Agricultural income turns on actual land use and immediate source; dividends from tea companies are not exempt by remote origin.

Agricultural income is confined to receipts derived from land actually used for agricultural purposes, and the claimant bears the burden of proving such use. Ground rent from land on which shops stood, including rent referable to vacant portions, is not exempt unless agricultural operations on the land are shown. Interest received under section 18A(5) of the Indian Income Tax Act, 1922 is treated as taxable income rather than capital or casual receipt. Dividend from tea companies is tested by its immediate and effective source; the shareholder's dividend is not converted into agricultural income merely because the company's underlying profits may arise from tea cultivation.

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Issues: (i) Whether ground rent received from lands on which shops had been erected, including rent relating to vacant portions of such lands, was agricultural income exempt from tax; (ii) whether interest received under section 18A(5) of the Indian Income Tax Act, 1922 was includible in total income; and (iii) whether any part of dividend income received from tea companies could be treated as agricultural income exempt from tax.

Issue (i): Whether ground rent received from lands on which shops had been erected, including rent relating to vacant portions of such lands, was agricultural income exempt from tax.

Analysis: The statutory test under section 2(1)(a) of the Indian Income Tax Act, 1922 is whether the rent is derived from land used for agricultural purposes. The decisive inquiry is the actual use of the land and not the purpose of the lease. Where the assessee claims exemption, the burden lies on him to prove agricultural use. On the materials, the vacant land was not shown to have been used for agriculture, and the factual finding was that no agricultural operations had been carried on there.

Conclusion: The issue was answered against the assessee and in favour of the Revenue.

Issue (ii): Whether interest received under section 18A(5) of the Indian Income Tax Act, 1922 was includible in total income.

Analysis: Interest on advance payment of tax was treated as neither capital receipt nor casual receipt. The earlier binding view governing the point was followed, and the receipt was held to fall within taxable income.

Conclusion: The issue was answered against the assessee and in favour of the Revenue.

Issue (iii): Whether any part of dividend income received from tea companies could be treated as agricultural income exempt from tax.

Analysis: For agricultural income, the relevant inquiry is the immediate and effective source of the receipt. Dividend is not identical in law to the company's agricultural profits, because the shareholder receives income through the declaration of dividend and the statutory relationship created by the company's constitution, not directly from the land. The fact that the company's profits may ultimately arise from tea growing does not convert the shareholder's dividend into agricultural income. The contrary authorities relied upon were distinguished on their facts and context.

Conclusion: No part of the dividend income was agricultural income or exempt from tax, and the issue was answered against the assessee and in favour of the Revenue.

Final Conclusion: All the referred questions were resolved in favour of the taxing authority, with the assessee held liable on each count.

Ratio Decidendi: Income qualifies as agricultural income only when the receipt is derived from land actually used for agricultural purposes, and dividend income is tested by its immediate and effective source, not by the remote source of the company's profits.

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