Agricultural income from forest land depends on basic cultivation operations; mixed spontaneous and replanted growth required separate examination.

Income from forest land qualifies as agricultural income only where it is derived from land used for agriculture and supported by basic operations on the land, followed by later acts such as weeding, pruning, tending, and protection. Mere preservation or exploitation of spontaneous growth is not enough. On the facts, parts of the forest had been replanted and maintained through forestry operations, and no enquiry separated income from spontaneous growth from income linked to planted areas. The Department therefore could not treat the entire income as non-agricultural.

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Issues: Whether income derived from a forest of spontaneous growth, where some areas had been replanted and forestry operations such as pruning, weeding, guarding, clearing, watering, and sowing were carried on, constituted agricultural income exempt under section 4(3)(viii) of the Indian Income-tax Act, 1922.

Analysis: The definition of agricultural income in section 2(1) required that the income be derived from land used for agricultural purposes and by agriculture. The Court held that agriculture denotes an integrated activity consisting of basic operations on the land, such as tilling, sowing, or planting, together with subsequent operations like weeding, pruning, tending, and protecting the crop, but the subsequent operations must be connected with and follow from the basic operations. Mere preservation, nursing, or exploitation of products of spontaneous growth, without the land having been subjected to such basic agricultural operations, would not by itself amount to agriculture. On the facts, however, the forest was not wholly one of untouched spontaneous growth, since parts had been denuded and replanted over time, and the record showed substantial expenditure on maintenance and regeneration. As no enquiry had been made to separate income from spontaneous growth from income attributable to planted and nurtured areas, the Department failed to establish that the whole income was non-agricultural.

Conclusion: The income could not be treated in entirety as non-agricultural income and the assessee succeeded.

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