TMI Blog1946 (9) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... phasise that we are not a Court of appeal and accordingly are not free to debate such questions as might seem to us to arise in the case, however important they may appear to be. We are only an advisory body which is not free to tender unsolicited advice. We can only advise on the questions referred and accordingly will have to confine our answers to the questions asked. We have certain other powers, and indeed it will be necessary to exercise them in one of the cases heard along with these (we shall deal separately with that), but these powers only enable us to send the matter back and compel a reference. Until that is done, we have no power to debate questions which have not been referred. This is clear from the Act, but the matter has been placed beyond controversy by their Lordships of the Privy Council in Commissioner of Income-tax, Bihar Orissa v. Kameshwar Singh of Darbhanga [1933] 12 Pat. 318, at p. 335; 1 I.T.R. 94, Rajendra Narayan v. Commissioner of Income-tax, Bihar Orissa [1940] 8 I.T.R. 495, Trustees Corporation (India), Ltd. v. Commissioner of Income-tax, Bombay [1930] 54 Bom. 437, at p. 445 and National Mutual Life Association of Australasia Ltd. v. Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at agriculture comes from ager, a field, and cultura, cultivation. This implies the use of human skill and labour; and that is exactly how the dictionaries define it. Webster, for instance, says that agriculture is the art of science of cultivating the ground, and includes in it the rearing and management of livestock, husbandry, farming, and so forth. Other dictionaries, including the Oxford English Dictionary, employ the same basic conception. Some include forestry in the term. It is to be observed, however, that the word used when forestry is included, is forestry and not forests. The distinction is important because when one turns to the definition of forestry in the dictionaries one finds that is also an art or a science. Thus, Webster says it is the art of farming or cultivating forests; the management of growing timber, and the Oxford English Dictionary says much the same thing. Therefore, throughout we find that the essence of agriculture, even when it is extended to include forestry, is the application of human skill and labour. Without that it can be neither an art nor a science. And that we feel must be the determining factor in this class of case. Turning nex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugesa Chetti v. Chinna Thambi Goundan ([1901] 24 Mad. 421), Chandrasekhara Bharathi v. Duraisami Naidu ([1931] 54 Mad. 900), Kesho Prasad v. Sheo Pargash Ojha ([1922] 44 All. 19), Kesho Prasad v. Sheo Pargash Ojha ([1924] 46 All. 831), Hiralal Ravchand v. Parbhulal Sakhidas ([1922] 46 Bom. 48, at p. 51), Kaju Mal v. Salig Ram ([1919] A.I.R. 1919 Lah. 222) and Imam Ali v. Priyawati Devi ([1938] I.L.R. 1938 Nag. 31). The other cases in this class, though dealing with special Acts, base the decision on general grounds and to that extent are more in point. But all they serve to show is that difference of opinion is possible, the meaning being extended in some cases and restricted in others. Thus, Panadai Pathan v. Ramasami Chetty ([1922] 45 Mad. 710) holds that the growing of casuarina trees for fuel is an agricultural purpose and Hiralal Ravchand v. Parbhulal Sakhidas ([1922] 46 Bom. 48) discards what we might term the human agency test and employs instead one which determines whether the income is derived from the produce of the land and not what is the actual quantum of labour bestowed on it. Of these two the former is largely based on considerations which the Federal Court state ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that income derived from pasturage was agricultural income but not that from fisheries or from land leased for stacking timber. The pasturage part of the decision would, at first sight, appear to offend the rule we have suggested but the point was not decided because it was not contested once the case reached the High Court (see page 527). But that apart, nearly every rule has its exceptions and the pasturing of cattle is so closely allied to agriculture that it has become to be considered part and parcel of it and the meaning of the term is now so well established that there is no longer room for doubt. That, however, does not apply to forests, or even to forestry, though we think it possible that the latter might fall within the scope of the definition. Commissioner of Income-tax, Madras v. Manavedan Tirumal- pad (54 Mad. 21) holds that income from unassessed forest land is not agricultural income and Province of Bihar v. Pratap Udai Nath Sahi Deo (20 Pat. 699, at p. 724; 9 I.T.R. 313) applies the same rule to uncultivated forest land, as also does Maharaja of Kapurthala v. Commissioner of Income-tax, Central and United Provinces (A.I.R. 1945 Oudh 35; 13 I.T.R. 74), Sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esses but also to be derived from agriculture or from land used for agricultural purposes shows that incomes from other types of land are not exempt even though they pay land revenue. And that of course is patent. Rents derived from bungalows on malik makbuza land in a town are already taxable. Nor indeed is there any reason why there should not be double taxation if the legislature chooses to impose it. That is also dealt with in the Oudh case. The argument is also met by what their Lordships of the Privy Council say in Probhatchandra Barua v. Emperor [1931] 58 Cal. 430, at p. 444. Their Lordships point out that in such cases the land revenue or cesses paid are deducted from the gross receipts because the tax is not levied on gross receipts but on income. In practice, therefore, there is no double taxation. It was also argued that this income is not taxable at all because Section 6 of the Act sets out the only sources of taxable income. It cannot fall under the head income from property because Section 9 defines that and there is no room for forest produce there. So also Section 10 sets out what is to constitute profits and gains of business, profession or vocation. That al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uree Netchiar v. Dorasinga Tevar [1875] 23 W.R. 314. The case is not in point but the observations are pertinent. At page 317 their Lordships say: It is obvious that an enactment which is intended to apply to all the Courts in India, and which is also a modern enactment, ought to receive the same construction in all those Courts, and that no inconsistent course of practice should be allowed to spring up in any of the presidencies ; and at page 320, unless, therefore, etc...............we must come to the absurd conclusion that the same words are to be interpreted by the High Court in one sense when it is exercising its original jurisdiction or sitting on an appeal from a decree made under that jurisdiction, and in a different sense when it is sitting on an appeal from a mofussil court; and further that the legislature has by the same form of words intended to make one law for the mofussil Courts, and another for those of the Presidency towns. Another branch of this argument had relation to a possible conflict between the Provincial and Federal Legislative Lists in the Constitution Act unless the matter was decided in the way contended for by the assessees. But the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd which is not merely a product of man's neglect or inaction except for the gathering in of the spoils. Not only must be labour to reap the harvest-that of course he must do, else there could be no income-but he must also labour to produce it. An attempt was also made to get us to take into consideration the previous practice of the department and the instructions embodied in the Income-tax Manual. This also is not permissible. It shows no more than that either certain officers of the department hold a certain view of the law, or that it was considered expedient at that time, for this reason or that, not to tax income of this kind. The Courts are here to interpret the law and what departmental officers thought is not relevant. The argument is doubtless founded on certain observations of Lord Halsbury in Commissioners for Special Purposes of Income Tax v. Pemsel ([1891] A.C. 531) at page 546 but Lord Macnaghten said in the same case at page 591 that he would prefer not to express an opinion on the point. Also a later House of Lords case, Pate v. Pate ([1915] A.C. 1100, at pp. 1107, 1108), brushed aside the continuous interpretation which the Supreme Court of Ceylon had place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se than as described above. Our answer to the question referred in this case is that the ₹ 10,835 derived from the sale of forest produce is not agricultural income and so is not exempt from taxation. Miscellaneous Civil Case No. 7 of 1945.-Here also the facts are agreed. The forest income is derived from a sale of timber which the assessee cuts into beams, logs, poles etc.; also from the sale of tendu leaves which are used in the manufacture of bidis. The finding regarding the nature of the forest is to be found in the Tribunal's appellate order and is given in these words:- It is impossible that all these forest trees or tendu shrubs could have been planted or reared by any process of agriculture, that is to say, by the cultivation of the soil. It may be that at some stage in their growth the trees required to be watered or watched. But the fact is that they had been standing upon the land for a number of years during which the soil has remained untouched. The evidence adduced by the assessee to show that he had planted the trees was disbelieved. In the circumstances, the burden being on the assessee to bring himself within the purview of the exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aneous Civil Case No. 91 of 1945. We now turn to points which are not common to all the cases. A question of interest arises in Miscellaneous Civil Case No. 63 of 1944, as also in Miscellaneous Civil Cases Nos. 8 and 85 of 1945. We will deal with that. The question has been posed in much the same language in all three cases except for the figure. It was (we quote from Miscellaneous Civil Case No. 85 of 1945):- Whether the sum of (Rs. 1,270) representing interest received by the assessee on the arrears of agricultural rents due to him from his tenants is agricultural income within the meaning of Section 2(1)(a) of the Income-tax Act? This matter has been recently decided by a Division Bench of this Court in Pratapmal Laxmichand, Firm v. Commissioner of Income- tax, U.P., C.P., Berar Miscellaneous Civil Case No. 34 of 1945. We do not feel free to differ from this decision though, had the matter been res integra, we might have taken another view. It was contended by the learned acting Advocate-General that the decision is distinguishable and that it is, in any event, wrong. The ground of distinction is said to be that the question posed there narrows the scope of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances, we hold, following Pratapmal Laxmichand, Firm v. Commissioner of Income-tax, U.P., C.P., and Berar Miscellaneous Civil Case No. 34 of 1945, that the interest in these three cases is exempt from taxation, it being agricultural income. Miscellaneous Civil Case No. 7 of 1945 raises another question. We are asked to decide whether a profit of ₹ 19,447 arising from the sale of forest produce, such as timber and tendu leaves, is a receipt of a capital nature and so exempt on that score. Their Lordships of the Privy Council point out in Kamakshya Narain Singh v. Commissioner of Income-tax, Bihar Orissa [1943] 22 Pat. 713, at p. 724; 11 I.T.R. 513, that whether a given receipt is capital receipt or income depends on circumstances, so that what is income in the hands of one man may be capital receipt in those of another. The facts here are admitted and are stated thus in the order of reference: But it was admitted before us that the assessee sells timber annually and derives the income in question and that there has been no reduction or loss of any capital asset, that is the forest land, by the timber being cut and sold. That places the matter, in princi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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