Agricultural income depends on cultivation and source, not land ownership, where a firm jointly cultivates another's land.

Agricultural income is characterised by its source and nature, not by ownership of the land, so income derived from agricultural operations on land used for cultivation can retain that character even when the land belongs to another person. The Tribunal's reasoning relied on section 2(1A) of the Income-tax Act, the Maharashtra Agricultural Income-tax Act, and tenancy concepts recognising cultivation through partners, labour, or lease arrangements. On the stated facts, a partnership firm carrying on joint cultivation on another entity's land was treated as earning agricultural income because actual sugarcane cultivation was not in dispute.

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Issues: Whether income arising from joint cultivation of land owned by another person could be treated as agricultural income in the hands of a partnership firm, and whether ownership of the land was a necessary condition for claiming such character.

Analysis: The Tribunal held that agricultural income under section 2(1A) of the Income-tax Act, 1961 is determined by the source and nature of the income, namely revenue derived from land used for agricultural purposes, and not by the ownership of that land. It relied on the statutory scheme of the Maharashtra Agricultural Income-tax Act, 1962, which recognises a firm as a person capable of being an assessee and, by necessary implication, capable of deriving agricultural income. The Tribunal also noted that the Bombay Tenancy and Agricultural Lands Act, 1948 and the concept of deemed cultivation show that personal ownership is not essential and that cultivation through partners, labour, or tenancy arrangements can satisfy the legal character of agricultural operations. On the facts, the assessee had a joint cultivation agreement, was carrying out agricultural operations on land belonging to MSFC Ltd., and the Revenue had not disputed that sugarcane cultivation in fact took place.

Conclusion: The income was rightly treated as agricultural income in the hands of the firm, and the Revenue's challenge failed.

Ratio Decidendi: For purposes of agricultural income, ownership of the land is not a sine qua non; if income is derived from agricultural operations on land situated in India, even through a partnership or tenancy arrangement, it retains the character of agricultural income.

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