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TMI Blog1953 (8) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... of a zamindary property known as Mechpara Estate. Applicant No. 4, Jyotirindra Narayana Sinha Chowdhury, who is since dead and in whose place his heirs have been substituted before this Court, was a co-sharer in another zamindary called Parbatjoar Estate, whereas the applicants in items Nos. 5 to 7, Sourindra Narayan Chowdhury, and applicant No. 8, Sulochona Chowdhurani, are co-sharers in both the abovementioned estates, Mechpara and Parbatjoar. These estates are admittedly in the Goalpara District of the State of Assam and are assessed to land revenue. Both these estates have vast areas of forest tracts, considerable portions of which are covered mainly with sal trees. The trees in the forest are of spontaneous growth or, as the assessee puts it, of spontaneous germination, and there was no planting or sowing or employment of any human agency for the purpose of tilling the soil. It has, however, not been disputed in the statement submitted to us that the assessee maintained establishments to look after the maintenance, preservation and regeneration of the forest. Some of the activities carried on by the assessees with reference to the forest may be summarised thus: (a) reservat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal rightly concedes: "that in respect of the same assessees it has been held by the High Court of Assam in an agricultural income-tax case of the appellants for the same year that the income derived by the appellants was agricultural income"; yet it sought to distinguish the case on grounds which, I am afraid, do not justify the endeavour. It is suggested that the main question in that case was whether the amount received was capital receipt or revenue receipt; and once the point had been decided against the assessees, it was evidently to their advantage to confess judgment on the other point. It must be remembered, however, that both the points had been referred to the Court for its decision. The Court, therefore, had to give its decision on the point whether the income received from the sale of the forest trees was agricultural income and liable to be taxed as such. In fact, the judgment, on the face of it, shows that the point has been exhaustively dealt with and many of the relevant decisions reviewed. This Court having pronounced its decision on the question, I feel bound to observe, with due deference to the members, that it was the clear duty of the Tribunal to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns; but this group insists that human labour and skill must be spent in operations upon the land itself, e.g., in the shape of sowing, planting, hoeing, watering, manuring, etc. This group rules out of consideration forests of natural growth where the trees or saplings germinate spontaneously and grow of their own accord, even though human skill and labour may be employed to rear and tend those trees and to aid the growth of the off-shoots standing on the land. Pruning the leaves or guarding the shrubs, off-shoots and saplings from early destruction or lopping off the branches of trees and removal of obnoxious weeds and creepers, though actually conducive to the development and growth of the trees standing on the land, will not, according to this group of cases, constitute "agriculture" because they are not operations on the soil strictly so called. This group is, as I have said, an improvement upon the former group; but it rests upon the artificial distinction between the soil and the produce of the soil, between the land and the trees standing on the land, ignoring, if I may say so, that many of the operations on the produce or the trees essentially react upon the soil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uot;agricultural income" substantially in the same terms, except for the numbering of the clauses. Clause (c) of Section 2(1) of the Income-tax Act is not included in the definition of "agricultural income" in the Agricultural Income-tax Act, and an explanation has been added in regard to agricultural income derived from cultivation of tea. It would be obvious from the above definition that in order that an income may be characterised as "agricultural income", it should be income derived (i) by "agriculture" and (ii) "from land" which is used for "agricultural purposes" and is assessed to land revenue or subject to some local rate assessed and collected by Government. The land on which the forests in question stand is undoubtedly assessed to land revenue. The only question is: whether the lands are used for "agricultural purposes" and the income is derived from such land by "agriculture". "Agriculture" in its derivative and etymological sense, means"ager" : land, and "cultura": cultivation, that is, cultivation of land. Mr. Iyengar, therefore, contends that the meaning of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e trampled upon by men and animals or the young shoots may be browsed and grazed or they may be burnt by fire, etc. Many other causes may combine to retard their growth and development. Where, therefore, human agency intervenes on a planned and scientific scale to do away with causes which interfere with the growth of the trees or tend to destroy them and adopts processes which enable the land to yield its utmost nutriment to the trees standing thereon, there is undoubtedly the utilisation of human skill and labour for the production and growth of the trees. In other words, human skill and labour is harnessed to the "raising" or rearing of the "trees on the land"; and so long as the trees stand on the land, this human skill and labour is in essence utilised over the land and the produce of the land itself. The adoption of these processes would naturally constitute agricultural process. They prepare, as it were, the soil for the growth of the trees and for their getting conserved nutriment from the land. The land has, therefore, been utilised for agricultural purposes. I am thus driven to the necessity of attributing to the word "agriculture" a wide se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the note of warning sounded by the Judicial Committee, in the well-known case of Mustafa Ali Khan v. Commissioner of Income-tax [1948] 16 I.T.R. 330 If the test which I have given above is adopted, it will be found that much of the conflict of views can be satisfactorily explained and understood. I will now turn to some of the important cases cited on the point and deal with them chronologically. Mr. Iyenger places in the vanguard of his submissions a casual re- mark in this connection made by Rankin, J., (as he then was) in Emperor v. Probhat Chandra Barua [1924] I.L.R. 15 Cal. 504, which decision ultimately travailed up to the Privy Council. The remark of that eminent Judge is certainly entitled to weight; but the point in that case was entirely different. The learned Judge observed that he was not "convinced that the legislature, if it intended to include even 'forestry', would have been content to say 'agriculture', but in the circumstances, I desire to prejudice this question no further than by an expression of this doubt". Page, J., the other learned Judge, refrained from expressing any view upon "that vexed question" because in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s had been employed to protect the property, but the trees appeared to have grown naturally in the jungles without the intervention of human agency. It was held that the income from the sale of the trees could not be regarded as agricultural income. As Harries, C.J., tersely put it : "In fact, it was the absence of cultivation that permitted the area to grow into a jungle". Although the words "cultivation of the soil" have been used, I doubt very much if the learned Judge actually purported to decide that actual tilling of the soil was the sine qua non of an agricultural process. The essential finding was that the trees grew without any intervention of human agency and there was no evidence to show that anything had been done by the assessee for the growth and development of the trees. Mere employment of forest guards to prevent people from cutting and destroying trees could not in any sense of the term amount to an agricultural process, and the decision is justified on its own facts. The decision in Maharaja of Kapurthala v. Commissioner of Incometax [1945] 16 I.T.R. 74, is another instance of the kind mentioned above. This decision is of some importance beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the kind which was wholly of spontaneous growth was agricultural income at all. I shall now refer to another decision which appears to have received the approval of the Judicial Committee in Mustafa Ali Khan's case [1948] 16 I.T.R. 330. In my opinion, this decision is very important, Yuvarajah of Pithapuram v. Commissioner of Income-tax, Madras [1946] 14 I.T.R. 92. There also the trees in the forest and the non-forest areas had grown wild and no agricultural operations had been carried on in any of the areas. The Court was called upon to decide whether the income derived from forests of spontaneous growth and from trees which had grown wild in non-forest areas, represents agricultural income within the meaning of the definition given in Section 2(1) of the Income-tax Act. Their Lordships held that the word "agriculture" implied something which was "achieved with the aid of human agency", and income derived from trees which have grown wild could not legitimately be described as agricultural income. This case does not say that the cultivation or tillage of the soil was an essential factor; all that it considered necessary was the aid of human agency, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he etymological and dictionary meaning of the term "agriculture", and they found on a review of the definitions, "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 art nor a science. And that, we feel, must be the determining factor in this class of case". This dictum as to the "essence of agriculture" in relation to "forestry" is sufficiently explicit. The learned Judges here did not insist that tillage or opening up of the soil was the sine qua non of agricultural operations in this class of cases. All that they emphasised was the application of human skill and labour, of course, in the produce of the soil. At another place, however, in the judgment, the Judges underlined the word "tilled" as bringing out the distinction which they sought to draw between agricultural and non-agricultural purposes. This, however, they did with reference to a passage occurring in a decision of the Federal Court in Meghraj v. Alla Rakhia [1942] F.C.R. 53. The passage in question refers to the meaning of the term "agricultural land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome should be derived from some activity which necessitates the employment of human skill and labour and 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". This evidently brings us back to the test which the learned Judges had originally laid down and which, in my opinion, is the main and essential test. In dealing with the facts found in the individual cases, the learned Judges have emphasised the same aspect of the case. I have already quoted what they meant by the word "cultivation" with reference to one of the cases. In another case, they similarly found that nothing had been done "in the nature of preparing land for the growth of the trees therein", while yet in a third case they pointed out that "Active human agency in tilling the soil was not employed nor any process which is commonly understood as an agricultural process was used in the production of the forest trees which grow spontaneously and which were sold from time to time to clear off the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operation nor any agricultural purpose involved in selling timber from a forest of spontaneous growth without any human intervention. But their Lordships made a very significant observation as to the essential test in determining the meaning of the word "agriculture". It is better to quote the dictum to extenso as it has provided the text for subsequent judicial pronouncements. It runs thus:- "It is sufficient for the purpose of the present appeal to say (1) that in their opinion, no assistance is to be got from the meaning ascribed to the word 'agriculture' in other statues 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". The contention of Mr. Iyengar is that the expression "some expenditure of skill and labour upon it" is used merely in further clarification of the expression "cultivation of the land" and, therefore, all that their Lordships held was that cultivation of the land was necessary. I do not conced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aning of the Agricultural Income-tax Act. They held that "the view that tilling of the soil was the sine qua non for bringing within the term agriculture, has also been exploded". If there is actual tilling of the soil for production it is the unquestionable result of human pursuit. In the case in question, the different processes adopted by the assessee on the findings could be summarised in the following terms; (1) parcelling out the total area of 14,000 acres of land into about 100 acres each, the trees on each parcel being sold when they were about 15 years old; (2) to prevent damage to the new shoots in the early stages of their growth and to give new vigour to the new shoots and saplings, the ground was kept free from undergrowth of jungle and by removal of leaves; (3) during the early stages of the growth in each block, the area cut down was closely guarded by forest guards at least for one year from the time when the block in question was cut down, thus keeping out both men and cattle from the lands, so that they might not damage the growing shoots by trampling or browsing; and (4) final cutting near about the 15th year when the trees were sufficiently matured fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and quality of the soil. Even after the expiry of the period of 3 or 5 years, the trees, in order to facilitate their growth, require pruning. The trees are usually cut 8 or 10 years after they are transplanted. It was, therefore, undoubted on those facts that the process involved both tillage of the solid and the employment of labour and skill to grow the plantation. So, in any view of the matter, the process was agricultural process. The trees, when cut and sold, were meant merely for purposes of timber and fuel. The learned Judges pointed out that it was common knowledge that other commercial crops, such as tobacco, hemp, cotton and so on are grown on the land and though such crops have no food value, nobody could suggest that the purpose to which the land in which such crops are raised is not "agricultural purpose". If there is actual tilling of the soil either by plough or by spade or by expending human energy, and plantation is raised, there is no reason for not considering it as agriculture. Satyanarayana Rao, J., appears to have followed and approved of the above decision of the Calcutta High Court in the case of Raja Jagadish Chandra Deo [1949] 17 I.T.R. 426. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Judge also implies that in the case of forests of spontaneous growth, there could be no agricultural operation at all. Frankly speaking, I do not see why it cannot be so. Can there be no utilisation of human skill and labour to aid the growth of such trees or saplings which germinate spontaneously so as to make the land on which they stand yield its utmost succour and nourishment to them and make them grow to their full girth and height? Processes of that kind cannot be discounted and, in fact, have been found to exist in various cases. Viswanatha Sastri, J., agreed to the answers proposed to the relevant questions by the other learned Judge. It is, therefore, obvious that his doubts regarding the soundness of the Calcutta decision in Raja Jagadish Chandra Deo's case [1949] 17 I.T.R. 426 are largely out of the way. In Jyotirindra Narayan v. State of Assam [1951] 19 I.T.R. 379 a Division Bench of this Court, to which I have already referred earlier, the judgment thereof being delivered by my brother Ram Labhaya, the same view prevailed. The decision refer to the very same point which is involved in the present proceedings and to which the petitioners were parties. It was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department has, however, drawn our attention to a recent decision of the Allahabad High Court in Pratap Singh Balbeer Singh v. Commissioner of Income-tax [1952] 22 I.T.R. 1. similar question arose there. The Tribunal had, in submitting the statement of the case, tacitly accepted the assessee's claim that though the trees were originally of spontaneous growth, the applicant had applied human labour and skill for the regeneration and preservation of the trees growing on the land. There was, however, no evidence that there had been every any cultivation of the soil on which the trees stood or that human labour and skill had been expended toward the planting or growing of the trees and according to the finding, it appears that the utilisation of human skill and labour lay in pruning and weeding, besides the protection of the trees. It was held that these processes, by themselves, do not constitute "agriculture" or regular operation in "forestry". Their Lordships appear to have thought that the operation must be on the soil of the land itself; human skill and labour should be used for the purpose of ploughing the soil, manuring it, planting the trees or some sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rations were being undertaken for their growth, preservation and regeneration. The decision, therefore, in my opinion, does not help the learned counsel. It is a decision on its own facts. So far as the principle is concerned, it does take the view that agricultural process may not consist merely in tillage or cultivation of the soil, but may take different other shapes. After we had heard arguments and reserved judgment in the case, the Advocate-General, Mr. Lahiri, who represented the assessee before us, intimated that there had been a recent decision of the Calcutta High Court also on the point and that we should defer judgment until we had considered the case. Copies of this judgment, which was delivered on 27th May, 1953, in Raja Benoy Kumar v. Commissioner of Income-tax, West Bengal [1953] 24 I.T.R. 70, were produced before us, and we heard the parties again in the matter. The question arose on a reference under Section 66(1) of the Income-tax Act. The facts showed that the forest was of spontaneous growth-not a forest grown by the aid of human skill and labour-and that it had been in existence for about 150 years. The area was occasionally parcelled out for the purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correctness of the decision on the facts. So fact as the case before them was concerned the held that the operations found to exist in the case amounted to agricultural operations. They were necessary for the maintenance and upkeep of a forest of spontaneous growth and if such a forest be subjected to operations of frostier, which involve agriculture, then the fact that originally the trees had grown spontaneously would not prevent the income from being agriculture income. They held that the operation of weeding, cutting of channels to help the flow of rain-water and showing of seeds after digging up the soil of denuded area, was agriculture operation. The process of weeding, it as held, was an operation carried out on the land in order to free the soil of its burden and make it a better feeder of the trees or plants preserved or grown. This case supports my own viewpoint and the principles stated by me. The Tribunal, as also the learned counsel for the Department, have laid stores upon the word "raised" occurring in some of the clauses of the definition section of "agriculture" in the income-tax law. In my opinion, the word carries no other significance excep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts. They involve in assignees expenditure of human skill and labour on the land itself to rear the tress in these forests. As such, the operations are, in my opinion, "agricultural operations" and the land on which the forts stand is being used for "agricultural prepossess". The only concluding, therefore, which inevitably follow from the above discussing it that the income so earned by the assessee is agricultural income under the Income-tax Act and is entitled to exemption on that account. The answer to the question submitted to us must, therefore, be in the affirmative. I do not propose to number this judgment with a long discussion to two other subsidiary points which Mr. Iyengar has urged. The point that "forest" is placed under a separate hear as distinguished from "agriculture" in the Lists of the Constitution and, as such, they are entirely distinct subjects having nothing to do with each, other, has been answered more that once in previous decisions. The division of subjects in the Legislative lists, though independent in one sense, is not always scientific and the subject arranged under different heads have been very often found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to about ₹ 14,000. The Tribunal stated that it was admitted by the assessees that the trees in the forest were of spontaneous growth. The representative of the assesses explained that what was meant was spontaneous germination, not growth. There was admittedly no plantation sowing, nor was any human agency employed for the purpose of tilling the soil. It was further found that "from all that was done to the trees, it was clear that the tress sold were those standing for a considerable number of years during which the soil had remained untouched. In the production of the income, the applicants made no contribution by way of cultivation." The Tribunal further pointed out that the case of the assessees was that there had been employment of human skill and labour in the forest. It was asserted that apart from the fact of the maintenance of a forest establishment, human skill and labour had been employed for the maintenance, preservation, nursing, improving and rearing of the forest, so that the quality and the general condition of the forest might be improved. The Tribunal held that whatever the assessees had done with regard to the maintenance and improvement of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion "agricultural income" as used in the Assam Agricultural Income-tax Act. The Tribunal declined to follow that decision on the ground that the controversy in that case manly centered round the question as to whether the receipts from the sale of sal threes were capital or revenue. When the receipts were held to be covered by the expression "revenue" it was profitable for the assessees to agree to being taxed under the Agricultural Income-tax Act of the State rather than under the Indian Income-tax Act and they did not seriously contend on that income was not agricultural. In the absence of any real contest on that point the Tribunal declined to place "too much importance on the judgment of this Court". The judgment in Jyotirindra Narayan v. State of Assam( disposed of 9 references (Nos. 1 to 9 of 1949). Of these applicant in the first 6 references were co-sharers in Parbatjoar or Mechpara Estate or in both. Five out to six reference related to 3 years so assessment, i.e., 1946-47, 1947-48 and 1948-49. Reference No. 1 covered 2 years of namely 1947-48 and 1948-49. The assessments covered by the present reference also deal with the same 3 years of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes or income derived from such land by agriculture. The land must be assessed revenue or subject to a local rate. Both the clauses of Section 2(1) require that the land should be used for agricultural purposes. It has, therefore, to be found out when land can be said to be used for agricultural purpose. This takes us to the meaning of the word "agriculture". This controversy centers round the sense in which the expression "agriculture" is used in the Income-tax Act. The word "agriculture" has not been defined. It should bear its ordinary meaning. So far there is no dispute. The question is what is its ordinary meaning. A reference to dictionaries and other standard works would be one way of ascertaining its ordinary meaning. Mr. Iyengar, however, is distrustful of these dictionaries. He has referred us to page 151, para. 2 of "Craies on Statute Law" where the proposition stated is that ordinary dictionaries are somewhat delusive guides in the construction of statutory terms. But this is not all that Craies has to say on the subject. On the next page, he has clarified the position. It is conceded there that reference to better diction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notation to mere cultivation. Mr. Iyengar has contended with very great vigour that the key to the solution of the difficulty lies in the expression "agricultural income" itself. It has got intrinsic evidence pointing to the intention of the legislature. He has claimed that this intrinsic evidence has escaped the notice of all the Court which from time to time had the occasion to determine the significance and the import of the expression "agriculture" as used in Section 2(1) of the Income-tax Act. The originality of the contention is undeniable. The point is that both in clauses (ii) and (iii) of Section 2(1) (b) of the Act, the word "cultivator" and "the produce raised" are used. These words also occur in Rule 23 of the Income-tax Rules farmed under Section 59 of the Act. He argues that the these words indicated that the legislature had the primary or the etymological meaning of the expression "agriculture" in mind. These words, according to him, would control and govern the interpretation of the expression "agricultural purposes" used in Section 2(1)(a) and the expression "agriculture" used in Section 2(1)(b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Iyengar has next contended that entries 14 and 19 List II of Schedule VII of the Constitution of Indian would go to show that forests are not included in the expression "agriculture ". His argument is that if forest were covered by the expression "agriculture" entry No. 19 would be redundant. Redundancy may not be attributed to the Constituent Assembly accordant to the will recognised canons of interpretation of the construction of statutes, but is spite of this I do not think this contentions is sound. Entry No. 46, of List II relates to taxes on agricultural income. Agricultural income for the purposes of the Constitution has the same definition as it has for the purpose of enactment's relating to income-tax: vide Article 366(1) of the Constitution. Agricultural Income having been defined for the purposes of the Constitution would control the interpretation of the expression "forests". Any income which according to the definition can be described as agricultural income even though derived from the sale of forest tress would be taxable as agricultural income. Forests from which such income is made would be treated as land used for agricultur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slative lists are not always set out with scientific precision, and instances will be found of overlapping, it is clear that a legislature empowered to legislate on a subject included within a particular list will sustain its power whether it is derived from one entry or from more than one entry. In some cases, however, it becomes important to determine under which entry the legislature derives its power to pass to particular Act, for example, when legislation under one entry is subject to certain restrictions from which it would be free if it came under another entry. This contingency arose in that case. The learned Judges held that the provisions of entry No. 36 in List II limited the extent of entry No. 18 in the same list and the meaning to be attached to the latter entry was held to be such as to exclude from its scope what was mentioned in the former. We are not concerned with these entries in the present case. Besides it may be said that entry No. 46 which deals with agricultural income limits the extent of the meaning of entry No. 19 relating to forests which appears in the same list. The word "agriculture" in entry No. 46 and in entry No. 14 ought not to have an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting and fostering growth are excluded from the ambit of the expression "agriculture" or "agricultural purposes". Mr. Iyengar has addressed us at great length on the distinctive character of the forests. He has referred us to the provisions of the Indian Forests Act and also to some passages from Baker's Principles of Sylviculture. He has also pointed out that we have separate arrangements for education in subjects pertaining to forests. The idea was to show that forests and forestry were distinct subjects and in their popular sense, they were quite different from "agriculture". All this, however, is compatible with the expressions "agriculture" and "agricultural income" having been used both in the Constitution and in the Income-tax Act in a wider sense. Nature forests of spontaneous growth which have grown not by employment of human labour and skill by inaction on man's part would not be included in the expression "agriculture", but such forests or plantations where trees at one time grew spontaneously but which are utilised for growing timber by means of operations of forestry would constitute land used for ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income-tax from 1867 onwards. Before 1935 when the Central Legislature could levy a tax on agricultural income, the Income-tax Acts passed by the Central Legislature from time to time exempted from income-tax the agricultural income of lands assessed to land revenue. It seems that the legislature regarded as inequitable the burdening of that income again with liability to taxation under the Income-tax Act. It is only income from land that is assessed to land revenue that can enjoy the exemption. The wider meaning given to agricultural purpose when land is assessed to land revenue would be in consonance with the intention and the object of the legislature. The etymological meaning of the expression "agriculture" has been considerably extended in common parlance. "The element of human effort in the process of cultivation may vary from the art of mowing and ploughing to the art of spray-watering or pipetting of chemical solutions, not necessarily related to land or field. It may extend from the production or promotion or preservation of the giant lords of the forest to the raising or tending of the delicate mimosa. It would include horticulture, arboriculture and syl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck a dissentient note. He did not favour the idea of including in the definition of agriculture the planting of timber or firewood trees as they stand on the land for a considerable number of years. He thought that inclution of such plantations in the terms "agriculture" was opposed to to its very idea. But this case was under the Estates Land Act and the learned Judge was influenced to a very considerable extent by the provisions and the policy of the Act in holding that casuarina plantation was not an agricultural purpose and that a person who held the land for that purpose was not a ryot within the meaning of the Estate Land Act. In spite of this fact the correctness of the general observations has not gone unchallenged. In Secretary to the Chief Commissioner of Income-tax, Madras v. Zamindar of Singampatti [1922] 45 Mad. 518, it was observed that the word agriculture, which is sometimes used in the narrow sense of art or science of cultivating the ground, is also used in a much wider sense so as to include "forestry" according to Webster. The decision of their Lordships of the Privy Council in Mustafa Ali Khan v. Commissioner of Income-tax [1948] 16 I.T.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that remained was how to determine whether land was used for agricultural purposes. Their Lordships' observations are that:-"The question seems not yet to have been decided 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, and upon this question their Lordships express no opinion. It is sufficient for the purpose of the present appeal to say (1) that in their opinion no assistance is to be got from the meaning ascribed to the word "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". Since the finding in the case was that the income had been derived from the sale of trees growing on land naturally and without the intervention of human agency, it was enough for the disposal of the case to hold that the land was not used for agricultural purposes inasmuch as there was no cultivation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Assam [1951] 19 I.T.R. 397. The judgment was delivered by me. My view was that "some measure of cultivation of land" had been placed on a par with "some expenditure of skill and labour on it". If either of the two conditions existed, the land could be said to have been used for agricultural purposes. "Tillage or actual cultivation was not an essential pre-requisite of agriculture in its wider implication". The same interpretation was placed on the observations of their Lordships of the Privy Council in Commissioner of Income-tax v. Sundara Mudaliar [1950] 18 I.T.R. 259 a decision of Division Bench of the Madras High Court. Satyanarayana Rao, J., observed that the recent decision of the Privy Council in Raja Mustafa Ali Khan v. Commissioner of Income-tax [1948] 16 I.T.R. 330 had to some extent paved the way to evolve a clear definition of the expression. In his connection he referred to the interpretation placed on the test in Raja Jagadish Chandra Deo's case [1949] 17 I.T.R. 426 with approval. Viswanatha Sastri, J., observed on page 275 that "it has now been held by the Judicial Committee that the word 'agriculture' involves some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land. The learned Chief Justice agreed with the view that tillage was not necessary to constitute agriculture. But this is the first case since the decision of Raja Mustafa Ali Khan's case(5) in which emphasis has been shifted in express terms from the employment of human labour and skill to its employment on the land as distinguished from its employment on the growths such as trees or plants growing on the land. This is an improvement on the formula evolved in Raja Mustafa Ali Khan's case(5). Their Lordships did state no doubt that the employment of human labour and skill has to be on the soil. This is natural. Operations in forestry are carried on in the forests and therefore they are on the soil, even though all processes which form part of these operations may not necessarily involve direct human contact with the soil. None the less the operations as a whole would be regarded as on the soil. Their Lordships when laying down that the employment of human labour and skill has to be on the soil, did not have this aspect of the question in mind. The undisputed facts before them were that the jungle was of spontaneous growth. There was no intervention of human agency in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R. 74, the second question was whether the income from the sale of forest trees of spontaneous growth growing on land which is assessed to land revenue is agricultural income within the meaning of Section 2(1)(a) of the Income-tax Act. It is clear from the words in which the question is formulated that the receipts were from the sale of forest trees of spontaneous growth. The answer on the simple statement of facts was that income from the sale of trees was not agricultural. The question whether when trees were grown and cut by the owner of the land according to the strict botanical principles was agriculture or not, was left open. The learned Judges made this clear in the following terms:- "But it is not necessary for us to determine in this case whether, when trees are so grown (viz., according to strict botanical principles), the land is being used for agricultural purposes, because admittedly the trees under consideration were of spontaneous growth." The assertion of the agent of the estate that there was "maintenance, preservation, nursing, improving and rearing of the forest and there was regular planning for the improvement of the quality and the general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the test no assistance can be derived from the case of Maharaja of Kapurthala [1945] 13 I.T.R. 74. The decision must be taken to be limited to the facts of the case. But if it contains any observations which militate against the view taken by their Lordships of the Privy Council, to that extent its authority must be held to have been shaken by the decision of their Lordships of the Privy Council. In Beohar Singh Raghubir Singh v. Commissioner of Income-tax [1948] 16 I.T.R. 433 a positive approach has been made to the question as to whether "forestry" is included within the expression "agriculture". It was held (vide paragraph 23) that whatever else may be necessary it was "essential that the income should be derived from some activity which necessitates the employment of human skill and labour and which is not merely a product of man's neglect or inaction except for the gathering in of the spoils. Not only must he labour to reap the harvest...but he must also labour to produce it." Agriculture was described as the art or science of cultivating the ground. It was held to include forestry as distinguished from forests. The essence of agriculture, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lture". He did not go into the matter fully nor did he give any considered decision. Apart from this expression of doubt and the observations of Reilly, J., there is no decision which lays down definitely anything contrary to the test evolved in Raja Mustafa Ali Khan's case [1948] 16 I.T.R. 330. The doubts of Rankin, J., and the observations of Reilly, J., have all lost their importance by reason of the test laid down by their Lordships of the Privy Council. After the decision of their Lordships of the Privy Council the question whether if the trees were planted on the land and cultivated in the regular course of arboriculture, the land could be said to be used for agricultural purposes arose for decision in Commissioner of Income-tax v. Sundara Mudaliar [1950] 18 I.T.R. 259. The question referred was whether income derived from casuarina plantations is agricultural income within the meaning of Section 2(1) of the Income-tax Act. It was undisputed that in order to raise casuarina plantation it was necessary to prepare the soil, raise seedings, cultivate the land and plant them. The question was whether planting of such trees and their cultivation was an agricultural purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r produce of the land like cotton, wheat, etc. His conclusion was that irrespective of the nature of the produce or product of the land, whatever is grown on land aided by human labour and effort, whatever does not grow wild or spontaneously on the soil without human labour or effort, would be an agricultural product and the process of producing it would be "agriculture" within the meaning of Section 2 of the Income- tax Act. In Pratap Singh Balbeer Singh v. Commissioner of Income-tax [1952] 22 I.T.R. 1 also income was derived from the sale of forest tress. It was assumed in that case that the expression "agricultural purposes" would include forests where some operations on the soil were carried on, where skill and labour is used for the purpose of ploughing the soil, manuring it, plating the trees or some other similar processes. Mere weeding care and preservation of trees which grow spontaneously, however were not considered as agricultural operations on the soil. What amount of labour and skill must be employed for converting the land into land used for agricultural purposes is a question on which the decision does not lay down any definite rule of general a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income-tax v. Sundara Mudaliar [1950] 18 I.T.R. 259. It is also applicable to forests of spontaneous growth where human labour and skill is employed on the soil for aiding, stimulating or fostering growth of trees. My learned brother Deka, J., had observed that:- "Their Lordships expressed nowhere the view that forest operations or regular operations in forestry would come within the scope of 'agriculture' for the purpose of the Income-tax Act and this omission though tentatively seems to be given in the head note in Raja Mustafa Ali Khan v. Commissioner of Income-tax does not really arise from the text of the JUDGMENT." What my learned brother appears to have meant is that the head note in Raja Mustafa Ali Khan v. Commissioner of Income-tax [1948] 16 I.T.R. 330 was misleading and their Lordships did not express the view that regular operations in forestry would convert forest into land used for agricultural purposes. With great respect to my learned brother I feel that the basis of the Privy Council decision was that the forest was of spontaneous growth and there were no regular operations of forestry in it. The positive and the negative parts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was admittedly no tilling of the soil or sowing of seeds or grafting or watering. In Mahendralal v. Commissioner of Income-tax, C.P. and Berar, Nagpur [1949] 17 I.T.R. 454, Hidayatullah, J., held that in the test laid down by their Lordships of the Privy Council, the expenditure of skill and labour need not necessarily be connected with the cultivation of land. He emphasised that their Lordships had nowhere stated that expenditure of skill and labour upon the land must be in cultivating it. He was of the view that if the product grows naturally and the agriculturist does nothing more than trim the place and put a thorn fencing, there was some expenditure of skill and labour upon the land. It was not necessary that the expenditure of labour and skill should be in the direction of cultivation. The words "agricultural purposes" mean, according to him, something more than mere agriculture and cannot be taken to be an equivalent of cultivation though agriculture implies something which is achieved with the aid of human agency. In Commissioner of Income-tax v. Sundara Mudaliar [1950] 18 I.T.R. 259 "agriculture" was held to connote the raising of useful or valuable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowth was meant is made part of the statement of the case, though it is emphasized that the trees stood for a considerable number of years in the forests and during this period the soil remained untouched. The assessees' case that there had been employment of human labour and skill with respect to these forests is also incorporated in the statement. According to the assessees skill and labour were being employed for the maintenance, preservation, nursing, improving and rearing of the forest in order that the quality and the general condition of the forest might be improved. The processes to which recourse was being had in the forests are also detailed in paragraph 6 of the statement. The issue before the Appellate Tribunal was stated in paragraph 8 and it was whether agricultural income in Section 2(1) of the Income-tax Act referred to agriculture in its wider sense, so as to include income derived from the forests. The Tribunal answered this question on the basis that such operations in forestry on which the assessee relied were being carried on notwithstanding the absence of details as to expenditure in the account books. The question was what meaning the expression "a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing in that case have not been proved by the assessees in these cases. That decision was not followed as it was given in a case under the Assam Agricultural Income- tax Act to which the Income-tax Department was not a party. Its viewpoint was not before the Court and it was to the advantage of the assessee to get assessed under that Act. Without disputing the facts on which the decision in Jyotirindra Narayan v. State of Assam was based, therefore, the Tribunal has presented its view of the matter. It is also the view of the taxing authorities. Mr. Iyengar has therefore urged that the decisions in Jyotirindra Narayan v. State of Assam [1951] 19 I.T.R. 379 and Commissioner of Agricultural Income-tax, West Bengal v. Raja Jagadish Chandra Deo Dhabal Deb [1949] 17 I.T.R. 426 require reconsideration as they give a very extended meaning to the expression "agriculture" which in his view must be limited to the actual cultivation of the soil as held by the Income-tax Appellate Tribunal. In this case though there is no planting or sowing, or any tilling of the soil, still human labour and skill were employed for the maintenance, preservation, nursing, improving and rearing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds will be necessary. That is how the Government protect their forests. Employment of forest guards is a substitute for fencing in forests where fresh growth is fostered and aided by human agency. Operations of blocks of forests by rotation, marking trees fit for felling and cutting the trees of certain age and at a certain height from the ground, leaving the stump to grow again into a tree serve the same purpose as pruning in the case of tendu leaves. Creeper and climber cutting, thinning and removal of diseased and unsound trees, clearing the jungle of debris and of useless undergrowth are processes which in forests take the place of weeding. Allowing grazing at a certain time of the year is also a part of the process of clearing the forests. The grass hinders the growth of trees sought to be fostered or aided in their growth. Burning of the undergrowth is believed to fertilize the soil. Maintenance of fire-lines is a special need of the forests. Forest fires are a common phenomenon. Preservation of mother trees and closure of all forests to men and cattle during the rainy season (Baisak to Aswin) correspond to planting or sowing in agriculture taken in its limited sense. No pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him is that there should be some expenditure of human skill and attention in certain operations which are employed for raising useful products from the soil. This test is even wider in scope than that laid down by their Lordships of the Privy Council. Chakravartti, C.J., also considered employment of human labour and skill on the soil as distinguished from its employment on the growths on the soil as satisfying the essential requirements of agriculture. Seen in the light of these tests the income derived from the sale of sal trees in Raja Jagadish Chandra Deo's case [1949] 17 I.T.R. 426 could not be said to be income derived from the sale of trees of spontaneous growth. It was in no sense the result of inaction. It was the result of human effort expended on the soil. The regular removal of undergrowth by third parties with the permission of the assessees was a process similar to weeding. There were other processes also employing the use of human labour and skill on the soil. In any case the operations in the present case include processes which involved to a substantial and impressive extent employment of human labour and skill on the soil. If regular operations in forestr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. It was for this reason that one consolidated reference was made covering all the assessments of all the assessees. The Commissioner in his reply to the demand for a reference pointed out (vide Exhibit E at page 98) that Jyotirindra Narayan Sinha Choudhury had put in only one application though three appeals were involved and therefore it was a point for consideration whether her applicant in the circumstances of the case had any right to claim a reference in respect of more than one appeal of his choice. Mr. Iyengar urges that since only one fee has been paid, it is open to Jyotirindra Narayan Sinha Chowdhury to have the reference limited to only one of his appeals. He has in support of his contention relied on Calcutta Insurance Ltd. v. Commissioner of Income-tax [1952] 21 I.T.R. 404, and Commissioner of Income-tax, Madras v. Mothey Ganga Raju. In Calcutta Insurance Ltd. v. Commissioner of Income-tax [1952] 21 I.T.R. 404, the position was that appeals for there different assessment years were heard together and one consolidated order was passed. Against that order the applicant filed one application for reference and deposited one fee of ₹ 100. At the hearing of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine to force Jyotirindra Narayan Sinha Choudhury to select one year for the purposes of this reference. Mr. Lahiri has contended that the decision reported in Jyotirindra Narayan v. State of Assam [1951] 19 I.T.R. 379 is binding on the Special Bench as the Special Bench is no more than a larger Division Bench. He urges that if one Division Bench differs from another Division Bench on a question of law or usage having the force of law, the case must be referred to a Full Bench. I am not quite sure if it would be necessary to adopt the course suggested by him in case this Bench or a majority of the Judges composing it differ from the previous decision of this Court. But it is clear that so far as this Court is concerned a reference to a Full Bench in the way suggested by Mr. Lahiri will not result in any practical advantage. For, the Full Bench again will consist of the same Judges who are members of the Special Bench. It will be a reference by this Bench to itself for all practical purposes unless the decision of the case is held up till the appointment of a fourth Judge--a contingency the occurrence of which is extremely remote. In these circumstances this Special Bench may if it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21, Yuvarajah of Pithapuram v. Commissioner of Income-tax [1946] 14 I.T.R. 92, Maharaja of Kapurthala v. Commissioner of Income-tax, Central and United Provinces [1945] 13 I.T.R. 74, Kamakshya Narain Singh v. Commissioner of Income-tax, Bihar and Orissa [146] 14 I.T.R. 673, Commissioner of Agricultural Income-tax, West Bengal v. Raja Jagadish Chandra Deo Dhabal Deb [1949] 17 I.T.R. 426, Maharajadhiraja of Darbhanga v. Commissioner of Agricultural Income-tax, west Bengal [1952] 21 I.T.R. 258, Raja Mustafa Ali Khan v. Commissioner of Income-tax [1948] 16 I.T.R. 330, Benoy Ratan Banerjee v. Commissioner of Income-tax [1947] 16 I.T.R. 330, Province of Bihar v. Maharaja Pratap Udai Nath [1941] 9 I.T.R. 313, Beohar Singh Raghubir Singh v. Commissioner of Income-tax [1948] 16 I.T.R. 433, Pratap Singh Balbeer Singh v. Commissioner of Income-tax [1952] 22 I.T.R. 1, and it was in keeping with this line of decisions that this Court held in Jyotirindra Narayan v. State of Assam Assam [1951] 19 I.T.R. 379, that the receipts from the sale of the sal trees were revenue receipts of the proprietors and in answer to the point No. 2 under reference it was held that the amounts so received were to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Department though not a party thereto. But I am prepared to discuss the points under reference for its own sake. It is admitted that the definition of "agricultural income" is identical both for the purpose of the Assam Agricultural Income-tax Act and the Indian Income-tax Act. The point in dispute has to be decided on the facts given in the statements of the case and I reproduce below the three relevant paragraphs, they being paragraphs 5, 6 and 7:- "5. It was admitted that the trees in the forest were of spontaneous growth (which is now stated by the representative of the assessees that it meant of spontaneous germination), there was no planting or sowing nor were any human agency employed for the purpose of tilling the soil. From all that was done to the trees, it was clear that the trees sold were those standing for a considerable number of years during which the soil had remained untouched. In the production of the income, the applicants made no contribution by way of cultivation. 6. The applicants' case, however, was that there had been employment of human skill and labour with respect to the forests. Apart from the facts of the maintenance of a for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turally and without the intervention of human agency is not agricultural income within the meaning of Section 2(1)(a) of the Indian Income-tax Act. This is the view held by the Allahabad High Court in Benoy Ratan Banerji's case [1947] 15 I.T.R. 98, by the Madras High Court in Yuvarajah of Pithapuram's case [1946] 14 I.T.R. 92 and in Manavedan Tirumulpad's case [1930] 54 Mad. 21, by the Oudh Chief Court in Maharaja of Kapurthala's case [1945] 13 I.T.R. 74 and in Nawab Nawazish Ali Khan v. Commissioner of Income-tax, C.P. & U.P. [1946] 46 I.T.R. 356, and this view had the seal of approval of the Privy Council not only in Maharaja of Kapurthala's case but also independently in Raja Mustafa Ali Khan v. Commission of income tax [1948] 16 I.T.R. 330, which also was an appeal from the decision of the Chief Court of Oudh in an income-tax reference case. This was also the view held by the Punjab and Patna High Court (refer to Province of Bihar v. Maharaja Pratap Udai Nath [1941] 9 I.T.R. 313) and they were also placed before the Judicial Committee in course of the argument in Mustafa Ali Khan's case [1948] 16 I.T.R. 330. It was held by the Judicial Committee in Musta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "operations in forestry" within the terms "agriculture" as given in the Income-tax Act and that "some expenditure of skill and labour" by itself was enough to constitute agriculture and that it had no relation to cultivation of the land or investment in the shape of labour and skill on the soil for the production of the article from which the income arises. There are recent Calcutta High Court decisions doubting the correctness of the view held in Jagadish Chandra's case [1949] 17 I.T.R. 426 and the latest pronouncement is that of Chakravartti, C.J., sitting with Lahiri, J., in Raja Benoy Kumar v. Commissioner of Income-tax, West Bengal [1953] 24 I.T.R. 70, a certified copy of which was placed before us, the judgment being delivered on 27th May, 1953. In Commissioner of Income-tax v. Sundara Mudaliar [1950] 18 I.T.R. 259 Viswanatha Sastri, J., towards the conclusion of his judgment discusses Jagadish Chandra's case [1949] 17 I.T.R. 426 and while doubting its authority, says that:- "It seems to rest on an undue extension of the principle laid down by the Judicial Committee in Mustafa Ali Khan's case. [1948] 16 I.T.R. 330" In J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned Judges deciding that case considered that extensive operations in forestry if employed made the income from forest produce an agricultural income--a view to which I cannot subscribe. We have to confine ourselves, so far as facts are concerned, to the statement of the case. What is claimed to have been done to the trees in the present case (vide paragraph 6 of the statement) does not amount to an "operation in forestry" assuming it comes within the scope of agriculture. The trees are admittedly of spontaneous growth, not only in matters of germination alone but no treatment is done to the trees, neither pruning, weeding, nor planting, nor fencing. All that is claimed to have been done is for preservation of the forest which may be said to be "conservation" as observed in Maharaja of Kapurthala's case [1945] 13 I.T.R. 74. In a recent decision of the Allahabad High Court, Pratap Singh Balbeer Singh v. Commissioner of Income-tax [1952] 22 I.T.R. 1, Malick, C.J., and Bhargava, J., have come to the decision that what their Lordships held in Mustafa Ali Khan's case [1948] 16 I.T.R. 330 was that the expenditure of skill and labour must be upon the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulture" might have a wider implication than cultivation, as it is commonly understood, or something more than tillage, but it must have some relation to the growth or improvement of the plants by some sort of operation (involving expenditure of skill and labour) in relation to the earth or the soil on which the plants grow. In Moolji Sicka & Co., In re [1939] 7 I.T.R. 493, Derbyshire, C.J., considers pruning to be an operation on the shrubs in relation to the earth helping to grow more leaves on the tendu plants, and directs that so much of the items ......is to be deemed agricultural income......as the assessee can show to be profit derived from......tendu eaves produced by the pruning of the tendu shrubs". Here, nothing is shown as to what was the addition to the natural growth of the trees of spontaneous growth on virgin soil assuming the claims of the assessees to be correct, due to the investment of human labour and skill. The subject was dealt with by the Income-tax Appellate Tribunal and in paragraph 6 of its judgment, we find that Mechpara Estate showed expenses on forest establishment including temporary hands at ₹ 15,000 a year, the gross receipts being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be whittled down by importing limitations not imported by the legislature. These are propositions sufficiently familiar and need no special examination. His further contention was that the onus was on the Income-tax Department to show that the assessee is not entitled to the exemption. This contention, however, cannot be accepted as will appear from the decision of the Privy Council in Raja Mustafa Ali Khan's case [1948] 16 I.T.R. 330. Mr. Iyengar tried hard to show that forestry cannot come within agriculture and he drew our attention to the Constitution of India and the 1935 Government of India Act and to the schedules thereto. But for the purpose of this case, we need not examine those contentions, the simple point for investigation being whether the land was used for agricultural purpose which, in my decision, was not, even giving full credit for the assertions made by the assessees. Here selling timber in blocks of forests or the mature trees therein was a pure business deal for the assessees--a money earning operation--and it had nothing to do with the art or science of forestry, regular or otherwise, nor of agriculture-in spite of all that they might urge in their l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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