TMI Blog1953 (8) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... echpara 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) reservation of blocks of forest commonl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect 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 follow that authority, unless the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 or the land itself. Moreover, having examined the cases rath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses. 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 terms should be confined to actual cultivation or tillage of the soil, and agricultural purposes only connote such purposes. Where there is absence of tillage, or cultivation of the soil, or in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 sense so as to denote the raising of useful or valuable products which derive nutriment from the soil with the aid of human skill and labour; it would include horticulture, arboriculture and sylviculture where the growth of the trees is effected by the expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned 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 opinion income derived from sthaljat is not 'rent or revenue derived from land which is used for agricultural purposes', but is rent derived from land which is used for the purpose of enabling the timber contractors to carry on their trade or business . The above casual remark of Ran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 because of the fact that it appears to have been approved by the Judicial Committee on appeal as also in Mustafa Ali Khan's case [1948] 16 I.T.R. 330. In this case, the Income-tax Tribunal was of opinion that:- Even where trees are grown and cut by the owner of the land according to strict botanical princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in the absence of any such aid, the income derived from trees grown on natural forests was not considered liable to exemption under the income-tax law. It is important to remember that while in the Kapurthala case [1945] 13 I.T.R. 74 the learned Judges to some extent emphasised on the growth of the trees being fostered by tillage , in this case, to which Patanjali Sastri, J., (as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 occurring in a local Act which indeed could not be a satisfactory criterion for interpreting the words in the income-tax law. In any case, even the Punjab Chief Court, when dealing with the terms as used in the Punjab Act of 1905, held that it had been used in its widest sense to denote all land which is tilled, including land used as tea garden. The above remark was, however, followed by another observation of the learned Judges, wherein, after a reference to va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 overgrowth . (The italics are mine). This last quotation quite clearly shows that tillage was not the only test but that there could be any other process which is commonly understood as an agricultural process in the production of the forest trees. Judged in this light, the decision is quite consistent with the principles which I have indicated above. The above discussions disclose some conflict of views only on the negative aspect of the cases with which they dealt; but the decisions were apparently all agreed on the positive side, namely, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 concede that the word cultivation is necessarily synonymous with ploughing or tillage. But even if it were, I am unable to accept the argument for the simple reason that if precision is the hallmark of Privy Council decisions, as I think it is, then their Lordships would have stopped short with the phrase some measure of cultivation of the land . This, in itself, was quite expressive and no further expressions were needed to clarify the matter. Therefore, when they proceeded to add after a comma, the phrase some expenditure of skill and labour upon it , they evidently intended to signify something more than mere cultivation. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs, 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 for the purpose, the season and date being fixed appropriately. The application of human efforts according to the exigencies of this particular case was undoubtedly different from what would appear in Moolji Sicka's case [1391] 7 I.T.R. 493 or some of the other cases, but it was held that there could be no doubt that the assessee was carrying out regular operations in forestry tantamounting to tending of the trees in the forests. The utilisation of land for regular operations in forestry was essentially an agricultural operation in the wider sense of the terms, and in those circumstances it was held that although there may not have been any actual cultivation of the soil and the trees may have ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The learned Judge also quoted with approval the dictum of Spencer, J., and Ramesam, J., in Pavadai Pathan v. Ramasami Chetti [1922] I.L.R. 45 Mad. 710. The other learned Judge Viswanatha Sastri, J., however, appears to have doubted the correctness of the Calcutta judgment, though, on principle, he also agrees that the word agriculture in the Income-tax Act was used in a wide sense so as to denote the raising of useful and valuable products which derive nutriment from the soil with the aid of human skill and labour. In dealing with the case of Mustafa Ali Khan [1948] 16 I.T.R. 330 the learned Judge thought that the observations of the Privy Council in regard to arboriculture were made ex abundanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... handra 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 admitted in the case that the sal forests in question had to be nursed, preserved and developed at considerable expenses, and the sales were periodically effected. In other words, there was an exploitation of the forest in conformity with schemes to guard against the forest disappearing altogether. It was moreover found that the forest trees as they exist were the result of operations in forestry that were undertaken for their growth and regeneration. On those facts, it was held that the operations were agricultural operations and the income derived from the sale of the forest fell within the purview of the agricultural income-tax law. It was pointed out that the one feature which was essentially common to all the definitions of the term agriculture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abour 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 similar process in order to constitute agriculture . As they say, mere weeding, care and preservation of the trees which grow spontaneously are not operations on the soil of the land which are necessary to constitute the process a process of agriculture. They naturally fell back in support upon the earlier decision of there own Court in Benoy Rata Banerji v. Commissioner of Income-tax, C.P. Berar [1947] 15 I.T.R. 98. It is, however, significant to note their observation with reference to the judgment of the Privy Council in the aforesaid case of Raja Mustafa Ali Khan [1948] 16 I.T.R. 330 and, in particular, their interpretation of the relevant passage discussed by me earlier. They observed: It is quite clear that their Lordships were of the view that for, income to be agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of sale, but the trees sold were so cut as to leave stumps of about 6 inches in height, from which fresh off-shoots came out growing into big trees in course of time, and when the trees were cut down from a particular section of the forest, the area was guarded by forest guards in order to protect the off-shoots. Thus a considerable amount of human skill and labour was being employed year after year to keep the forest alive, as also for reviving the portions that got denuded as a result of destruction by cattle and other causes. The operations performed by the staff maintained by the assessee were pruning, weeding, feeling, clearing, cutting of channels to help the flow of rain-water, guarding the trees against pests and other destructive elements, and sowing seeds after digging up the soil in denuded areas. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants 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 except with reference to the growth and development of the produce for the land by artificial operation thorough human agency. Such operations can be equally turn of trees standing on the land, and if the growth of the trees has been aided by such operation, which, in effect, amount to tending the tress and nursing them on the soils, the word raised can with equal force be applied to such cases. I am more concerned with the principle then with the application thereof. It may be that in a particular case the principle may have been misapplied; but so long as it is clearly understood that the term agriculture as used in the income-tax law is not confined merely to titling the earth, or plaguing of the soil, but is a term of much wider amplitude and comprehends all the various processes under which human man skill and labour is har ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stinct 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 to overlap. The fact that the State Legislature has been given the power to legislate on tax on agriculture brings us back to the problem as to what the term agriculture denotes. Therefore, not much light can be thrown on the solution of the question by a reference to the arrangement in the Legislative Lists. The other point about the competency of the application in one of the cases is equally without substance. All the cases have been disposed of by one judgment of the Appellate Tribunal covering all the different erodes of assessment, and there is one consolidated reference before us. Therefore, the answer given by us will naturally govern all the cases in respect of the periods in question. The cases relied upon by the learned council are clearly distinguishable and a technically of this kind cannot be allowed to prevail when there is no substantial violation of the statute or rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 forests, their activity was not agricultural in character. It would appear that the statement of the assessees as to the manner of the employment of human labour and skills is not disputed. In a petition dated 22nd June, 1951, put in by the applicant in answer to the draft statement of the case a detailed description of the operations carried on in the forest was given. These operations were said to include- (a) reservation of blocks of forest commonly known as jhars and their operation in these blocks by rotation l(cyclic order); (b) marking of trees fit for felling; (c) creeper and climber cutting; (d) thinking and removal of diseased and unsound trees; (e) clearing of jungles and undergrowth; (f) allowing grazing from Kartik to Chaitra; (g) burning of undergrowths in March-April (which clears the jungles and fertilizes the soil); (h) protection from fire-maintenance of fire lines; (i) cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth. 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 assessment, viz., 1946-47, 1947-48 and 1948-49, though not in each case. The consolation arrived at in Jyotirindra Narayan v. State of Assam [1951] 19 I.T.R. 379 was based on facts which have been incorporated in the present consolidated statement of the case. The decision has no distinguishing features. No attempt has been made by the Tribunal or by Mr. Iyengar to distinguish it on facts. The soundness of the decision on the facts on which it is based is however challenged. Mr. Iyengar has very a by supported the view that the Tribunal decided to take. His argument, stated briefly, was that the expression agriculture in Section 2(1) of the Income-tax Act, though left undefined, has been used in its narrow sense in which it involves as its essential feature the cultivation of the soil. Without cultivation of the soil, there could be no agriculture in his view. From the trend of his argument, it appeared that he was using the word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 dictionaries does afford by definition or illustration some guide to the use of a terms in a statute. Observations of Lord Coleridge in R. v. Peters [1886] 16 Q.B.D. 636 at 641, are quoted in support of the proposition. These observations are as follows:- I am quite aware that dictionaries are not to be taken as authoritative exponents of the meanings of words used in Acts of Parliament, but it is a well-known rule of Courts of law that words should be taken to be used in their ordinary sense, and we are, therefore, sent for instruction to these books . It may thus be stated that whenever there is a conflict of opinion as to the ordinary import of an expression used in a statute, standard dictionaries may form useful guides in ascertaining the meaning of such an expression. They may not be completely discarded. The etymological meaning of the expression agriculture is no doubt limited. Ager means a field and cultura is cultivation Taken literally, it will have a very restricted meaning. It would simply cultivation of a field or an ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he argument is fallacious. The expression relied on occurs in Section 2(1)(b)(ii) and (iii). These clause extend the conception of agricultural income to income even in the hands or a receiver of rent in kind. They cannot be utilised for restricting the meaning of the expressions agriculture and agricultural purposes. These clause are meant to give the benefit of the exemption to persons who make what is admittedly agricultural produce fit to be taken to the market. They do not help in answering the question as to what is meat by the expression agriculture or agricultural purposes. They may be dealing with the income derived from the cultivation of soil, but they afford no justification for reading into the definition of agricultural income that it must be income derived from actual cultivation or tillage of the soil. Income derived by agriculture from land used for agricultural purposes is admittedly within the ambit of the expression agricultural income. If cultivation in any limited sense were an essential feature of agricultural, it would have been simpler to use the word cultivation instead of agricultural particularly when it is obvious that the word agric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the two entries are concerned but there is no danger of any conflict as both agricultural income and forests fall in List II of the Seventh Schedule. In regard to all these matters, the legislature of the State has exclusive powers to make laws. In State of Bombay v. Narottamdas Jethabhai [1951] S.C.R. 51 Das J., held that the different topics in the same legislative list should not be read as exclusive of one another. As there can be no question of conflict between the two items in the same list, there is no warrant for restricting the statutory meaning given to one for the reason that the same subject-matter might in some aspect come within the purview of the other. On the strength of observations of their Lordships of the Federal Court in United Provinces v. Mt. Atiqa Begum [1940] F.C.R. 110, it may be said that there is not need for giving the expression agricultural as restricted meaning on the ground that some process which may legitimately be regarded as agricultural is covered by the expression forests which is the subject matter of a separate entry in the same list. The subject dealt with in the three legislative lists are not always set out with scientifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l scope and effect. Seen in this light the Allahabad decision is of no assistance to Mr. Iyengar. In United Provinces v. Mt. Atiqa Begum [1940] F.C.R. 110 relied on by Mr. Lahiri it was held by their Lordships of the Federal Court that:- None of the items in the lists (Lists II and III of Schedule VII of the Government of India Act, 1935) is to be read in a narrow or restricted sense. Each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in its. These observations will apply to the interpretation of matters enumerated in the three lists of Schedule VII of the Constitution of India. The decision would justify giving an extended meaning to the expression agriculture . In Meghraj v. Allah Rakhia [1942] F.C.R. 53 also, their Lordships of the Federal Court observed that no reason had been suggested by counsel for the appellant why agricultural land in entry No. 21 of List II of Schedule VII should be limited to what has been described in the case as the narrower meaning of the expression. On the same basis it may be urged with great force that there is no reason why a restricted me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral income has been expressly exempted from taxation under Section 4(3)(viii) of the Income-tax Act. It is a well recognized principles of the construction of statutes that where exemption from taxation is conferred by statute, the provision has to be interpreted liberally and in favour of the assessee, but without doing any violence to the language used. Viswanatha Sastri, J., held in Commissioner of Income-tax v. Sundara Mudaliar [1950] 18 I.T.R. 259 that:- exemption from tax granted by a statute should be given full scope and amplitude and should not be whittled down by importing limitations not inserted by the legislature . The same view prevailed in Commissioner of Agricultural Income- tax, West Bengal v. Raja Jagadish Chandra Deo Dhabal Deb [1949] 17 I.T.R. 426 where it has been held that the present day view (in England and in India) seems to be that where an exemption is conferred by statute, the clause has to be interpreted liberally in favour of the assessee but it must always be without any violence to the language used. A liberal interpretation of the provision thus is justified. There is no justification for reading into definition what is not contained ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... occurring in Legislative List in Schedule II (Government of India Act, 1935), that in the context in which it had been used it must receive the widest meaning. In Murugesa Chetti v. Chinnathambi Goundan [1901] 24 Mad. 421 it has held that a lease for raising a betel garden was a lease for agricultural purpose. Shepherd, J., held that the term agriculture was capable of being applied to tillage of the soil in the widest sense and after considering the context in which the expression agricultural purposes is used in the Transfer of Property Act (in Sections 37, 106 and 108), he could not say that it was intended to limit its denotation in any way. In Pavadai Pathan v. Ramaswami Chetti [1922] 45 Mad. 710 it was held that the lease of land for growing casuarina trees was a lease for agricultural purpose within the meaning of Section 117 of the Transfer of Property Act. Spencer, J., expressed his view in the following terms:- In my opinion agriculture connotes the raising of useful or valuable products which derive nutriment from the soil with the aid of human skill and labour; and thus it will include horticulture, arboriculture and sylviculture in all cases where the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red from the form of the question that income was derived from the sale of trees described as forest trees growing on land naturally and the case had throughout proceeded on the footing that there was nothing to show that the assessee was carrying on any regular operations in forestry and that the jungle from which the trees had been cut and sold was of spontaneous growth. It was held that the primary condition which had to be satisfied was that the land in question was used for agricultural purposes. The was necessary for both the clauses (a) and (b) of sub- section (1) of Section 2. The case of an assessee claiming exemption would fail if land was not utilised for agricultural purposes. On this point, their Lordships concurred with the views which had been expressed in the Chief Court of Oudh, in the High Court of Madras in Yuvarajah of Pithapuram v. Commissioner of Income-tax [1946] 14 I.T.R. 92, in the High Court of Allahabad in Benoy Ratan Banerji v. Commissioner of Income-tax [1947] 15 I.T.R. 98 and elsewhere in India. Mr. Iyengar has argued that the one case that their Lordships had in mind when they referred to the other High Courts was Beohar Singh Raghubir Singh v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to be borne in mind that their Lordships when stating the facts did point out that the case had proceeded on the footing that there was nothing to show that the assessee was carrying on any regular operations in forestry. This statement has an important bearing the interpretation of the test. Such operations in forestry are carried on in forests. They involve the use of human labour and skill on the soil. They aim at stimulating growth and could easily satisfy the requirements of the test evolved by their Lordships. Due importance therefore has to be given to the absence of operations in forestry in Raja Mustafa Ali's case [1948] 16 I.T.R. 330 when interpreting the test laid down therein. In Commissioner of Agricultural Income-tax, West Bengal v. Raja Jagadish Chandra Deo Dhabal Deb [1949] 17 I.T.R. 426 the test laid down by their Lordships of the Privy Council in Mustafa Ali Khan v. Commissioner of Income-tax [1948] 16 I.T.R. 330 was interpreted in the following terms:- It is, therefore, incontrovertible that income from a virgin forest or forest of spontaneous growth is not agricultural income. The view that tilling of the soil was the since qua non for bringing with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Balbeer Singh v. Commissioner of Income-tax [1952] 22 I.T.R. 1 also the learned Judges placed exactly the same interpretation on the dictum of their Lordships of the Privy Council. They observed on page 10 as follows:- It is quite clear that their Lordships were of the view that, for income to be agricultural income, the essential element that must exist is that there should be 'some measure of cultivation of the land' or 'some expenditure of skill and labour upon it.' In Mahendralal v. Commissioner of Income-tax, C.P. Berar, Nagpur [1949] 17 I.T.R. 454, Bose A.C.J., (as he then was) held that tilling or cultivation of the ground was only one aspect of agriculture. The other was the rearing and the management of the live-stock. Hidayatullah, J., disposed of the case on a difference of opinion between Bose, A.C.J., and Mudholkar, J., and held that in the test laid down by their Lordships of the Privy council the expenditure of skill and labour need not necessarily be in cultivation of the land. He emphasized that their Lordships had nowhere stated that expenditure of skill and labour upon the land must be in cultivation it. In Raja Benoy Kumar v. Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or skill. Its employment has to be on the soil, as the labour and skill have to be utilised for exploding the soil. The exploitation may take a large variety of forms. It would be noticed that the learned Chief Justice when justifying the need for employment of human labour and skill on the land as distinguished from the growths on it, referred to the etymological meaning of the expression agriculture . This would be giving the expression agriculture a very restricted meaning, which seems to me opposed to the general consensus of authority. With profound respect, I feel that the learned Chief Justice has read into the test more than what their Lordships meant to convey. In all the cases decided after the decision in the case of Raja Mustafa Ali Khan [1948] 16 I.T.R. 330 the test laid down in that case has been uniformly interpreted to mean that it does not require tillage as an essential ingredient of agriculture. Mr. Iyengar considers this interpretation unsound. He urged that the meaning of their Lordships of the Privy Council was lost on the High Courts in India. All that their Lordships intended to lay down was that some measure of cultivation of land or some expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he trees is not fostered by tillage. We should not be justified in giving the taxpayer the benefit of the dictionary definition when it is not disputed that the meaning of the term 'agricultural' cannot be extended for the purpose of the Income-tax Act to all the secondary implications therein suggested. We, therefore, construe the term in its primary sense. We hold accordingly that income from the sale of forest trees of spontaneous growth growing on land which is assessed to land revenue is not agricultural income . All that is held is that the primary sense of the expression would not include within its ambit trees of spontaneous growth growing on land assessed to land revenue. It is difficult to read into these words what Mr. Iyengar attributes to the learned Judges, viz., that in their view the expression agriculture was used in the Income-tax Act in the etymological sense necessarily implying actual cultivation or tillage of the land. In view of the concessions made in the course of the argument by the counsel for the assessees it was held that the mere fact that an industry had some connection with or was in some way dependent on land was not sufficient to br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These observations conflict with subsequent pronouncements in Raja Mustafa Ali Khan's case [1948] 16 I.T.R. 330 and to this extent they lose their value as precedent. Their effect is also whittled down by the remarks in paragraph 23 of the judgment. Mr. Iyengar has also relied on the decision reported in Province of Bihar v. Maharaja Pratap Udai Nath [1941] 9 I.T.R. 313. In this case one question was whether income derived by the assessee from trees was agricultural income. The assessee was taxed on income from Bankar and Phalkar. Income under the head Bankar was derived from virgin jungle land not actually cultivated. A few forest guards were employed to protect the property. Trees were found to have grown naturally in the jungle without the intervention of human agency and the growth of the trees could not be said to have been the result of cultivation of the soil. In fact, it was the absence of cultivation that permitted the area to develop into a jungle. Phalkar was income derived from wild jungle fruits and it could not be said that they grew by cultivation. On the facts of the case it was held that the item did not constitute agricultural income. This case is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is, therefore, incontrovertible that income from a virgin forest or forest of spontaneous growth is not agricultural income. The view that tilling of the soil was the sine qua non for bringing within the term agriculture had also been exploded. If there is actual tilling of the soil for producing the product, it is the unquestionable result of agricultural pursuit. Viswanatha Sastri, J., did not feel driven to the necessity of attributing to the Indian Legislature a precise adherence to the classical origin of an English word in common use throughout the word. In his opinion the word agriculture was used in Section 2(1) of the Income- tax Act in a wide sense so as to denote the raising of useful or valuable products which derive nutriment from the soil with the aid of human skill and labour. The expression according to him would include horticulture, which involves intensive cultivation of land as garden in the production of fruits, flowers or vegetables. It would also include growing of trees or plants whose growth is effected by the expenditure of human effort, skill and attention in such operations as those of ploughing, sowing planting, pruning, manuring, watering, prot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J., the expenditure of skill and labour on the land was in relation to the rearing of the cattle pastured upon it and this he thought would satisfy the test laid down by their Lordship of the Privy Council. Income derived from letting out of pasture meadows was regarded as agricultural income to the extent that it was derived from agricultural animals pastured on the land. In Commissioner of Agricultural Income-tax, West Bengal v. Raja Jagadish Chandra Deo Dhabal Deb [1949] 17 I.T.R. 426 and Raja Benoy Kumar v. Commissioner of Income-tax, West Bengal [1953] 24 I.T.R. 70 income from the sale of forest trees was found to be agricultural by reason of the fact that employment of human labour and skill was involved in the operations that were being carried on in each case. In Jyotirindra Narayan v. State of Assam [1951] 19 I.T.R. 379 also the test formulated by their Lordships of the Privy Council was applied to forests which were originally of spontaneous growth. Such operations in forestry as were being carried on were found to involve employment of human labour and skill on the soil. The foregoing review of decisions goes to show that the expression agriculture in Section 2( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tural income. In all the cases relating to forests where trees grew spontaneously, decided after the decision by their Lordships of the Privy Council in Raja Mustafa Ali Khan v. Commissioner of Income-tax(2) the test laid down there was applied and in some of them regular operations in forestry were found to satisfy the requirements of the test. The next question is what form the employment of human labour and skill should take in forests originally of spontaneous growth in order that income derived from these forests may be regarded as agricultural. It is settled law that cultivation of the soil or tillage is not necessary. Beyond this I feel that it is not possible to lay down a general rule which should cover all cases. The decision on the question whether human labour or skill had been employed on the soil for producing income must depend on the facts of each case. Decided cases bearing on the point cannot all be reconciled. In Moolji Sicka and Co., In re [1939] 7 I.T.R. 493, pruning of the tendu shrubs was eld to be cultivation of the soil in the technical and the legal sense. Guarding of new shoots from being trampled under foot or being browsed by animals, the remov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other subsidiary arrangements were held sufficient for granting exemption from liability under the Act to income derived from sale of trees in the forest. In Pratap Singh Balbeer Singh v. Commissioner of Income-tax [1952] 22 I.T.R. 1 it was conceded that such operations of forestry as were being carried on in the forests in Jyotirindra Narayan v. State of Assam [1951] 19 I.T.R. 379 were sufficient to convert forest into land used for agricultural purposes. Cultivation in the limited sense of ploughing or tillage was not insisted on. In the light of these decisions it has to be seen whether there has been such employment of human labour or skill which would satisfy the requirement of the tests laid down in Raja Mustafa Ali Khan's case [1948] 16 I.T.R. 330. The interpretation most favourable to the taxing authorities is the one which prevailed with the learned Chief Justice of the Calcutta High Court. Even if that interpretation is applied I have no manner of doubt that on the facts and in the circumstances brought out in the statement of the case the receipts from he sale of sal trees is agricultural income within the meaning of the definition of agricultural income given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that the question referred to this Court has to be answered. My learned brother Deka, J., has treated these forests as more or less of spontaneous growth. He was not impressed apparently by the processes employed by the assessees in these forests. He referred to the affidavit of the assessees to which reference has been made in the statement of facts and seemed to be of the opinion that the statements contained in the affidavit could not be taken as proved or as part of the statement. Having held that the receipts were from the sale of trees virtually of spontaneous growth without any intervention of human agency, he has answered the question in the negative. I have given my reading of the statement of the facts. It seems to me that if the taxing authorities could find that receipts were from trees of spontaneous growth and that there was no employment of human labour and skill in these forests, no question of law would have arisen. The income then would not be agricultural, for it is concluded by authority that income from virgin or natural forest where trees grow spontaneously without any effort or aid from human agency in any manner is not agricultural income. The vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med part of the operations of forestry in the forests in question, creeper and climber cutting, thinning and removal of diseased and unsound trees and clearing of jungles and the removal of undergrowth are all processes which can be carried on only on the soil. They involve direct human contact with the land. They involve expenditure of human labour and skill on the soil in the sense in which the test has been understood by the learned Chief Justice of the Calcutta High Court. Permitting grazing from Kartik to Chaitra involves the use of human skill for purposes of weeding. Burning of undergrowths at certain times of the year is also an operation on the land. It clears the jungles and also fertilises the soil. Other operations like closure of forests to men and cattle during rainy season in order to allow germination, preservation of mother trees, reservation of blocks of forests and marking of trees fit for felling, felling of trees at a certain age and their cutting in a particular manner are all subsidiary processes on the soil though direct treatment of the soil may not be involved in all. They have to be resorted to on the soil and by human agency. These processes are proto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessees. The operations in this case would satisfy the requirements of the test, even if it is held that operation on the soil must be on the land and not on the growths on it. The facts in this case are not the same as in Raja Jagadish Chandra Deo's case [1949] 17 I.T.R. 426. The correctness of the decision in that case has been doubted. Viswanatha Sastri, J., in Commissioner of Income-tax v. Sundara Mudaliar [1950] 18 I.T.R. 259 expressed the view that the decision in Raja Jagadish Chandra Deo's case [1949] 17 I.T.R. 426 had undoubtedly extended the scope of the test laid down by their Lordships of the Privy Council. Chakravartti, C.J., in Raja Benoy Kumar v. Commissioner of Income-tax, West Bengal [1953] 24 I.T.R. 70, also doubted whether Raja Jagadish Chandra Deo's case [1949] 17 I.T.R. 426 has been rightly decided. He observed that save and except occasional removal of the undergrowth by third parties with the permission of the assessees, there were no operations on the land at all . I have found it difficult to share these doubts. According to Viswanatha Sastri, J., agriculture connotes the raising of useful or valuable products which derive nutriment from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cultural or not had been referred to this Court and was decided on its merits on the material made available. The decision did not rest only on any concession made by the assessees or on their behalf. The Tribunal in these circumstances was bound to follow the decision. In declining to attach much importance to the decision the Tribunal has not acted properly. The proper course was to follow the decision and then to refer to question at the instance of the Commissioner if he felt aggrieved by the decision. Mr. Iyengar has also contended that in the case of Jyotirindra Narayan Sinha Choudhury (in No. 4), there were there assessments. He put in only one petition and paid a fee of ₹ 100 whereas under the law there should have been three applications and each one should have been accompanied by a fee of ₹ 100. He relies on the provisions contained in Section 66(1) of the Income-tax Act. The section provides that within sixty days of the date upon which the assessees are served with notice of an order under sub-section (4) of the Section 33 the assessees or the Commissioner may, by application in the prescribed form, accompanied where application is made by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separated members of a family. They were also separately assessed. They put in one application accompanied by a fee of ₹ 100 under Section 66(2) of the Income-tax Act for the statement of a case by the Commissioner of Income-tax. This case is clearly distinguishable on facts and is of no assistance. There is thus no direct authority on the point that Mr. Iyengar has raised. In spite of the fact that the Commissioner drew the attention of the Tribunal to the omission on the part of Jyotirindra Narayan Sinha Choudhury the Tribunal did not give him the option of limiting his application of his reference to any particular year. The reference covers all three years of assessment. Presumably, the Tribunal did not consider the course adopted by Jyotirindra Narayan Sinha Choudhury contrary to the requirements of Section 66(1). It has not been specifically alleged either by the Commissioner in his statement which he submitted to the Tribunal or by Mr. Iyengar before us, that separate notices in regard to these assessments were issued to the assessees as required by Section 33(4) of the Income-tax Act. It only one notice was issued the application for reference with one fee would s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Jyotikana Chowdhurani, Kamal Krishna Chowdhury, Birendra Narayan Choudhury, Sourindra Narayan Choudhury and Sm. Sulochona Choudhurani; 1947-48 and 1948-49 in case of Sourindra Narayan. There is only one reference case with respect to three assessment cases on the part of the heirs of late Jyotirindra Narayan Choudhury, which has been objected to by the learned advocate for the Income-tax Commissioner and he requested the Court to ask the assessee to pick up assessment for one particular year, he having deposited only one hundred rupees under Section 66 of the Indian Income-tax Act. This objection will be considered later. There was an earlier decision of this Court reported in Jyotirindra Narayan v. State of Assam [1951] 19 I.T.R. 379 in connection with nine reference cases under Section 28(2) of the Assam Agricultural Income-tax Act made at the instance of those assessees as are concerned with these references and others too and there was a consolidated hearing and one judgment covering all the cases. Those cases also dealt with the question as to whether the sale proceeds of sal trees from the forests owned and possessed by these zamindars were agricultural income, in case t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for forming a Full Bench and the former is purely at the discretion of the Chief Justice, and this Bench has accordingly been rightly formed or constituted. As regards the finality of the judgment, as it stands, nobody disputes it,--but that is a decision not adjudicating certain claims inter parties--but is given in an advisory capacity in a reference (or references) under the Assam Agricultural Income-tax Act. The only relevant objection is, whether the parties will be subjected to double taxation for the same income--once as agricultural income-tax and for the second time as income-tax under the Indian Income-tax Act. Mr. Iyengar for the Commissioner of Income-tax, Assam, so far I understood him to say, assured us that there will be no pressure for realisation of income-tax from the assessees for the years under reference even if found liable, in case the assessees have already paid agricultural income-tax to the authorities concerned, but the Income-tax Department only asks for a ruling as to whether the receipts from the sale of the sal trees grown within the estates of the assessees were really products of agricultural operation and exempt from assessment under Section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing from Kartik to Chaitra; (g) burning of undergrowths in March-April (which clears the jungles and fertilises the soil); (h) protection from fire-maintenance of fire lines; (i) closure of all forests to men and cattle during rainy season, Baisak to Aswin; and (j) preservation of mother trees. 7. In order to establish these facts, and affidavit was filed before the Tribunal at the time of hearing of the appeal. But the actual costs with reference to each activity could not be found from the books of the assessees. We have already stated the total of such costs came to ₹ 14,000 in respect of Parbatjoar Estate and ₹ 15,000 in respect of Mechpara Estate. It is not disputed that no sum was contributed towards cultivation . The contention on behalf of the assessees is that agriculture is a wider term than cultivation and regular forest operations are also included within the terms agriculture as used in the Indian Income-tax Act. Raja Jagadish Chandra Deo Dhabal Deb's case [1949] 17 I.T.R. 426 (a reference under the Bengal Agricultural Income-tax Act) is cited as an authority on the point and so is the decision of this Court in the case reported in J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th trees and cultivated in the regular course of arboriculture. Much of the controversy has centred round the following observation in their Lordships judgment:- 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 . Their Lordships expressed nowhere the view that forest operation or regular operations in forestry would come within the scope of agriculture for the purpose of the Income-tax Act, and this impression though tentatively seems to be given in the head-note in Raja Mustafa Ali Khan v. Commissioner of Income-tax [1948] 16 I.T.R. 330 does not really arise from the text of the judgment. Whether regular operations in forestry or arboriculture would be considered as agriculture is completely left out. All that their Lordships say is:- As appears from the form of the question, the income under the first head was derived from the sale of trees described as 'forest trees growing on land naturally', and the case has throughout proceeded upon the foot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has stated that if receipts from the sale of forest trees are treated as income as distinguished from capital receipts they would be covered by the expression 'agricultural income'. We have no manner of doubt that though no actual tilling of the soil is necessary for the growth and regeneration of sal trees in these forests, it is obvious that elaborate operations in forestry are necessary for the maintenance of the forests and for the growth and regeneration of new trees in place of those cut every year. The exploitation of these forests clearly conforms to working plans. Blocks of trees are sold in rotation. New trees take root and grow. In the case of all the assessees, there have been receipts from sale of sal trees in all the years of assessment. The operations, which are considered necessary by the assessees with a view to being able to sell trees from these forests periodically involve both skill and labour. The expenditure of this skill and labour is of a substantial and impressive character. The different processes described by the Appellate Assistant Commissioner and by the Member, Assam Board of Agricultural Income-tax, indicate without any doubt that the extensi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n skill and labour must be expended on the land itself and not merely on the growths from the land. In his words:- The true position therefore is that when income is derived from natural growths from the soil, it is derived from land, but not derived from land by agriculture. It is derived from land by agriculture, as the definition requires, when the land is subjected to the labour and skill of man, whether in the form of cultivation or otherwise, in order to the production or the improvement of the produce which yields the income . Judged according to the above test, in the present case, there was, assuming even the assessee's claims to be true, no agricultural operation on the land or the land was not used for agricultural purposes and the income arising from the sale of sal trees in the forests were not agricultural income as defined in the Indian Income-tax Act, Section 2(1)(a) or (b) and the question referred to us should be answered in the negative. Much time of the Court has been taken by Mr. Sampath Iyengar in arguing whether agriculture should be given a wide connotation or a narrow one--as to whether dairy business would come under agriculture or not, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y operation whatsoever for the growth, preservation or regeneration of the trees standing on the vast areas as alleged. Assuming even the claims to be correct there was no operation on the land in this case which we might call agricultural. Mr. Lahiri raised another objection to the proposed assessment on the ground that the Income-tax Department having never assessed income-tax on the proceeds of sal trees, could not ask for it now, their own previous orders being against it--and the non-user of the now claimed right to assess forest produce only indicates the real intention of the Income-tax Act, 1922,--which under its own Manual directed nor to assess tax on the proceeds from the forest produce. This objection is not tenable--there being a number of cases all over India where forest produce was taxed to income-tax--and non-assessment in previous years does not give exemption from assessment if it is otherwise due. This point has been considered in Raja Kamakshya Narayan Singh's case [1946] 14 I.T.R. 673, by the Privy council: vide Commissioner of Income-tax, Bihar and Orissa v. Kamakshaya Narayan Singh [1948] 16 I.T.R. 325, and the same view has been accepted by the Cal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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