TaxTMI 
TaxTMI 
1949 (6) TMI 1
X X X X Extracts X X X X
X X X X Extracts X X X X
....come-tax (Amendment) Act of 1939 (Act VII of 1939). The appellants are the assessees. The assessment was made with respect to the year 1942-43, the previous year being 1941-42. The question arising for determination in this appeal is whether the appellants are exempt from taxation in respect of a part of their income amounting to ₹ 7,612, derived from the sale of wood, bark, leaves, usufruct of trees, etc., on the ground that (a) the income was derived from a permanently settled estate and (b) the income was agricultural income within the meaning of Section 2(1) of the Indian Income-tax Act, 1922. Before stating the facts, it will be convenient to refer to the relevant provisions of the Madras Permanent Settlement Regulation (XXV ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the country, under the several heads of salt and saltpetre-of the sayar, or duties by sea or land-of the abkari or tax on the sale of spirituous liquors and intoxicating drugs-of the excise on articles of consumption-of all taxes personal and professional, as well those derived from markets, fair or bazars-of lakhiraj lands (or lands exempt from the payment of public revenue), and of all other lands paying only favourable quit-rents-the permanent assessment of the land-tax shall be made exclusively of the said1 articles now recited." THE INDIAN INCOME-TAX ACT (Act XI of 1922). The relevant provisions of the Indian Income-tax Act are as follows:- "Section 2. Definitions-In this Act, unless there is anything repugnant in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion. A part of the permanently settled estate knows as Pulivela was settled upon the appellants by their father. This estate includes forest and non-forest areas of spontaneous growth from which the appellants derive income by the sale of wood, bark, leaves, minor forest produce, usufruct of trees including Jadivala in Jiarayati lands, and levy of licence fees. They also derive income from the sale of proceeds of trees which are also of spontaneous growth in non-forest areas. It is admitted that the trees in the forest and non-forest areas have grown wild, and that agricultural operations are not carried on in any of the areas from which the income in question was derived. For the year of account 1941-42 the income derived by the appellan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Appellate Tribunal. At the request of the appellants the Tribunal referred two questions to the High Court. These are:- "(1) Whether the imposition of income-tax in respect of income derived from a permanently settled estate would be a breach of Regulation XXV of 1802 relating to Permanent Settlement. (2) Whether the income of ₹ 7,612 derived from the sale of wood, etc., (as detailed hereinabove) is exempt under Section 4(3)(viii) read with Section 2(1) of the Indian Income-tax Act, 1922." Both these questions were answered against the appellants by the High Court. In a recent decision of the Board, viz., Raja Mustafa Ali Khan, through Special Manager, Court of Wards, Utraula, District Gonda v. Commissioner of Income....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the income from the produce of the forest will in effect amount to an addition to the peishkush and will thus be contrary to the terms of the sannad. It is admitted that the forest and non-forest areas were all included in the zamindari at the time of the settlement. In support of the above argument reliance was placed on Chief Commissioner of Income-tax, Madras v. Zamindar of Singampatti [1922] ILR 45 Mad. 518, and Maharajadhiraj of Darbhanga v. Commissioner of Income-tax [1924] ILR 3 Pat. 470, both of which support the appellants. It is not necessary to discuss these decisions, or to consider further the arguments of the learned counsel, for it was decided by the Board in Probhat Chandra Barua v. King Emperor [1930] LR 57 IA 228-a case ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....azar for petitions presented to the zamindar, dealing with questions of succession, settlement and partition. (ix) Ground rent for permanent shops at hauts and bazars. (x) Stall fees paid by temporary (daily) sellers at hauts and bazars." The Bengal Permanent Settlement Regulation is Bengal Regulation I of 1793. Though the two Regulations are differently worded it was conceded by the learned counsel, and their Lordships think rightly, that the language of both the Regulations is to the same effect. The decision of the Board was sought to be distinguished by the learned counsel on the ground that the items mentioned in the case before the Board had been excluded from the assessment of the jama at the time of the permanent settlemen....