TMI Blog1968 (8) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-tax, therefore, this reference arises under section 66(1) and the question is : " Whether, on the facts and in the circumstances of the case, the two sums of Rs. 8,962 and Rs. 8,835 are agricultural income, exempt under section 4(3)(viii) ? " The assessee at the relevant time was a dealer in coconuts. He also took leases, the transactions have been so described, of coconut thopes from different parties. Some of the transactions were registered and the others were not, but supported by acknowledgments by the lessors. There was a third category of transaction, evident from the entries in the account books. The assessee paid a fixed annual sum and was allowed to enjoy the fruits of the coconut trees for a stipulated period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... swami Vanniar v. Smt. S. Mahalakshmi Ammal as being in support of its view. It was alive to the fact that there must be some relationship between the produce sold and the land from which it was got as to entitle the assessee to claim it as produce from agriculture. The claim for exemption has been rested on section 2(1)(a) which defines "agricultural income" so far as is relevant to this case. This provision says that, in the Act, unless there is anything repugnant in the subject or context, " agricultural income " means 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 Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect. The very case cited for the assessee, Venugopala Pillai v. Thirunavukkarasu, brings out the distinction between a lease of land and lease of immovable property for agricultural purposes. While land may be immovable property the converse is not necessarily true. That was a case of an agreement of lease in respect of toddy yield from coconut trees, and the question the court was called upon to decide was whether it was a lease or licence in the context of the requisite of a proper notice to quit under section 106 of the Transfer of Property Act. The officiating Chief Justice and Yahya Ali J. held that it was not a lease of land because they found on a plain reading of the document that the rights created thereunder were only (i) the righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, his learned counsel urges that, if the transaction is regarded as a lease of immovable property for agricultural purposes, inasmuch as thereby an interest in immovable property is created, it should follow that the income is from the land used for agricultural purposes. But, as we said, there is a distinction between an interest in immovable property and an interest in land. Apart from that, the answer to the question under reference eventually would revolve round whether the income had been derived as agricultural income. The Privy Council in Commissioner of Income-tax v. Kamakshya Narayan Singh explained the scope of the word "derived" in section 2(1)(a) : " The word 'derived' is not a term of art. Its use in the definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Act, but only when it was received by the actual cultivator, whether as owner or lessee of the land on which the trees grow. On the facts there, the court made the observation : " No interest in the land has been transferred here and it would appear that what the petitioner has obtained is a mere licence to tap the trees and draw the juice. If that be so, the mere fact that he has to water the trees (and that is not proved to be the case) shows only that the watering is one of the conditions of his licence and not an act whereby the agricultural produce has been raised, for that was raised before he obtained his licence. " The actual decision, therefore, in that case was that the income was not agricultural in character. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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