TMI Blog1960 (9) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the expression not before the words agricultural income in the question formulated is inappropriate, as it would seem to cast the burden on the revenue to prove that the disputed amount is not agricultural income, while in law the onus of proving the right to exemption from tax is upon the assessee. There is some force in the two submissions made by the learned counsel. But the objections are really as to the form of the question and not to the substance. We are satisfied that the question formulated by the Appellate Tribunal substantially reflects the controversy between the assessee and the Revenue. The assessee is the owner of certain lands in Ramaniahpeta village, Kakinada taluk. On those lands there are a large number of mango, palmyra, cashew-nut, coconut and other fruit-bearing trees which were yielding income. In 1943 the lands were requisitioned for military purposes in accordance with the relevant rules made under the Defence of India Act (XXXV of 1939). In cases of such requisitioned properties certain rules made in 1943 called Payment of Compensation and Arbitration Rules. By reason of the requisition of these lands for military purposes by the Government u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the amount received by the assessee from the Defence Ministry as compensation for the occupation of his lands by the military authorities was not agricultural within the meaning of section 2(1)(a) or section 2(1)(b)(i) of the Indian Income-tax Act, and in that view it rejected the appeal. The assessee applied to the Tribunal to refer the question of the liability of the amount in question to income-tax to the High Court under section 66(1) of the Indian Income-tax Act. Hence the reference. Section 4(3) of the Act provides: Any income, profits, or gains falling within the following classes shall not be included in the total income of the person receiving them. Among such classes of income is agricultural income [clause (iii) of section 4(3)]. 'Agricultural income' is defined in section 2(1) of the Indian Income-tax Act and the relevant portions thereof are as follows: 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 incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dlord is bound to deliver possession of the building to the authorised officer, the terms of the tenancy being such as might be agreed upon between the landlord and the tenant, and in the absence of such agreement the terms may be determined by the courts referred to in section 3(5) of the Act. Apart from the inappropriateness implicit in trying to construe the terms of one enactment with reference to the terms of another, we find that under the Madras Buildings (Lease and Rent Control) Act, 1949, there is a provision expressly providing for a tenancy. Neither in the rules made under the Defence of India Act, under which the assessee's lands have been requisitioned, nor under the provisions of the Requisitioned Land (Continuance of Powers) Act, 1947, is there in terms any reference to the creation of the jural relationship of landlord and tenant between the requisitioning authority and the person from whom the lands have been so requisitioned. Mr. Sastry has invited our attention to a decision of the Calcutta High court in Province of Bengal v. Board of Trustees A.I.R. 1946 Cal. 416. In that case a large block of land vested in the Improvement Board of Trustees, Calcutta, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smuch as the income in dispute is referable to the use and occupation of the assessee's lands it would be revenue. But, whether it is rent or revenue, the language of section 2(1)(a) requires that it must be derived from the land which is used for agricultural purposes. In other words, the income whether one calls it rent or revenue must be derived as a result of and in consequence of agricultural operations. It is argued by the learned counsel that the words is used for agricultural purposes are merely descriptive of the nature of the land from which the income is derived and that they do not mean or imply that the income must be derived by the actual carrying on of agriultural operations. We are unable to agree. Apart from the language of the section there is a long and decisive current of legal authority pressing against the contention advanced by Mr. Sastry. In Raja Mustafa Ali Khan v. Commissioner of Income-tax [1958] 16 I.T.R. 330, 335 their Lordships if the Privy Council observed: ........whether exemption is sought under section 2(1)(a) or section 2(1)(b), the primary condition must be satisfied that the land in question is used for agricultural purposes; the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in regard to any land that land can be said to have been used for 'agricultural purposes' and the income derived therefrom can be said to be 'agricultural income' derived from the land by agriculture. From the aforesaid decision it will be clear that an income derived from the land will be agricultural income within the meaning of the Act, only if the income is derived from the land by agriculture, in other words, as a direct consequence of the carrying on of actual agricultural operations. In view of this high authority it is unnecessary to refer to other decisions. The fact that the income is indirectly referable to the land will not invest it with the character of agricultural income. In Gopal Saran v. Commissioner of Income-tax [1935] 3 I.T.R. 237 it was held by the Privy Council that an annuity payable under a covenant but charged on land is not agricultural income within the meaning of section 2(1)(a) of the Act and would not partake of the character of rent or revenue derived from the land. In Raja Mustafa Ali Khan v. Commissioner of Income-tax [1948] 16 I.T.R. 330, referred to already. their Lordships of the Privy Council had to consider whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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