Agricultural income exemption turns on the immediate source: interest on rent arrears remains taxable, and debt-security construction matters.

Interest on arrears of rent for agricultural land is not agricultural income because its immediate and effective source is the debt arising from rent default, not the land itself. The statutory term "derived" requires the inquiry to stop at that effective source, so the interest remains taxable despite the tenancy connection. Administrative practice treating similar interest as exempt could not override the statutory meaning absent legislative adoption. A usufructuary mortgage bond preserving the debtor's personal liability was construed by its true effect as securing the same debt, so the earlier rule applied and that arrangement did not change the tax position.

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Issues: Whether interest on arrears of rent payable in respect of agricultural land is agricultural income and exempt from tax; and whether a usufructuary mortgage bond executed in satisfaction of such interest is taxable where the bond preserves the debtor's personal liability.

Analysis: Interest on arrears of rent is not rent itself, nor an accretion to rent. Although it arises because of the tenancy and the rent default, the immediate and effective source of the interest is the debt represented by arrears of rent, not the land from which the rent was derived. The term "derived" requires the inquiry to stop at the effective source, and the causal chain does not make the interest revenue derived from land. Past administrative practice treating such interest as exempt could not control the statutory meaning, because there was no sufficient basis to infer legislative adoption of that practice. As to the second question, the bond was construed as preserving the personal liability for the debt, so the matter fell within the governing principle already recognised in earlier authority.

Conclusion: Interest on arrears of rent payable in respect of agricultural land is not agricultural income and is taxable. The usufructuary mortgage bond, on its true construction preserving personal liability, was governed by the earlier rule and did not alter that position.

Final Conclusion: The appeals succeeded for the taxing authority, the negative answers of the High Court on the main issue were displaced, and the separate answer on the bond issue was left undisturbed.

Ratio Decidendi: For an amount to be exempt as agricultural income, it must have land as its immediate and effective source; interest on arrears of rent does not satisfy that test, and a security arrangement preserving personal liability is assessed according to the debt it secures.

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