Actual agricultural use determines whether rent from leased land can qualify as agricultural income, not commercial lease features.

Rent from land used partly for resort and hotel activities is discussed in relation to whether it can qualify as agricultural income under the Tamil Nadu Agricultural Income-tax Act, 1955. The note emphasises that the decisive inquiry is the actual agricultural use of the land and the presence of basic agricultural operations, rather than the lease terms, intended commercial use, superstructure assessment, or treatment under central income-tax. It also notes that where the factual foundation on agricultural use has not been properly examined, the assessment and appellate findings may be set aside and the matter remitted for fresh assessment on relevant facts.

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Issues: (i) Whether rent received for leasing land used partly for resort and hotel activities could be treated as agricultural income under the Tamil Nadu Agricultural Income-tax Act, 1955. (ii) Whether the assessments and appellate order required to be set aside and the matter remanded for fresh assessment on relevant facts.

Issue (i): Whether rent received for leasing land used partly for resort and hotel activities could be treated as agricultural income under the Tamil Nadu Agricultural Income-tax Act, 1955.

Analysis: The constitutional definition of agricultural income is tied to the meaning given in the income-tax enactments. The relevant statutory scheme required the land to be agricultural land used for agricultural purposes, and the Supreme Court authorities applied the principle that actual agricultural use and the existence of basic agricultural operations are material. The lease terms, the intended commercial use of the land, assessment of the superstructure to house tax, and the treatment under the central income-tax assessment were not conclusive. The crucial question was the extent to which the land, or any part of it, was in fact used for agricultural purposes during the relevant years.

Conclusion: The Tribunal's blanket conclusion that the rent was not agricultural income could not stand on the materials relied upon, and the issue required fresh determination on proper factual footing.

Issue (ii): Whether the assessments and appellate order required to be set aside and the matter remanded for fresh assessment on relevant facts.

Analysis: The assessing authority and the first appellate authority proceeded on inadequate and partially irrelevant considerations, while the Tribunal also proceeded without examining the relevant factual foundation, particularly the extent of agricultural use of the land. Since the proper factual inquiry had not been made, the revisional court exercised its jurisdiction to set aside the orders and direct a fresh assessment.

Conclusion: The assessment orders and the Tribunal's order were set aside and the matter was remanded to the assessing authority for fresh disposal in accordance with law.

Final Conclusion: The dispute was not finally concluded on the taxability of the rent, and a fresh assessment was directed after examining the actual agricultural use of the land and the extent, if any, of apportionable income.

Ratio Decidendi: For rent derived from land to qualify as agricultural income, the land must in fact be used for agricultural purposes, and the decisive inquiry is the actual agricultural use on the relevant facts, not the lease purpose or other incidental commercial features.

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