1932 (5) TMI 9 - HC - Income Tax

Fisheries income not exempt from Indian Income Tax Act; historical regulations and case law rejected.

THE COMMISSIONER OF INCOME TAX, MADRAS Versus V.T.S. SEVUGA PANDIA THEVAR.

The High Court ruled that the income from fisheries is not exempt from assessment under the Indian Income Tax Act, 1922. The court rejected the ... - Issues Involved:1. Whether the income from fisheries is exempt from assessment under the terms of the sanad granted to the Zamindar and Madras Regulation XXV of 1802.2. Whether the income from fisheries is considered agricultural income under the Indian Income Tax Act, 1922.Detailed Analysis:Issue 1: Exemption Based on Sanad and Madras Regulation XXV of 1802The petitioner claimed that the income from fisheries should be exempt from assessment under the terms of the sanad granted to the Zamindar and Madras Regulation XXV of 1802. However, Mr. S. Srinivasa Ayyangar, representing the petitioner, did not argue this point, acknowledging the lack of substantial difference between Madras Regulation XXV of 1802 and the Bengal Regulations. The Calcutta High Court in Emperor v. Prabhat Chandra Barua, affirmed by the Privy Council in Raja Prabhat Chandra Barua v. King-Emperor, had already negated a similar claim for exemption. The High Court concluded that there was no promise or engagement by the Government to exempt the Zamindar's income from general taxation, thus disallowing the first contention.Issue 2: Agricultural IncomeThe primary argument was whether the income derived from leasing fishery rights in tanks and channels used for irrigation purposes could be considered agricultural income under Section 2(1) of the Indian Income Tax Act, 1922. The definition of agricultural income includes 'any rent or revenue derived from land which is used for agricultural purposes.' The petitioner argued that since the water in the tanks and channels was used for agricultural purposes, the income from fisheries should be considered agricultural income.However, the court referred to several precedents, including the Full Bench decision in Emperor v. Prabhat Chandra Barua and Maharajadhiraj of Darbhanga v. Commissioner of Income Tax, which held that income from fisheries is not agricultural income. The court emphasized that the land under the water was not being used for agricultural purposes, and the income was derived from the right to fish, not from any agricultural activity.The court also noted that the definition of 'rent' in the Madras Estates Land Act, which includes rent from fisheries, does not assist in this context as it merely extends the procedure for recovering arrears of land rent to fishery rents. The court concluded that the income from fisheries does not fall under the definition of agricultural income as it is not derived from land used for agricultural purposes.Conclusion:The High Court answered the question in the negative, ruling that the income from fisheries is not exempt from assessment under the Indian Income Tax Act, 1922. The court ordered costs of Rs. 250 to be paid to the Commissioner of Income Tax.