Charitable trust agricultural income exemption is governed by sections 11 to 13, not section 10(1), under the amended provision.

The amended section 4(b) of the Tamil Nadu Agricultural Income-tax Act, 1955, withdraws the earlier exemption for agricultural income derived from property held under charitable or religious trust. Read in its statutory context, the provision is directed to Chapter III of the Income-tax Act, 1961, especially sections 11 to 13, which govern exemption conditions for income from property held for such purposes. It does not incorporate section 10(1), which concerns agricultural income. A construction preserving that exemption would defeat the object of the amending Act and disrupt the taxation scheme, so the contrary view was rejected.

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Issues: Whether section 4(b) of the Tamil Nadu Agricultural Income-tax Act, 1955, as amended, incorporated section 10(1) of the Income-tax Act, 1961, or instead incorporated the scheme of sections 11 to 13 of that Act for the taxation of agricultural income derived from property held under charitable or religious trust.

Analysis: Section 4(b) was introduced to withdraw the earlier exemption available to agricultural income derived from property held under trust for charitable or religious purposes. The language of the provision, read as a whole and in its statutory setting, showed that the reference to income not included in total income under the Income-tax Act was not intended to preserve the exemption contained in section 10(1), which relates to agricultural income. The proper reference was to Chapter III of the Income-tax Act, 1961, particularly sections 11, 12 and 13, which govern income from property held for charitable or religious purposes and the conditions of exemption. The construction urged on the petitioners would defeat the object of the amending Act and create inconsistency in the scheme of taxation. The earlier contrary view was therefore held to be incorrect.

Conclusion: The amended section 4(b) does not incorporate section 10(1) of the Income-tax Act, 1961, and the relevant reference is to sections 11 to 13 of that Act; the contrary interpretation was rejected.

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