Agricultural income exemption applies to the income itself, even when received by a money-lender in business.

Agricultural income retains its exempt character under the Income-tax Act, 1922 even when received by a money-lender in the course of a lending transaction. The statutory exclusion for agricultural income applies to the character of the income itself, not to the character of the recipient or the business context in which it is collected. Because the thika profits were derived from land used for agricultural purposes and fell within the Act's definition of agricultural income, they were outside taxable business income and remained exempt.

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Issues: Whether the sum representing thika profits derived from agricultural lands, though received in the course of a money-lending transaction, was taxable as business income or exempt as agricultural income.

Analysis: The rents and profits were found to be derived from land used for agricultural purposes and within the statutory definition of agricultural income. The scheme of the Income-tax Act, 1922, showed that agricultural income was excluded from the operation of the Act by the express saving in section 4(3)(viii), read with the opening words of sections 4(1) and 6. The exemption attached to the character of the income itself and not to the character of the recipient. The fact that the respondent was carrying on a money-lending business and had received the income under a transaction entered into in that business did not deprive the receipt of its exempt character.

Conclusion: The receipt was exempt agricultural income and not taxable business income.

Ratio Decidendi: Where income is agricultural income within the Act, the statutory exemption applies to the income itself and is not lost merely because it is received by a money-lender in the course of his business.

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