Dividend from tea company profits is not agricultural income for the shareholder and remains taxable.

Dividend received by a shareholder from tea companies was not agricultural income merely because the companies' profits included agricultural income in their hands. Agricultural income under the Income-tax Act must be rent or revenue derived directly from land used for agricultural purposes, and dividend arises from the shareholder's investment in shares and the contractual rights of membership, not from any direct interest in the company's land or property. As a company is a separate juristic person from its shareholders, the agricultural character of the company's income does not attach to the dividend. The dividend was therefore taxable in the shareholder's hands.

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Issues: Whether dividend received by a shareholder from tea companies, to the extent the companies' profits were treated as agricultural income, is itself agricultural income exempt under the Income-tax Act.

Analysis: Agricultural income under the Act requires rent or revenue derived directly from land used for agricultural purposes. Dividend paid to a shareholder does not arise from any direct relation with the land, but from the shareholder's investment in shares and the contractual rights flowing from membership in the company. A company is a separate juristic person distinct from its shareholders, and the shareholder has no interest in the company's property itself. The character of agricultural income does not attach to dividend merely because the company's underlying profits included income exempt in the company's hands.

Conclusion: The dividend was not agricultural income in the shareholder's hands and was taxable.

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