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Issues: (i) Whether the word "revenue" in section 6(a) of the Bihar Agricultural Income-tax Act is confined to land revenue or extends to all revenues as defined in section 136 of the Government of India Act; (ii) whether agricultural income-tax paid in the previous year is deductible in computing assessable agricultural income for the current year.
Issue (i): Whether the word "revenue" in section 6(a) of the Bihar Agricultural Income-tax Act is confined to land revenue or extends to all revenues as defined in section 136 of the Government of India Act.
Analysis: The deduction in section 6(a) was held to be connected with the burden attached to the land itself, namely the revenue or jama payable in respect of the land from which agricultural income is derived. The wider definition in another statute was held to be irrelevant to the construction of the Act, and the scheme of the provision showed that the word used was meant to refer to land revenue only.
Conclusion: The word "revenue" in section 6(a) is limited to land revenue only and does not include all revenues within section 136 of the Government of India Act.
Issue (ii): Whether agricultural income-tax paid in the previous year is deductible in computing assessable agricultural income for the current year.
Analysis: Agricultural income-tax was treated as a tax on income and not as an expenditure incurred to earn that income. Applying the settled principle that tax on profits is part of the profits and not an allowable deduction before profits are ascertained, the payment could not be deducted under section 6(a).
Conclusion: The deduction was not admissible, and the answer to the second question was in the negative.
Final Conclusion: The reference was answered against the assessees, and the claimed deduction was disallowed with costs awarded against them.
Ratio Decidendi: A deduction for revenue under the agricultural income-tax provision is confined to land revenue payable in respect of the land, and tax on income cannot be treated as a deductible outgoing in computing that income.
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