had the same meaning as given to it in the enactments relating to income tax and the definition of the said term in Act of 1922 and the Act of 1961 did not prescribe that only a particular part of the income derived by an assessee from the sale of tea grown and manufactured by him could be regarded as agricultural income, and it was open to the State Legislatures concerned to levy agricultural income tax on such entire income.
Disposing of the petitions, the Court, ^ HELD: The main question to be considered was whether the impugned provisions in the Bengal Amendment Act of 1980 were in excess of the legislative competence of West Bengal State Legislature, and whether by deletion of the Explanation effected by the Kerala Amendment Act of 1980, the definition of the term "agricultural income" in sub section (a) of Section 2 of the Kerala Agricultural Income tax Act 963 became void as in excess of the legislative competence of the State Legislature.
[978D E] A perusal of Entry 82 of the List I in the Seventh Schedule and Entry 46 in the List II makes it clear that the Legislatures of the States of West Bengal and Kerala can pass laws imposing taxes only in respect of agricultural income, and in respect of income other than the agricultural income, it is only the Parliament which has the power to legislate in respect of taxes on such income.
Sub article (1) of Article 366 of the Constitution states that "agricultural income" means such income as is defined as "agricultural income" for the purposes of the enactments relating to Indian income tax.
It is significant that the words used are not "as defined by the enactments relating Indian Income tax" but are "as defined for the purposes of the enactments relating to Indian Income tax"(emphasis supplied).[978F G] Although the Explanation has been deleted from clause (2) of Sub section (a) of Section 2 of the Kerala Agricultural Income tax Act, and in spite of the amendments carried out by the Amendment Act of 1979 and the Amendment Act 1980 in the case of the West Bengal Agricultural Income tax Act, an Agricultural Income Tax Officer acting under the Kerala Agricultural Income tax Act or the Bengal Agricultural Income tax Act has no power to levy agricultural income tax except in respect of 60 per cent of the income derived by an assessee from the sale of tea grown and manufactured by him and computed in the manner leid down under the relevant Income tax Act and the rules framed thereunder.
[984B C] The decision of this Court in Commissioner of Sales Tax, Lucknow vs D.S. Bist, [1979] 44 S.T.C. 392, relied upon by the State of Kerala and the State of West Bengal was of no assistance to them as the ratio of that decision had no application to present cases.
[986A] Article 366(1) of the Constitution provides that the term "agricultural income" has the same meaning as attributed to it for the purposes of enactments relating to Indian income tax, and Rule 8 of the Income tax Rules, 1962 as well as Rule 24 of the Income tax Rules 1922, pertain to and are bound up with the definition of the term "agricultural income" for the purposes of laws or enactments pertaining to Indian Income tax and the provisions of those rules have to be taken into account in considering the meaning of the term "agricultural income" under sub article (1) of Article 366 of the Constitution.
[987B D] 964 Clause (b) of sub section (2) of Section 295 of the Income tax Act, 1961 specifically confers power on the rule making authority to make rules relating to the manner in which and the procedure by which income for the purposes of the Act of 1961 would be arrived at in the case of income derived in part from agriculture and in part from business and Rule 8 clearly provides for the manner in which computation of income for the purposes of the Act of 1961 is to be made in the case of income derived from the sale of tea grown and manufactured by a seller and it cannot be said that the said rule goes beyond the scope of the rule making power conferred under section 295, as contended by counsel for the two States.
[987E F] Although the Explanation to Section 2(a) (2) of the Kerala Agricultural Income tax Act has been deleted by the Amendment Act of 1980, the result would still be the same that the Kerala State Legislature can impose tax only in respect of 60 per cent of the income derived by an assessee who sells tea grown and manufactured by him in India and such income has to be computed in the manner laid down in the Act of 1922 and thereafter in the Act of 1961 for computation of the business income.
The same is the position in respect of the powers of the legislature of the State of West Bengal in spite of the amendments made by the legislature by the Amendment Act of 1980 and earlier under the amending Act of 1979 which was in force for one year.
It is not necessary to strike down the said amendments because they do not directly conflict with the definition of the term "agricultural income" under the Constitution, but they do not confer any wider power on the State Legislature to impose taxes on the agricultural income then what is stated earlier.
[987G H;988A B] The validity of the amendments to the Bengal Agricultural Income tax Act made in 1980 and the deletion of the Explanation in Section 2(a)(2) of the Kerala Agricultural Income tax Act were challenged as being ultra vires and invalid in law on several other grounds but the Court did not go into those grounds in view of what it held as set out above.
[988C D] Although none of the prayers in the petitions was granted in terms, the petitioners substantially succeeded in the petitions.[988E] Karimtharuvi Tea Estates Ltd. & Anr.
vs State of Kerala Trading Co. Ltd. etc.
vs Commissioner of Agricultural Income tax, Kerala, ; State of Tamil Nadu vs Kannan Devan Hills Produce Co. Ltd., 965 ; Tea Estate India P. Ltd. vs Commissioner of Income tax, West Bengal II, ; Commissioner of Income tax, Madras vs R.M. Chidambaram Pillai etc.
, ; Commissioner of Sales Tax, Lucknow vs D.S. Bist & Ors., [1979] 44 S.T.C. 392; and High Land Produces Co. Ltd. & Anr. etc.
vs Inspecting Asstt.
Commr.
of Agricultural Income tax & Sales Tax (Special), Kottayam and Ors.
, [1984] 148 I.T.R. 746, referred to.


judgement:
Civil Appeal No. 1682 of 1984.
From the Judgment and order dated 23.12.1983 of the Punjab and Haryana High Court in Civil Revision No. 959 of 1979 V.M. Tarkunde, A.D. Sikri for the Appellant.
Hardev Singh and R.S. Sodhi for the Respondents.
The judgment of the Court was delivered by NATARAJAN, J.
What falls for consideration in this appeal by special leave by a tenant against the judgment of the High Court of Punjab and Haryana in a Civil Revision is whether the High Court had transgressed its revisional powers in interfering with the concurrent findings rendered by the Rent Controller and the Appellate Authority and ordering the eviction of the appellant herein from the leased premises and secondly whether the High Court had erred in holding that the leased premises had become unsafe and unfit for human habitation as envisaged in Section 13(3)(a)(iii) of the East Punjab Urban Rent Eviction Act, 1949 (hereinafter the Act).
205 The respondent 's petition for eviction was originally based on other grounds such as bona fide requirement of the premises for own use and change of user of the premises by the tenant.
As he failed before the Rent Controller, the respondent preferred an appeal and during the pendency of the appeal he obtained orders and amended the petition and raised an additional ground under Section 13(3)(a)(iii) for seeking the eviction of the appellant viz. the leased premises had become unsafe and unfit for human habitation.
The Appellate Authority called for a finding on the additional ground from the Rent Controller and the finding went against the respondent.
The Appellate Authority concurred with the Rent Controller on the said finding and dismissed the appeal.
Before the appellate Authority the respondent did not seriously press the original grounds on which eviction was sought for and laid stress only upon the ground under Section 13(3)(a)(iii) of the Act.
The respondent then preferred a Civil Revision wherein the High Court sustained his case and ordered the eviction of the appellant under Section 13(3)(a)(iii) and hence the present appeal by the appellant tenant.
Section 13(3)(a)(iii) was resorted to for seeking eviction of the tenant on the footing that one room in the rear side of the leased premises had fallen down.
We may state, even at this juncture that the High Court had wrongly assumed that besides the falling down of the roof, one of the walls had also crumbled.
This assumption was a mistaken one because the expert witnesses examined during the trial by the parties have spoken about the good condition of three walls alone of the room and not the fourth because they are the outer walls of the room while the fourth wall was a common wall for the room in question and the adjoining room and hence there was no need to certify its good condition.
It was therefore wrong for the High Court to have assumed that only three walls of the room were in good condition and not the fourth wall.
The High Court deemed it necessary to allow the Revision and set aside the order of the Rent Controller and the Appellate Authority because of its view that the falling down of the roof of one of the rooms afforded by itself a cause of action to the landlord to seek eviction of the tenant under Section 13(3)(a)(iii) and the said cause of action would subsist even if the tenant had repaired the roof under orders of the Rent Controller, under Section 12 of the Act.
It is necessary to mention here that during the pendency of the proceedings before the Rent Controller, the appellant obtained the permission of the Rent Controller under Section 12 to replace the roof fallen down and re 206 cover the cost from the respondent since the respondent had failed to do the work himself.
The High Court relied upon two decision Balbir Singh vs Hari Ram, AIR 1983 Punjab and Haryana 132 and Chander Mohini vs Jiva Singh, for holding that once a cause of action ensued under Section 13(3)(a)(iii), it would subsist inspite of any repairs effected by the tenant.
It also relied on another decision Sardarni Sampurna Kaur vs Sant Singh & Anr., for holding that even if the rest of the building was in good condition, the falling down of the roof of one room would constitute sufficient material to sustain a landlord 's claim under Section 13(3)(a)(iii) of the Act for seeking the tenant 's eviction.
A few facts may now be set out.
The leased portion comprises of four rooms in the ground floor where the appellant is running his office.
There is a room in the first floor in the possession of the respondent himself but we are not concerned with it.
It is common ground that the roof of one room in the rear side of the leased portion had fallen down and it had been replaced by the appellant after obtaining orders of the Rent Controller under Section 12.
The appellant 's contention is that the falling down of the roof in one of the four rooms would not by itself render the entire building unsafe and unfit for human habitation as envisaged under Section 13(3)(a)(iii) of the Act and, as such, the High Court had erred in ordering eviction under the said provision.
It was further urged that the Rent Controller and the Appellate Authority had concurrently found that the building was neither unsafe nor unfit for human habitation and as such the High Court was not justified in interfering with those findings especially when they were findings of fact.
In reply to the above said contentions, the learned counsel for the respondent argued that the falling down of the roof in a room was indicative of the damaged condition of the building and, therefore, the High Court was fully justified in ordering the eviction of the appellant under Section 13(3)(a)(iii) of the Act.
It was further urged that the replacement of the roof by the appellant would not extinguish the right which had accrued to the respondent under Section 13(3)(a)(iii) to seek recovery of possession of the leased premises and the High Court had rightly adverted to this aspect of the matter also while allowing the revision filed by the respondent.
On a careful consideration of the matter with reference to the contentions put forth by the learned counsel for the parties, we are clearly of opinion that the High Court was not justified in allowing the revision and directing the eviction of the appellant under Section 13(3)(a)(iii).
It is true that a roof of one of the rooms on the rear side 207 had fallen down and required replacement but there was no evidence whatever that the entire building or a substantial portion of it was in a damaged condition and consequently the building as a whole had become unfit and unsafe for human habitation.
Unless the evidence warranted an inference that the falling down of the roof in one room was fully indicative of the damaged and weak condition of the entire building and that the collapse of the roof was not a localised event, we fail to see how the High Court could have concluded that the entire building had become unsafe and unfit for human habitation.
In fact, the appellant had replaced the roof only at a cost of about Rs.200 and this would independently show that the damage that had occurred could not have been of a serious or disquieting nature.
The High Court has failed to notice two factors of relevance, viz., (1) that the respondent had given his consent to the Rent Controller granting permission under Section 12 of the Act to the appellant to replace the roof and (2) that inspite of the alleged cause of action having arisen due to the falling down of the,roof, the respondent did not immediately seek amendment of the petition so as to seek eviction of the appellant on the additional ground under Section 13(3)(a)(iii) but instead he chose to prosecute his petition only on the original grounds for eviction set forth therein and only after failing before the Rent Controller and preferring an appeal to the Appellate Authority, he deemed it necessary to amend the petition and ask for eviction of the appellant or the additional ground under Section 13(3)(a)(iii).
The above said conduct of the respondent would clearly reveal that he himself had not attached any significance to the falling down of the roof in one of the rooms and had not seriously considered that a sustainable cause of action had accrued to him under Section 13(3)(a)(iii) for seeking the eviction of the appellant.
The High Court has not only failed to appreciate these factors but has also proceeded on the erroneous assumption that the falling down of the roof in one room was by itself sufficient to warrant a finding that the entire building had become unfit and unsafe for human habitation and called for a declaration to that effect.
It is this basic error which has affected the reasoning of the High Court lead the High Court to apply the ratio laid down in certain cases where the facts and circumstances were entirely different.
What arose for consideration in Balbir Singh 's case (supra) was whether a tenant would stand deprived of his right under Section 12 to carry out repairs of the tenanted premises by reason of an application filed by a landlord under Section 13(3)(c) of the Haryana Urban Control on Rent and Eviction Act (Corresponding to Section 13(3)(a)(iii) of the East Punjab Urban Rent Restriction 'Act, 1949) and con 208 versely whether a landlord would stand deprived of his right to seek eviction of his tenant under Section 13(3)(c) by reason of an order passed under Section 12 empowering the tenant to carry out repairs to the tenanted premises.
It was in that context, the High Court held that the two sections operated in their respective spheres and they were not mutually destructive of each other and consequently, when a right accrued to a landlord under Section 13(3)(c) of the Haryana Act to seek eviction of a tenant, the right would not get extinguished on account of an order passed under Section 12 of the Act.
In other words, it was held that once a cause of action had arisen for a landlord to seek eviction under Section 13(3)(c) of the Haryana Act that the said cause of action would ensure to the benefit of the landlord in spite of the tenant effecting repairs to the building for his benefit in pursuance of permission obtained under Section 12 of the Act.
The decision does not lay down that each and every damage to a building, without reference to the seriousness of its nature or to the condition of the building as a whole would by itself entitle a landlord to invoke Section 13(3)(a)(iii) to seek eviction of the tenant.
In Chander Mohini 's case (supra) wherein Balbir Singh 's case (supra) was followed, it was held that if the tenants had pulled down the roof of one of the rooms under their tenancy and replaced the same, obviously for their own convenience and for pre empting the landlord from filing a petition for eviction under Section 13(3)(a)(iii), the landlord would undoubtedly, acquire a cause of action under Section 13(3)(a)(iii) as soon as the tenants had pulled down the roof of the room and his rights could not be defeated by the tenants by the replacement of the roof of their own volition.
The other decision in Sardarni Sampurna Kaur vs Sant Singh has also no relevance because it was found in that case that even though the portion under the ocupation of the tenant was in a sound condition, a substantial portion of the composite building had become unfit and unsafe for human habitation.
In that situation, the High Court held that what was relevant for consideration for passing an order of eviction under Section 13(3)(a)(iii) was the condition of the building viewed as a whole and not in parts or blocks.
In the instant case, the admitted position is that except for the roof in one of the rooms falling down, no other damage to the building was noticed and in such circumstances, there is no scope for holding that a substantial or major part of the building had become unfit and unsafe for human habitation and hence an order of eviction was called for.
It is therefore obvious that the ratio laid down in the earlier decisions were not at all attracted to the facts of the case and the High Court had wrongly applied them because of its erroneous assumptions.
209 Learned counsel for the respondent tried to contend that apart from the building having become unsafe and unfit for human habitation, the respondent had also sought eviction on the ground he was genuinely in need of additional accommodation but the Appellant Court had unjustly rejected the plea by saying that since the respondent was jointly living with his son, he can secure additional accommodation from out of the portion in his son 's occupation.
We do not find any merit in this contention because the requirement of the building on this ground was not canvassed before the High Court.
Even the Appellant Authority has observed that the only ground pressed for seeking eviction of the tenant was under Section 13(3)(a)(iii) and the other grounds were not pressed seriously and only incidentally a halfhearted argument was advanced regarding the requirement of the leased premises by way of additional accommodation.
In the result, the appeal is allowed and the judgment of the High Court is set aside.
The respondent 's application for eviction of the appellant will stand dismissed as ordered by the Rent Controller and the Appellate Authority.
The parties are, however, directed to pay and bear their respective costs.
N.V.K. Appeal allowed.

summary:
The suit premises consisted of four rooms in the ground floor where the appellant tenant was running his office.
One room in the first floor was in the possession of the landlord respondent.
The roof of one room in the rear side of the leased portion had fallen down, and it has been replaced by the appellant after obtaining orders of the Rent Controller under Section 12 of the East Punjab Urban Rent Restriction Act, 1949.
The landlord filed a petition for eviction on the ground of bona fide requirement of the premises for his own use and occupation, and change of user of the premises by the tenant.
As he failed before the Rent Controller, he preferred an appeal and during the pendency of the appeal he obtained the court 's order and amended the petition and raised an additional ground under Section 13(3)(a)(iii) of the Act, seeking eviction of the tenant on the ground that the leased premises had become unsafe and unfit for human habitation.
The Appellate Authority called for a findings on this additional ground from the Rent Controller and the finding went against the landlord.
The Appellate Authority concurred with the Rent Controller on the said finding and dismissed the appeal.
The respondent preferred a Civil Revision Petition before the High Court which sustained the case, and ordered the eviction of the appellant under Section 13(3)(a)(iii) of the Act.
The High Court came to the finding that the falling down of the roof of one of the rooms afforded by itself a cause of action to the landlord to seek eviction of the tenant under the said section, and the said cause of action would subsist even if the tenant had repaired the roof under orders of the Rent Controller under Section 12 of the Act.
203 In the appeal to this Court by the tenant it was contended that the Rent Controller and the Appellate Authority had concurrently found that the building was neither unsafe nor unfit for human habitation and as such the High Court was not justified in interferring with those findings especially when they were findings of fact.
On behalf of the respondent, the appeal was contested on the ground that the falling down of the roof in a room was indicative of the damage condition of the building and, therefore, the High Court was fully justified in ordering eviction, and that the replacement of the roof by the appellant would not extinguish the right which had accrued to the respondent under Section 13(3)(a)(iii) to seek recovery of the possession of the leased premises.
Allowing the appeal, ^ HELD: 1.
The High Court was not justified in allowing the revision and directing eviction of the appellant under Section 13(3)(a)(iii).
[206H] 2.
The High Court proceeded on the erroneous assumption that the falling down of the roof in one room was itself sufficient to warrant a finding that the entire building had become unfit and unsafe for human habitation and called for a declaration to that effect.
[207F] In the instant case, the admitted position was except for the roof in one of the rooms falling down, no other damage to the building was noticed and in such circumstances, there is no scope for holding that a substantial or major part of the building had become unfit and unsafe for human habitation and hence an order of eviction was called for.
[208G H] 3.
The High Court had wrongly assumed that besides the falling down of the roof, one of the walls has also crumbled.
This assumption was a mistaken one because the expert witnesses examined during the trial by the parties have spoken about the good condition of three walls alone of the room and not the fourth because they are the outer walls of the room while the fourth wall was a common wall for the room in question, and the adjoining room and hence there was no need to certify its good condition.
[205E F] 4.
The High Court had also failed to notice two factors of relevance: viz. (1) that the respondent had given his consent to the Rent Controller granting permission under Section 12 of the Act to the appel 204 lant to replace the roof, and (2) that in spite of the alleged cause of action having arisen due to the falling down of the roof, the respondent did not seek amendment of the petition so as to seek eviction of the appellant on the additional ground under Section 13(3)(a)(iii) but instead he chose to prosecute his petition only on the original ground for eviction set forth therein and only after falling before the Rent Controller and preferring an appeal to the Appellate Authority, he deemed it necessary to amend the petition and ask for eviction of the appellant on the additional ground.
[207C E] 5.
The aforesaid conduct of the respondent clearly reveals that he himself has not attached any significance to the falling down of the roof in one of the rooms and has not seriously considered the sustainable cause of action that had arisen to him under Section 13(3)(a)(iii) for seeking eviction of the appellant.
[207E F] Balbir Singh vs Hari Ram, AIR 1983 Punjab and Haryana 132; Chander Mohini vs Jiva Singh, and Sardarni Sampurna Kaur vs Sant Singh & Anr., , distinguished.