Agricultural income exemption denied where lease land was used for research and seed development, not cultivation.

Lease rent received for land claimed to be let for agricultural use was treated as taxable income, because agricultural income requires rent or revenue from land used for agricultural operations. The evidence showed the land was let for research and development or seed development purposes, not for cultivation, and there was no proof that the lessee carried out basic agricultural operations. The lump-sum receipt for several years' rent also supported the finding that the land was not used for agriculture. The exemption under section 10(1) was therefore unavailable, and the addition was sustained.

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Issues: Whether lease rent received from land allegedly given for agricultural use qualifies as agricultural income exempt under the Income-tax Act, or is taxable as income from other sources.

Analysis: The lease arrangement showed that the land was given for research and development or seed development purposes, not for agricultural operations. Agricultural income under section 2(1A) requires rent or revenue derived from land situated in India and used for agricultural purposes. The evidence did not show that the lessee carried out any cultivation or other basic agricultural operations on the land. The surrounding circumstances, including the lump-sum receipt for several years' rent, supported the conclusion that the land was not used for agriculture. Accordingly, the claim of exemption under section 10(1) was not available.

Conclusion: The lease rent did not constitute agricultural income and was not exempt; the addition was rightly sustained against the assessee.

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