TaxTMI 
TaxTMI 
1957 (5) TMI 6
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....was always left out of account. The assessment for 1944-45 also was first made without including therein any forest income, but the assessment was subsequently re-opened under section 34. In response to a notice under section 22(2) read with section 34 of the Act, the respondent submitted a return showing the gross receipt of Rs. 51,798 from the said forest. A claim was, however, made that the said income was not assessable under the Act as it was agricultural income and was exempt under section 4(3)(viii) of the Act. The Income-tax Officer rejected this claim and added a sum of Rs. 34,430 to the assessable income as income derived from the forest after allowing a sum of Rs. 17,548 as expenditure. 3. The Appellate Assistant Commissioner confirmed the assessment and the Income-tax Appellate Tribunal also was of opinion that the said income was not agricultural income but was income derived from the sale of jungle produce of spontaneous growth and as such was not covered by section 2(1) of the Act. At the instance of the assessee the Tribunal referred to the High Court under section 66(1) of the Act two questions of law arising out of its order, one of which was : "Whe....
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....estion in the affirmative. The Revenue obtained the requisite certificate of fitness for appeal to this Court and hence this appeal. 6. The question that arises for consideration in this appeal is whether income derived from the sale of sal and piyasal trees in the forest owned by the assessee which was originally a forest of spontaneous growth "not grown by the aid of human skill and labour" but on which forestry operations described in the statement of case had been carried on by the assessee involving considerable amount of expenditure of human skill and labour is agricultural income within the meaning of Section 2(1) and as such exempt from payment of tax under section 4(3)(viii) of the Indian Income-tax Act. 7. Section 2(1) of the Act defines agricultural income and states (so far as it is relevant for the purposes of this appeal) : "(1) 'agricultural income' means-- (a) any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land revenue in the taxable territories or subject to a local rate assessed and collected by officers of the Government as such ; (b) any income derived from such la....
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....es would clearly be agricultural produce. It has to be remembered that even though this demarcation between agriculture and forestry was available in the Lists contained in the Seventh Schedule to the Government of India Act, 1935, no such demarcation existed in the Devolution Rules made under the Government of India Act, 1919, and in any event the definition of agricultural income with which we are concerned was incorporated in the Indian Income-tax Acts as early as 1886, if not earlier ; vide section 5 of the Indian Income-tax Act, 1886 (II of 1886). It has also to be remembered that in spite of this demarcation between agriculture and forests in the Constitution, taxes on agricultural income are a separate head under entry 46 of List II of the Seventh Schedule and would comprise within their scope even income from forestry operations provided it falls within the definition of agricultural income which according to the definition given under article 366 (1) means agricultural income as defined for the purposes of the enactments relating to Indian income-tax. 11. The terms "agriculture" and "agricultural purpose" not having been defined in the Indian Income-tax Act, we must ....
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....re" has been understood to mean : "art or science of cultivating the ground, especially in fields or large quantities, including the preparation of the soil, the planting of seeds, the raising and harvesting of crops, and the rearing, feeding and management of live-stock ; tillage, husbandry and farming. In its general sense the word also includes gardening or horticulture." 15. Bhashyam Ayyangar J., in Murugesa Chetti v. Chinnathambi Gounden and Others gave the following dictionary meanings of agriculture as culled out from the Century Dictionary and Anderson's Dictionary of Law : "The primary meaning of agriculture is the cultivation of the ground ('The Century Dictionary') and in its general sense, it is the cultivation of the ground for the purpose of procuring vegetables and fruits for the use of man and beast including gardening or horticulture and the raising or feeding of cattle and other stock (Anderson's 'Dictionary of Law'). Its less general and more ordinary signification is the cultivation with the plough and in large areas in order to raise food for man and beast ('The Century Dictionary') or, in other words, 'that speci....
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....furthering the growth of forest trees, these operations would also enjoy the character of agricultural operations. If breeding and rearing of live-stock, dairying, butter and cheese-making etc., could be comprised within the term "agriculture", it was asked, why should these also be not classed as agricultural operations. 19. Considerable stress was laid on the fact that section 4(3)(viii) of the Act enacted a provision in regard to the exemption of "agricultural income" from assessment and it was contended that exemptions should be liberally construed. Reliance was placed on the observations of Viswanatha Sastri, J., in Commissioner of Income-tax, Madras v. K. E. Sundara Mudaliar and Others : "Exemption from tax granted by a statute should be given full scope and amplitude and should not be whittled down by importing limitations not inserted by the Legislature." 20. Mookerjee, J., in Commissioner of Agricultural Income-tax, West Bengal v. Raja Jagadish Chandra Deo Dhabal Deb also expressed himself similarly "and the present-day view seems to be that where an exemption is conferred by statute, that clause has to be interpreted liberally and in favour of the assess....
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....ion." The Shorter Oxford Dictionary, Vol. I, page 735, gives the meaning of "forestry" as the "science and art of forming and cultivating forests, management of growing timber." 25. Webster's New International Dictionary, Vol. I, page 990, gives the following meaning of forestry : "Science and art of farming, caring for, or cultivating forests ; the management of growing timber." 26. Webster's New International Dictionary, Vol. I, page 643, while talking of cultivation, says that "to cultivate" means "(1) to prepare, or to prepare and use, for the raising of crops ; to till ; as, to cultivate the soil ; to loosen or break up the soil about (growing crop or plants) for the purpose of killing weeds, etc., especially with a cultivator, as to cultivate the corn ; (2) to raise, or foster the growth of, by tillage or by labour and care; to produce by culture ; as to cultivate roses ; to cultivate oysters." 27. Whether the narrower or the wider sense of the term "agriculture" should be adopted in a particular case depends not only upon the provisions of the various statutes in which the same occurs but also upon the facts and circumstances of each case. ....
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....t was held that a lease of a coffee garden was not an agricultural lease within the meaning of the Transfer of Property Act, section 117. The case, however, concerned itself with the situation where as far as the Court could gather from the karar the lease was of the coffee plants only. There was no further discussion of the legal position and it may be noted that Shephard, J., who was a party to this decision stated in the later case of Murugesa Chetty v. Chinnathambi Gounden that he was wrong in the opinion he expressed with regard to a coffee garden in this case. 29. Murugesa Chetty v. Chinnathambi Goundan also was concerned with section 117 of the Transfer of Property Act. The lease there was a lease of land for the cultivation of betel and the Court held that such a lease was an agricultural lease falling under section 117. Bhashyam Ayyangar, J., who delivered the main judgment of the Court discussed the dictionary meanings of the term "agriculture" and stated that in section 117 of the Transfer of Property Act it was used in its more general sense as comprehending the raising of vegetables, fruits and other garden products as food for men or beast, though some of them may ....
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....tle and not for cultivation, i.e., ploughing and raising agricultural crops, was "ryoti" land, though it might have been "old waste" and a tenant of such land was a "ryot" and any amount agreed to be paid for pasturing cattle was "rent" within the definitions of section 3 of the Madras Estates Land Act (Mad. Act I of 1908). The Court held that such land was not "ryoti" land inasmuch as it was not fit for ploughing and raising agricultural crops. The ordinary meaning of "agriculture" was taken to be "the raising of annual or periodical grain crops through the operations of ploughing, sowing, etc." (Per Sadasiva Ayyar, J., at p. 741). 32. Chief Commissioner of Income-tax, Madras v. Zamindar of Singampatti was a reference arising out of the assessment for income-tax under Act VII of 1918 of the income derived by the Zamindar of Singampatti from forests and fisheries within the ambit of his Zamindari. The assessee objected to the assessment (i) on the ground that the income was agricultural income within the meaning of section 4 of the Act and, therefore, not chargeable to income-tax; (ii) that the assessment was illegal as contravening the terms of his permanent sanad for the Za....
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....village, and was occupied or let for the cultivation of tea was "agricultural land" within the meaning of section 3(i) of the Punjab Pre-emption Act, 1905. 35. Emperor v. Probhat Chandra Barua was a case under the Indian Income-tax Act and the classes of income derived from permanently settled estates were "1. Income from fisheries. 2. Income from land used for stacking timber. 3. Income from pasturage". The income from the first two heads was certainly not agricultural income or income derived from "land which is used for agricultural purposes" within the meaning of sections 2 and 4 of the Act. But income derived from pasturage was held to be agricultural income which could not lawfully be charged with income-tax. There was a difference of opinion between Rankin, J., and Page, J., in regard to the liability of income from fisheries and income from land used for stacking timber based on the construction of the Permanent Settlement Regulations of 1793. But that is immaterial for our present purposes. What is material is that both the learned judges were unanimous in their opinion that income from pasturage was income derived from "land which is used for agricultural purposes" ....
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.... "agriculture" meant and came to the conclusion that agriculture could not be defined by the nature of the product cultivated but should be defined rather by the circumstances in which the cultivation was carried on. He observed at page 902 : "I agree with the remark of Shephard, J., in Murugesa Chetti v. Chinnathambi Goundan that a man who plants or maintains trees for firewood is not in ordinary parlance an agriculturist. If we take the strict meaning of 'agriculture' according to its derivation it means the cultivation of a field, the cultivation of an open space, as opposed to horticulture, the cultivation of a compartively small enclosed space. The cultivation either of the field in agriculture or of the garden in horticulture cannot be confined, I think, to any particular product. With great respect, I do not agree with the opinion of Bhashyam Ayyangar, J., in Murugesa Chetti v. Chinnathambi Goundan that agriculture implies production of things useful as food for man or beast or other products fit for human consumption by way of luxury. That appears to me to be too narrow an interpretation. Still less do I agree with the opinion expressed by Sadasiva Ayyar, J....
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....riculture" by having regard to the circumstances in which the cultivation was carried on rather than the nature of the products cultivated and embraced within the scope of the term not merely the production of things useful as food for man or beast or other products fit for human consumption by way of luxury but also such useful products as cotton, jute, flax and hemp, though he stopped short at those products and hesitated to include therein growing of trees in plantation where the land was covered with trees which have to stand on it for a number of years. 41. The last case to be referred in this series is that of Deen Mohammad Mian v. Hulas Narain Singh where it was held that an orchard is an agricultural land. It was observed : "The case of an orchard is quite different. Orchard trees ordinarily are, and can be presumed to have been, planted by man after preparation of the ground which is cultivation and seasonal crops are gathered. Fruit trees also require seasonal attention such as pruning and digging of the soil around the roots, and it cannot be said that this ceases to be cultivation merely because the whole tree is not replanted every year.........................
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....the land for two years or a little more, and there are usually two cuttings. Castor plants stand for some years on the soil and the seeds are periodically gathered in. Bamboo is often planted in enclosed lands by digging pits, filling them with sand and manure and then planting the young stalks in a bunch at suitable distances. Watering is done for the first 2 or 3 years. Every year, the land surrounding each bamboo cluster is dug with a spade and small earthen ridges are put up so as to catch and retain rain water. Bamboo plants attain maturity in about 3 or 4 years, and the thorny branches which grow on the main stem are then fit to be cut off and used for fencing purposes........................I am unable to see why these operations are not agricultural operations." 44. The cases above noted all of them interpret the term "agriculture" in its narrower sense, though there is a marked progress from the extremely narrow construction put upon it by Bhashyam Ayyangar, J., in Murugesa Chetti v. Chinnathambi Goundan to the somewhat wider connotation thereof adopted by Reilly, J., in Chandrasekhara Bharathi Swamigal v. Duraisami Naidu and by Viswanatha Sastri, J., in Commissioner of....
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....n can be drawn between large and small plots of lands on which roots or grains are cultivated. All such land must be held to be land used solely for agricultural purposes.....................Counsel has urged before us that these so-called waste lands are pasture lands and as such should be held to be lands used solely for agricultural purposes.....................If, therefore, it could be shown that these so-called waste lands were in reality pasture grounds or lands used for "rearing livestock", we should certainly decide that they were lands used solely for agricultural purposes." 46. The learned Judges there were influenced by the dictionary meaning of the term agriculture as given in Murray's New Oxford Dictionary and understood the term agriculture in the wider sense as including user of land for rearing live-stock also. 47. In Panadai Pathan v. Ramaswami Chetti a lease of land was given for growing casuarina trees and the question was whether such a lease was a lease for agricultural purposes within the meaning of section 117 of the Transfer of Property Act. The Court held that it was a lease for agricultural purposes and therefore did not require a registered ins....
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....round or some expenditure of human care and attention in such operations as those of ploughing, sowing, planting, etc., was considered essential for constituting these operations agricultural operations. 50. In Commissioner of Income-tax, Burma v. Kokine Dairy, Rangoon the question was whether income from a dairy farm and the milk derived from the farm is agricultural income and exempt as such from income-tax. Roberts, C.J., who delivered the opinion of the Court observed : "Where cattle are wholly stall-fed and not pastured upon the land at all, doubtless it is trade and no agricultural operation is being carried on : where cattle are being exclusively or mainly pastured and are none the less fed with small amounts of oil-cake or the like, it may well be that the income derived from the sale of their milk is agricultural income. But between the two extremes there must be a number of varying degrees, and the task for the Income-tax Officer is to apply his mind to the two distinctions and to decide in any particular case on which side of the fence, if I may use the term, the matter falls." 51. He then referred to the case of Lean and Dickinson v. Ball where Lord Culle....
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....e, C.J., understood the term "agriculture" in a wider sense as including operations not only on the land itself but on the shrubs which grew on the soil and were according to him a part of the soil. The assessees were manufacturers of biri, a kind of cigarette consisting of tobacco wrapped in tendu leaves. The tendu plant was of entirely wild growth and propagated itself without human agency in jungle and waste lands. The assessees had taken several villages on "lease" for plucking the leaves of such plants and the work done by the assessees consisted in pruning the trees and burning the dead branches and dried leaves lying on the ground., The Court held that the profits accruing to the assessees by the sale of tendu leaves was not exempt as agricultural income but to the extent to which pruning of the tendu shrub occurred, there was in a technical and legal sense a cultivation of the soil in which the shrub grew and, therefore, so much of the income as was shown by the assessee to be profit derived from the collection and preparation, so as to make them fit to be taken to the market, of tendu leaves produced by the pruning of the tendu shrubs was exempt as agricultural incom....
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....ged connotation of the term "agriculture" has been tinged by the dictionary meanings ascribed to it in Murray's Oxford Dictionary and Webster's Dictionary quoted above which understood the term as including the allied pursuits of rearing, feeding and management of live-stock and also including husbandry, farming, horticulture, etc., in the widest sense, as also butter, cheese-making, etc. We shall have to consider at the appropriate stage as to how far such enlargement is warranted by the definition of "agricultural income" as given in section 2(1)(a) of the Indian Income-tax Act. 58. The cases above noted all of them involve some expenditure of human skill and labour either on the land or the produce of the land, for without such expenditure there would be no question of the income derived from such land being agricultural income. Where, however, the products of the land are of wild or spontaneous growth involving no expenditure of human labour and skill there is unanimity of opinion that no agricultural operations were at all involved and there is no agricultural income. In such cases, it would be the absence of any such operations rather than the performance thereof w....
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.... the income described as phalkar in these cases is income derived from land used for agriculture or from agriculture and is, therefore, not assessable to agricultural income-tax." 62. In Raja Mustafa Ali Khan v. Commissioner of Income-tax, U.P. & C.P., which went up to the Privy Council, the Oudh Chief Court held that income from the sale of forest trees growing on land naturally and without the intervention of human agency, even if the land was assessed to land revenue, was not agricultural income within the meaning of section 2(1)(a) of the Income-tax Act. The Court followed an earlier decision given by it in the case of Maharaja of Kapurthala v. Commissioner of Income-tax, C.P. & U.P., in which the Court had discussed the meaning to be ascribed to the term " agriculture " and observed at page 93 : "A fiscal statute should no doubt be construed strictly and, if there be any doubt about its construction, the subject must be given the benefit. But we do not feel any doubt that the expression 'land used for agricultural purposes' in the Income-tax Act does not extend to forests of spontaneous growth, where nothing is done to prepare the soil for trees to be pl....
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....an appeal to the Privy Council against this decision but the same was dismissed : vide Yuvarajah of Pithapuram v. Commissioner of Income-tax, Madras.) 64. Benoy Ratan Banerji v. Commissioner of Income-tax, U.P., C.P. & Berar, was another case in which the assessee derived income from the sale of timber from his Zamindari on which there had been for many years a number of forest trees, khar and wild plants. There was no evidence on the record to show that the growth of the trees in question was the result of any actual cultivation by the assessee at all. The various trees which he sold were of spontaneous growth, not having grown as a result of actual cultivation. The Court held that in order to come within the definition of "agricultural income" the income had not only to be derived from land which was used for "agricultural purposes " but such income had also to be derived by the process of "agriculture". The Court observed that being trees of spontaneous growth, to the production of which the assessee had made no contribution by way of cultivation, no question could arise either of the land on which they grew being "used for agricultural purposes " or of the trees themse....
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....ich we have sought to draw between an agricultural and a non-agricultural purpose. The decisions referred to are Kaju Mal v. Saligram and Kaju Mall v. Saligram." 66. The Court came to the conclusion that it was essential that the income should be derived from some activity which necessitated the employment of human skill and labour and which was not merely a product of man's neglect or inaction except for the gathering in of the spoils. Not only must the assessee labour to reap the harvest. But he must also labour to produce it, and they accordingly held that the income in question was not agricultural income and was not exempt from taxation under section 4(3)(viii) of the Indian Income-tax Act. 67. We now come to the decision of the Privy Council in Raja Mustafa Ali Khan v. Commissioner of Income-tax, U. P., Ajmer and Ajmer Merwara. It will be recalled that the Oudh Chief Court had in Raja Mustafa Ali Khan v. Commissioner of Income-tax, U.P. & C.P., decided that income from the sale of forest trees growing on land naturally and without the intervention of human agency even if the land was assessed to land revenue was not agricultural income within the meaning of section ....
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....expenditure of skill and labour upon it, it cannot be said to be used for agricultural purposes within the meaning of the Income-tax Act. In the present case their Lordships agree with the High Court in thinking that there is no evidence which would justify the conclusion that this condition is satisfied." 68. It may be noted that the Privy Council also proceeded upon the footing that there was nothing to show that the assessee was carrying on any regular operations in forestry and these observations are patient of argument that if any regular operations in foresty had been carried on the land they might have made a difference to the result. Their Lordships also did not express any opinion on the question whether land can be said to be used for agricultural purposes within the section if it has been planted with trees and cultivated in the regular course of arboriculture. They were, however, definite in their opinion that unless there is some measure of cultivation of the land, some expenditure of skill and labour upon it, the land cannot be said to be used for agricultural purposes within the meaning of the Act. Agricultural operations are thus defined by them to be operatio....
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....ation of the same. The sal trees were generally sold off in blocks when about 5 years old. Annually blocks of about 1,000 acres were sold up. All the trees in the blocks sold up were cut down by the purchasers for sale as fuel and house posts. During the rainy season from the stumps of the trees cut down, new shoots came out which grew into mature trees in 15 years, to be cut down again. In order to prevent damage to the young shoots in the early stages of their growth the areas cut down were closely guarded for one year at least from the time when the block in question had been completely denuded of trees, in order to keep cattle and men off from the lands so that they may not damage the young growing shoots. In order to promote the growth of shoots, the ground was also kept free from undergrowth jungle. This was not cleared at the assessee's expense but the villagers were allowed to clear the grounds of the undergrowth and take the same away free of cost. The existing sal trees in the forests and the sal trees which had been sold off in 1350 B.S. had been grown in the same manner as described above. From the above facts it was clear that human care and skill had been ut....
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.... It was further observed : "If the view of the judicial Committee were to exclude all kinds of income from the category of agricultural income unless there was actual cultivation of the soil, reference to 'regular operations of forestry' would have been unnecessary. Not that there must always be 'some measure of cultivation of the land' and 'some expenditure of skill and labour upon it' but that the proof of either would be sufficient to bring the case within either clause (a) or (b) of section 2(1)(a) of the Act. 'Regular operations in forestry' do require expenditure of skill and labour upon the land on which the forest grows." 74. The Court, therefore, came to the conclusion that in the special circumstances as disclosed in the case, there were regular operations in forestry and the income derived from forests in question was agricultural income within the meaning of section 2(1)(a) of the Bengal Agricultural Income-tax Act, 1944. 75. Jyotirindra Narayan Sinha Choudhury v. State of Assam arose under the Assam Agricultural Income-tax Act, 1939, and the question for the consideration of the Court was whether the amounts realised by th....
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.... 77. After referring to a decision of the Calcutta High Court in Hedayet Ali v. Kamalanand Singh and Commissioner of Agricultural Income-tax v. Raja Jagadish Chandra Deo Dhabal Deb the Court observed : "The review of the authorities considered above leads to the conclusion that purpose within the meaning of the Assam Act can be agricultural even if its achievement does not involve actual cultivation of the soil. In the words of their Lordships of the Privy Council in the case of receipts from the sale of forest trees, the income would be agricultural if there is some expenditure of skill and labour upon it. Regular operations in forestry necessarily involve expenditure of skill and labour. Where, therefore, such operations take place, the income from the sale of trees in the forest would be within the ambit of agricultural income as defined in the Assam Act." 78. In Pratap Singh Balbeer Singh v. Commissioner of Income-tax, U.P., C.P. & Berar, however, the High Court of Allahabad struck a different note. The assessee there derived the income from the sale of forest trees growing on land naturally and spontaneously without the intervention of any human agency but carried....
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....labour and skill as to constitute them operations in agriculture. The sowing of seeds were "few and far between" and the normal process by which the forest grew again, after a part of it had been cut down, was by the growing out of off-shoots from the stumps left, the operations were therefore in the main only operations for the "maintenance, preservation, nursing and rearing", of the forest. It was urged before the High Court on behalf of the assessee that the exemption from agricultural income-tax determined in Commissioner of Agricultural Income-tax, West Bengal v. Raja Jagadish Chandra Deo Dhabal Deb covered the case and it was submitted that the facts here were if at all far stronger in favour of the assessee. The decision of the Privy Council in Raja Mustafa Ali Khan v. Commissioner of Income-tax, U.P., Ajmer, and Ajmer-Merwara, was considered and the Court observed at page 87 : "I do not think that when the Privy Council said that there must be 'some measure of cultivation on the land, some expenditure of skill and labour upon it', their Lordships intended to say that the expenditure of skill and labour must always be in the form of cultivation. The word ....
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....5 feet, that there was cutting down of the trees and jungles which fell within that circle leaving sufficient space for growth and that forest conservancy staff was maintained to look after the forest. The Court construed the observations of the Privy Council in Raja Mustafa Ali Khan's case to mean that "in order to show that an income is agricultural income within the meaning of the definition, it must be found that the land itself was cultivated and that there was some expenditure of skill and labour upon it." The Court held that even conceding that the two conditions laid down by the Privy Council in Raja Mustafa Ali Khan's case were to be read as alternative conditions, there was no material on which to hold that that there was any expenditure of skill and labour upon the land and therefore the income from the sale of forest trees was not agricultural income. 83. In Jyotikana Choudhurani v. Commissioner of Income-tax, Assam which is also under appeal before us in Civil Appeals Nos. 57 to 62, a Special Bench of the Assam High Court considered whether income derived by the assessees from the sale of trees of spontaneous growth where there was no planting or sowing o....
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....d may be said to be used for agricultural purposes. The test requires that there must be some measure of cultivation of the land ; some expenditure of skill and labour upon it. It has however to be borne in mind that their Lordships when stating the facts did point out that the case had proceeded on the footing that there was nothing to show that the assessee was carrying on any regular operations in forestry. This statement has an important bearing on the interpretation of the test. Such operations in forestry are carried on in forests. They involve the use of human labour and skill on the soil. They aim at stimulating growth and could easily satisfy the requirements of the test evolved by their Lordships. Due importance therefore has to be given to the absence of operations in forestry in Raja Mustafa Ali Khan's case, when interpreting the test laid down therein. " 86. Vikram Deo Varma v. Commissioner of Income-tax, Bihar & Orissa, is the last case of this series. The assessee derived income from extensive forest areas in the impartible estate of which he was proprietor. Over several decades the whole of the forest area had been subjected by hill tribes to a process of "po....
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....of the Indian Income-tax Act. 87. Before parting with these cases it may be apposite here to note the following observations of Viswanatha Sastri, J., in Commissioner of Income-tax, Madras v. Sundara Mudaliar at page 277 : "In Commissioner of Agricultural Income-tax v. Raja Jagadish Chandra Deo it was held by a Division Bench of the Calcutta High Court that income derived from the sale of sal trees growing spontaneously in forests and not planted by man was 'agricultural' income within the meaning of section 2(1) of the Bengal Agricultural Income-tax Act. There was no digging or ploughing of the land nor planting of trees but there were 'operations in forestry' such as guarding the forest trees to keep away cattle and allowing leaves and undergrowth to be removed by people of the locality. There was no breaking up of the soil, no sowing or planting or watering or fencing. Whether the decision is correct or not can only be authoritatively declared by the Supreme Court of India. It seems to rest on an undue extension of the principle laid down by the Judicial Committee in Raja Mustafa Ali Khan's case, and goes much further than our decision in the pres....
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....as such ; and (ii) that the income should be derived from such land by agriculture or by one or the other of the operations described in clauses (ii) and (iii) of section 2(1)(b) of the Indian Income-tax Act. 91. It was at one time thought that the assessment of the land to land revenue in the taxable territories was intended to exempt the income derived from that land from liability for payment of income-tax altogether and that theory was based on the assumption that an assessee who was subject to payment of land revenue should not further be subjected to the payment of income-tax, because if he was so subjected he would be liable to pay double taxation. 92. It is interesting to note at this stage the genesis of the provision exempting agricultural income derived from the lands assessed to land revenue as understood by the Courts. Viswanatha Sastri, J., in this context observed in Commissioner of Income-tax, Madras v. Sundara Mudaliar at page 270 : "I shall briefly advert to the genesis of the provision exempting agricultural income derived from lands assessed to land revenue, as I consider that the subject-matter with which the legislature was dealing, and the fact....
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....nds, and therefore the exemption from income-tax was limited to agricultural income derived from assessed lands. Such is the reason for exemption from Income-tax of agricultural income." 93. Whatever may have been the genesis of the exemption of agricultural income from income-tax, the liability to pay land revenue or fixed peishkush under Regulation XXV of 1802 was not considered by Rankin, J., as a deterrent against the levy of income-tax in appropriate cases, even on certain classes of income derived from the permanently settled estates, if that was the clear intention of the legislature. The learned Judge observed in Emperor v. Probhat Chandra Barua : "Some reference was made at the bar to the practice of the Revenue Authorities since 1886 as regards fisheries in permanently settled estates, but there is no agreement as to what that practice--if there be a practice--has been. Assuming that it would have been open to us to place some degree of reliance upon an interpretation settled by practice as contemporanea expositio we are in fact without any such assistance." "Some reference was also made to what has been called a 'presumption against double taxati....
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....ense agriculture would be restricted only to cultivation of the land in the strict sense of the term meaning thereby, tilling of the land, sowing of the seeds, planting and similar operations on the land. They would be the basic operations and would require the expenditure of human skill and labour upon the land itself. There are however other operations which have got to be resorted to by the agriculturist and which are absolutely necessary for the purpose of effectively raising the produce from the land. They are operations to be performed after the produce sprouts from the land, e.g., weeding, digging the soil around the growth, removal of undesirable undergrowths and all operations which foster the growth and preserve the same not only from insects and pests but also from depradation from outside, tending, pruning, cutting, harvesting, and rendering the produce fit for the market. The latter would all be agricultural operations when taken in conjunction with the basic operations above described, and it would be futile to urge that they are not agricultural operations at all. But even though these subsequent operations may be assimilated to agricultural operations, when th....
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....considering the connotation of the term "agriculture" we have so far thought of cultivation of land in the wider sense as comprising within its scope the basic as well as the subsequent operations described above, regardless of the nature of the products raised on the land. These products may be grain or vegetables or fruits which are necessary for the sustenance of human beings including plantations and groves, or grass or pasture for consumption of beasts or articles of luxury such as betel, coffee, tea, spices, tobacco etc., or commercial crops like cotton, flax, jute, hemp, indigo etc. All these are products raised from the land and the term "agriculture" cannot be confined merely to the production of grain and food products for human beings and beasts as was sought to be done by Bhashvam Ayyangar, J., in Murugesa Chetti v. Chinnathambi Gounden & Others or Sadasiva Ayyar, J., in Raja of Venkatagiri v. Ayyappa Reddi but must be understood as comprising all the products of the land which have some utility either for consumption or for trade and commerce and would also include forest products such as timber, sal and piyasal trees, Casuarina plantations, tendu leaves, horra nuts....
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.... received by him which necessarily means the produce raised on the land either by himself or by the actual cultivator of the land who pays such rent-in-kind to him. If produce raised or received by the cultivator or receiver of rent-in-kind is thus made the subject-matter of clauses (ii) and (iii) in section 2(1)(b) of the Act, the term "agriculture" used in clause (i) of section 2(1)(b) must also be similarly restricted to the performance of the basic operations on the land and there is no scope for reading the term "agriculture" in the still wider sense indicated above. 101. If the term "agriculture" is thus understood as comprising within its scope the basic as well as subsequent operations in the process of agriculture and the raising on the land of products which have some utility either for consumption or for trade and commerce, it will be seen that the term "agriculture" receives a wider interpretation both in regard to its operations as well as the results of the same. Nevertheless there is present all throughout the basic idea that there must be at the bottom of it cultivation of land in the sense of tilling of the land, sowing of the seeds, planting, and similar wor....