Agricultural income exemption failed for post-partition land income from Pakistan because prior British India assessment was not enough.

Income accruing after partition from lands situated in Pakistan did not qualify as exempt agricultural income in India merely because the lands had been assessed to land revenue in pre-partition British India. The relevant statutory expression required a present and subsisting assessment to land revenue within the territorial scope of the Indian Act, and a past assessment in British India was not enough after the lands passed to Pakistan. As the continued assessment under Pakistani law was not proved, the post-partition income could not retain agricultural character under the Indian income-tax law and was taxable.

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Issues: Whether income accruing after 15 August 1947 from lands situated in Pakistan remained exempt as agricultural income in India on the footing that the lands had been assessed to land revenue in pre-partition British India.

Analysis: The expression "is assessed to land revenue in British India" in the definition of agricultural income was held to require a present and subsisting assessment within the territorial limits to which the Act applies. The adaptation of the definition after partition did not preserve the character of land as agricultural land in India merely because it had once been assessed to land revenue in British India. Once the land passed to Pakistan, the earlier assessment could not by itself continue to satisfy the statutory condition unless that assessment still subsisted in the relevant territory. On the facts, the law of Pakistan and the continued incidence of assessment there were not proved, and the claim that the post-partition income retained agricultural character under the Indian Act could not be sustained.

Conclusion: The post-partition income from the lands in Pakistan was not exempt from Indian income-tax as agricultural income, and the answer was against the assessee.

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