Reference confined to the referred question; sale proceeds from naturally grown forest trees were not agricultural income.

A reference under section 66(1) is confined to the specific question of law actually referred, so the High Court will not enlarge it to decide an unraised issue such as whether receipts are capital in nature. On the substantive tax question, income from the sale of forest trees growing naturally without human intervention was treated as not constituting agricultural income within section 2(1)(a). The fact that the land was assessed to land revenue did not alter the character of the receipts, and the exemption under section 4(3)(viii) was unavailable. The forest-tree sale proceeds were therefore taxable.

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Issues: (i) Whether, in a reference under section 66(1), the High Court could go beyond the specific question of law actually referred and determine an unraised issue as to whether the receipts were capital; (ii) Whether income from the sale of forest trees growing naturally without human intervention constituted agricultural income exempt from tax.

Issue (i): Whether, in a reference under section 66(1), the High Court could go beyond the specific question of law actually referred and determine an unraised issue as to whether the receipts were capital.

Analysis: The reference was confined to the question formulated by the assessee. The application, the Tribunal's statement, and the record did not raise the character of the receipts as capital. The jurisdiction under section 66(1) was treated as advisory and limited to the actual question referred, and the Court declined to enlarge the reference by examining an issue that had not been referred or factually developed.

Conclusion: The High Court could not consider the unraised capital issue and was confined to the question actually referred.

Issue (ii): Whether income from the sale of forest trees growing naturally without human intervention constituted agricultural income exempt from tax.

Analysis: On the question referred, the Court followed its earlier view that such receipts were not agricultural income within section 2(1)(a). The exemption under section 4(3)(viii) was therefore unavailable, and the mere fact that the land was assessed to land revenue did not alter the character of the receipts.

Conclusion: The receipts from the sale of forest trees were not agricultural income and were not exempt from income-tax.

Final Conclusion: The reference was answered against the assessee, and the taxable character of the forest-tree sale proceeds was affirmed.

Ratio Decidendi: In a reference under section 66(1), the High Court is confined to the specific question of law actually referred, and income from the sale of naturally grown forest trees is not agricultural income exempt under section 4(3)(viii).

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