1950 (2) TMI 9 - HC - Income Tax

Casuarina Plantation Income Deemed Agricultural, Exempt from Tax

Commissioner of Income-tax Versus K.E. Sundara Mudaliar

The income derived from casuarina plantations was held to be agricultural income under Section 2(1) of the Income-tax Act. The cultivation of casuarina ... - Issues Involved:1. Whether the income derived from casuarina plantations is agricultural income within the meaning of Section 2(1) of the Income-tax Act.Issue-wise Detailed Analysis:1. Whether the income derived from casuarina plantations is agricultural income within the meaning of Section 2(1) of the Income-tax Act:Facts and Context:The facts are not seriously in dispute. To raise a casuarina plantation, it is necessary to prepare the soil, raise seedlings, cultivate the land, and plant them. The plants require watering for periods ranging from 3 to 5 years, and even after this period, the trees require pruning. The trees are cut usually 8 to 10 years after they are transplanted. The wood of the trees is used mostly for fuel or building purposes.Legal Provisions:Section 2(1) of the Income-tax Act defines 'agricultural income' to include:(a) any rent or revenue derived from land used for agricultural purposes and assessed to land-revenue in British India or subject to a local rate assessed and collected by officers of the Crown.(b) any income derived from such land by agriculture, the performance by a cultivator of any process to render the produce fit for market, or the sale by a cultivator of the produce raised by him.Judicial Precedents and Interpretation:- The Privy Council in Raja Mustafa Ali Khan v. Commissioner of Income-tax held that unless there is some measure of cultivation of the land, some expenditure of skill and labour upon it, it cannot be said to be used for agricultural purposes within the meaning of the Income-tax Act.- The Judicial Committee did not decide whether land planted with trees and cultivated in the regular course of arboriculture could be said to be used for agricultural purposes.Analysis:The test laid down in Raja Mustafa Ali Khan's case is satisfied in the present cases as the trees did not grow on the land spontaneously but were the result of cultivation, expenditure of skill, and labour by the assessee. The definition of 'agricultural income' would not apply unless the purpose was agricultural. The land should be used for agricultural purposes.Dictionary Meanings and Broader Interpretations:- According to the concise Oxford Dictionary, 'agriculture' means 'cultivation of the soil'.- Webster's Dictionary includes 'farm, horticulture, forestry, butter and cheese making'.- Mookerjee, J., in Commissioner of Agricultural Income-tax v. Raja Jagadish Chandra Deo, stated that the term agriculture is used in a very general sense.Judicial Opinions:- Patanjali Sastri, J., in Sarojini Devi v. Subramaniam, interpreted 'agricultural land' to include lands used or capable of being used for raising valuable plants or trees or for any other purpose of husbandry.- Varadachariar, J., in Megh Raj v. Allah Rakhia, supported the broader interpretation of 'agriculture'.- Spencer, J., in Panadai Pathan v. Ramasami Chetti, and Ramesam, J., interpreted agriculture to include the raising of useful or valuable products deriving nutriment from the soil with human skill and labour.Conclusion:The raising of casuarina plantations involves tillage of the soil and expenditure of human skill and labour, thereby constituting an agricultural purpose. The income derived from the sale of casuarina trees is therefore agricultural income within the meaning of Section 2(1) of the Income-tax Act and is exempt from taxation under Section 4(3)(viii).Costs:The assessees in these references are entitled to their costs, fixed at Rs. 1,050 in all the references, i.e., Rs. 150 for each assessee.