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Commissioner of Agricultural Income-Tax, West Bengal Versus Raja Jagadish Chandra Deo Dhabal Deb

Reference No. 1 of 1948 - Dated:- 29-1-1948 - Das And Mookerjee, JJ. JUDGMENT Mookerjee, J. This is a reference under Section 63(1) of the Bengal Agricultural Income-tax Act, 1944. For the assessment year 1944-45 the assessee submitted a return for the accounting period 1350 B.S. including therein various items of agricultural income. While going through the books of accounts the Income-tax Officer traced from the ledger, produced by the assessee, that receipts from forest by sale of Sal trees, .....

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me from forest in this particular case was not agricultural income, and therefore, not assessable under the Agricultural Income-tax Act. On an application by the Commissioner of Agricultural Income-tax this reference has been made for determining the question: "Whether on the facts and circumstances of the case, the sum of ₹ 90,220-1-0 derived from the sale of Sal trees in the forests of the assessee can be treated as agricultural income within the meaning of Section 2 of the Bengal A .....

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as such; (b) any income derived from such land by- (i) agriculture, or (ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rentin-kind to render the produce raised or received by him fit to be taken to market, or (iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in item (ii .....

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en to market." The word "agriculture" is not defined in this Act. Etymologically, the word is derived from agar-field, culture-cultivation, including harvesting, managing and farming. According to Murray in the Oxford Dictionary "agriculture" means "the science or art of cultivating soil including the allied pursuit of gathering the crop and rearing live-stock, tillage, husbandry, farming in the widest sense." The Webster's Dictionary meaning of "agric .....

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science that treats of the cultivation of the soil." In Corpus Juris the term "agriculture" has been defined to be the "art or science of cultivating the ground specially in fields of larger quantities including the preparation of the soil, the planting of seeds, 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." The term agricultur .....

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lish Acts, has been interpreted in decisions by the Courts in England but I would refrain from going into the grounds mentioned in those decisions as both the idea of agriculture and the scheme of taxation in that country are altogether different from those in India. It will, therefore, be necessary to consider the background of the use of this word in this particular Act. The definition of the term "agricultural income" in this Act, viz., Bengal Agricultural Income- tax Act, is in ter .....

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Section 311(2) of the Constitution Act taken along with Schedule 7 it will be noticed that Item 41 in List II read with Item 54, List I, excludes agricultural land and income from the ambit of the jurisdiction of the Central Legislature. The Indian Income-tax Act has, therefore, excluded items of agricultural income from being assessed to income-tax and the provincial Agricultural Income-tax Act has made the same liable to the provincial tax. In the first instance, the learned counsel refers to .....

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se in Lakshmi Daiji v. Com- missioner of Income-tax, Bihar and Orissa [1944] 12 I.T.R. 309; I.L.R. 23 Pat. 374, where the practice followed by and the interpretation accepted by the Department was referred to as being one of the grounds for inferring that the legislature had not made any alteration in any successive amending statutes as the legislature did not intend to depart from such previous interpretation by the Department. In the present case we are asked to take judicial notice of the exe .....

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on to interpret that particular provision of the statute. This question recently came up for consideration before the Judicial Committee in Commissioner of Income-tax, Bihar and Orissa v. Raja Bahadur Kamakhaya Narayan Singh [1948] 16 I.T.R. 325. The following observation by the Judicial Committee, in my opinion, concludes the question as raised:- "It was stated-and the statement was not disputed-that for a considerable period Income-tax authorities had not treated interest on rent in arrea .....

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to have adopted the definition in the sense in which the Income-tax authorities had understood and applied it. The observations of Lord Macnaghten in Pemsel's case[1891] A.C. 531, at p. 591, and of their Lordships in Burah's case [1877] I.L.R. 3 Cal. 63, were relied on. Their Lordships are unable to accept this contention for the reason that they are unable to draw from the facts brought to their attention the inference that the legislature had by the repetition of the debated phrase ado .....

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meaning has to be given to an exemption clause as regards a taxing statute. The charging section must always be interpreted strictly and unless a particular type of income is made taxable the revenue authorities cannot levy the tax. If there be any doubt the assessee is given the benefit of such doubt. There was a view that once a charging section makes a particular class of income assessable to tax if there be any provision introducing an exception to the general clause the onus lies on the as .....

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al Provident Society v. Inland Revenue Commissioners [1946] 1 All E.R. 528 C.A. This decision, though overruled on another point by the House of Lords in Inland Revenue Commissioners v. Australian Mutual Provident Society [1947] A.C. 605; 15 I.T.R. Suppl. 71, on the point now in question was not overruled. [Vide also Cadbury Bros., Ltd. v. Sinclair [1933] 18 Tax Cas. 157. See also Upper India Chamber of Commerce v. Commissioner of Income- tax, C.P. & U.P. [1947] 15 I.T.R. 263; A.I.R. 1948 Al .....

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P. & Ajmer-Merwara [1948] 16 I.T.R. 330 and on appeal from the decision in Raja Mustafa Ali Khan v. Commissioner of Income-tax, U.P. & C.P. [1945] 13 I.T.R. 98; A.I.R. 1945 Oudh 44. The question which was referred to the Chief Court of Oudh under Section 66(1) of the Income-tax Act was as follows:- "Whether income from the sale of forest trees growing on land naturally and without the intervention of human agency, even if the land is assessed to land revenue is agricultural income w .....

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assessee was carrying on any regular operations in forestry" and the jungle from which the trees had been cut was also stated to be "one of spontaneous growth." "Upon these facts the question is whether such income is [within Section 2(1)(a) of the Act] rent or revenue derived from land which satisfies two conditions, (a) that it is used for agricultural purposes, and (b) that it is 'either assessed to land revenue or etc., or alternatively (as, notwithstanding the form o .....

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n necessary to consider any other difficulty which may stand in the way of the assessee. His case fails if he does not prove that the land is 'used for agricultural purposes'. Upon this point their Lordships concur in the views which have been expressed not only in the Chief Court of Oudh but in the High Court of Madras [See Yuvarajah of Pithapuram v. Commissioner of Income-tax, Madras [1946] I.L.R. 1946 Mad. 745; 14 I.T.R. 92] and the High Court of Allahabad [See Benoy Ratan Banerji v. .....

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rd 'agriculture' in other statutes and (2) that, though it must always be difficult to draw the line, yet, unless there is some measure of cultivation of the land, some 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." The Judici .....

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ua non for bringing within the term agriculture has also been exploded. If there is actual tilling of the soil for producing the product, it is the unquestionable result of agricultural pursuit. It is quite evident that the view now expressed by the Judicial Committee about income from virgin and natural forests is in affirmance of the decisions of the different High Courts in India [Raja Ravu Venkata Mahipati Gangadhara Rama v. Commissioner of Income-tax, Madras ([1946] I.L.R. 1946 Mad. 745; 14 .....

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R. 433), Raja Pratap Bikram Shah v. Commissioner of Income-tax, U.P. and Berar ([1946] 14 I.T.R. 788), and Special Manager, Court of Wards, Majgawan Estate v. Commissioner of Income-tax, U.P. and C.P. ([1945] 13 I.T.R. 94)] Whether a particular forest is one of spontaneous growth or not has to be decided on one important consideration as indicated by the Judicial Committee in the unreported decision above referred to (Since reported at [1948] 16 I.T.R. 330), i.e., whether there has been "so .....

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i Naidu ([1931] I.L.R. 54 Mad. 900), Kadirvelsami Naicker v. Sultan Ahmed Badruddin [1947] A.I.R. 1947 Mad. 160, Raja Ravu Venkata Mahipati Gangadhara Rama v. Commissioner of Income-tax, Madras [1946] I.L.R. 1946 Mad 745; 14 I.T.R. 92, and In re Moolji Sicka & Co. [1939] 7 I.T.R. 493 On a careful analysis of the reasons given by the learned Judges in the various decisions referred to above it will be apparent that the facts of each particular case must be considered for determining whether t .....

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Act, and there are observations on the general questions, and though obiter indicate that the test is the extent of human agency or intervention. In the case of cardamoms cultivation "in the first place, the seeds are sown in beds where they germinate and are left to grow for six months. Then they are transplanted in another bed where they are left to grow for further six months; the third stage is the replanting of the young plants in the forest. They are permanently planted there as card .....

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tendu trees or shrubs for wrapping tobacco in manufacturing country. made cigarettes. A claim was put forward that the income from the sale of country-made cigarettes or biris was agricultural income inasmuch as the tendu leaves which form part of biris are agricultural products. It was found in that case that the tendu plant is entirely of wild growth and propagates itself by root suckers or self-sown seeds. It grows either in jungle or waste lands and is never planted through human agency. The .....

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rom the collection and preparation of tendu leaves so as to make them fit to be taken to market the tendu products by the pruning of tendu shrubs, was considered to be agricultural income. In this particular case there was definite proof of the cutting of the young plants for the appearance of new shoots and plucking of the leaves; the application of human intervention was clear and without such human intervention the purpose for which tendu leaves were used would not have been possible. Bearing .....

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st:- "I questioned the accountant of the estate who appeared before me and the following facts were ascertained about the forest in question. The forest consists mainly of Sal trees which are sold mainly for fuel, wood and posts for huts. The total area of forest of the appellant is 14,000 acres. For the proper cultivation of the forest a large number of officials including a forester, an assistant forester and guards and choukidars are maintained. The Sal trees are generally sold off in bl .....

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ck in question has 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 is also kept free from under growth of jungle. This is not cleared at the appellant's expense but the villagers are allowed to clear the ground of undergrowth and take the same away free of costs." These findings are accepted by the Tribunal. Mr. Khaitan, appearing on behalf of t .....

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g the early stages of the growth in each block, the area cut down are closely guarded by forest guards at least for one year from the time when the block in question is cut down thus keeping out both men and cattle off from the lands so that they may not damage the growing shoots by trampling and/or browsing as the case may be. (4) Final cutting at near about the 15 years forms an intelligent agricultural operation-season and date have to be intelligently fixed and by directing removal of the ol .....

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virgin forest or containing trees which grow spontaneously and naturally without any human intervention whatsoever. The principal question in this case is whether on the facts as stated above and on the authorities referred to, the sale proceeds of Sal trees from this particular forest may be considered to be agricultural income. Extent and character of human intervention as found in In re Moolji Sicka [1939] 7 I.T.R. 493 cannot be noticed in this case. There is no pruning of young plants for he .....

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tural. There was no cultivation of the land in this case, no case of planting of trees, but a regular operation in forestry. Under the system in force as introduced by the assessee for the use of particular plots on fixed and stated intervals and after one plot is denuded of the old trees, the new shoots appearing during the rains without any human intervention have to be properly guarded, which may be described as tantamount to tending. Mere guarding the forest area from poachers or against sur .....

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some significance though not of the same extent as "tending" at the initial stage when the shoots appear after clearing of each period of 15 years. The last operation which is alleged to relate to agricultural planning is a part of forestry for removal of trees of certain description only. This is using human knowledge and experience for the proper utilisation of the produce of the earth. On a careful consideration of the circumstances as disclosed in the findings arrived at by the Tr .....

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