Agricultural income treatment for grazing dues on forest land was upheld as exempt from income-tax.

Grazing dues collected for allowing cattle to graze on forest land were treated as agricultural income because the land was used for pasturage, which is an agricultural purpose. Income derived from land used for agricultural purposes falls within agricultural income and is exempt from income-tax. The fact that the grass was of spontaneous growth and that no expenditure was incurred by the assessee in growing it did not alter the character of the receipts. By contrast, income from trees or forest produce of spontaneous growth, without cultivation or human agency, is not agricultural income. The grazing dues were therefore held to be exempt.

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Issues: Whether grazing dues collected for allowing cattle to graze on forest land covered by jungle and grass of spontaneous growth constitute agricultural income exempt from income-tax.

Analysis: Agricultural income under the Income-tax Act includes rent or revenue derived from land used for agricultural purposes, and income so characterised is exempt from assessment. Income from trees or forest produce of spontaneous growth, without cultivation or human agency, is not agricultural income. Pasturage stands on a different footing, because the use of land for grazing cattle commonly used in agriculture is itself an agricultural purpose. The income in question was derived from fees charged for grazing cattle on land used for that purpose, and the absence of expenditure by the assessee in growing the grass did not change the character of the income.

Conclusion: The grazing dues were agricultural income and were exempt from income-tax.

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