Agricultural income requires land as the real source; a personal ex gratia allowance for a ended lease is taxable.

An annual allowance paid after a thikadari lease had ended was not agricultural income because its real source was not land or agricultural operations. The payment arose from an order granting a personal ex gratia allowance after the estate had resumed possession, so it was connected to the former lease only in a historical sense. For income to qualify as agricultural income under the Income-tax Act, 1922, the receipt must be derived from land as its operative source. A personal allowance in substitution for a terminated lease did not meet that test and was therefore taxable.

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Issues: Whether the annual allowance paid to the assessee in lieu of a renewed thikadari lease constituted agricultural income within the meaning of the Income-tax Act, 1922.

Analysis: The allowance was not derived from land or from agricultural operations. It arose from the order granting a personal annual payment after the lease had ended and possession had been resumed by the estate. The real source of the receipt was the order sanctioning an ex gratia allowance in recognition of past considerations, not the land itself. For income to be agricultural income, its source must be the land and not a merely personal payment connected with a former lease.

Conclusion: The allowance was not agricultural income and was liable to tax.

Ratio Decidendi: A payment is not agricultural income unless it is derived from land as its real source; a personal ex gratia allowance granted in substitution for a terminated lease is not so derived.

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