Agricultural income test excludes spontaneous forest growth where no cultivation of land or soil-based labour is shown.

Income from the sale of forest trees of spontaneous growth on land assessed to land revenue was not agricultural income under the Indian Income-tax Act, 1922, because there was no cultivation of the soil or application of labour and skill to the land itself. Mere pruning, weeding, care, protection, or regeneration of a forest does not satisfy the agricultural character required for exemption. The net receipts from the sale of such trees were therefore taxable income and were not treated as merely capital converted into cash.

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Issues: Whether income from the sale of forest trees of spontaneous growth on land assessed to land revenue constituted agricultural income exempt from tax, and whether the net receipts from such sale were taxable income and not merely capital converted into cash.

Analysis: The reference turned on the meaning of "agricultural income" under the Indian Income-tax Act, 1922. The land was assessed to land revenue, but the trees were found to be of spontaneous growth and there was no finding of cultivation of the soil. Human labour and skill, if any, were used only for regeneration and preservation of the forest, such as pruning, weeding, care, and protection, and not for operations on the soil itself. For income to fall within agriculture, there must be some cultivation of the land or expenditure of skill and labour upon the land itself; mere preservation or management of spontaneously growing forest trees is insufficient.

Conclusion: The income from the forest trees was not agricultural income and was liable to income-tax. The net receipts from the sale of the trees were income and not merely capital converted into cash.

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