TMI Blog1949 (6) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... (Act VII of 1939). The appellants are the assessees. The assessment was made with respect to the year 1942-43, the previous year being 1941-42. The question arising for determination in this appeal is whether the appellants are exempt from taxation in respect of a part of their income amounting to ₹ 7,612, derived from the sale of wood, bark, leaves, usufruct of trees, etc., on the ground that (a) the income was derived from a permanently settled estate and (b) the income was agricultural income within the meaning of Section 2(1) of the Indian Income-tax Act, 1922. Before stating the facts, it will be convenient to refer to the relevant provisions of the Madras Permanent Settlement Regulation (XXV of 1802), and of the Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kari or tax on the sale of spirituous liquors and intoxicating drugs-of the excise on articles of consumption-of all taxes personal and professional, as well those derived from markets, fair or bazars-of lakhiraj lands (or lands exempt from the payment of public revenue), and of all other lands paying only favourable quit-rents-the permanent assessment of the land-tax shall be made exclusively of the said1 articles now recited. THE INDIAN INCOME-TAX ACT (Act XI of 1922). The relevant provisions of the Indian Income-tax Act are as follows:- Section 2. Definitions-In this Act, unless there is anything repugnant in the subject or context,- (1) 'agricultural income' means- (a) any rent or revenue derived from land which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... growth from which the appellants derive income by the sale of wood, bark, leaves, minor forest produce, usufruct of trees including Jadivala in Jiarayati lands, and levy of licence fees. They also derive income from the sale of proceeds of trees which are also of spontaneous growth in non-forest areas. It is admitted that the trees in the forest and non-forest areas have grown wild, and that agricultural operations are not carried on in any of the areas from which the income in question was derived. For the year of account 1941-42 the income derived by the appellants from the sources mentioned above amounted to ₹ 7,612, and the appellants were taxed on this sum for the year 1942-43. The material part of the assessment order made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome derived from a permanently settled estate would be a breach of Regulation XXV of 1802 relating to Permanent Settlement. (2) Whether the income of ₹ 7,612 derived from the sale of wood, etc., (as detailed hereinabove) is exempt under Section 4(3)(viii) read with Section 2(1) of the Indian Income-tax Act, 1922. Both these questions were answered against the appellants by the High Court. In a recent decision of the Board, viz., Raja Mustafa Ali Khan, through Special Manager, Court of Wards, Utraula, District Gonda v. Commissioner of Income-tax, United Provinces, Ajmer and Ajmer-Merwara [1948] 16 ITR 330, it was held that: Income derived from the sale of forest trees growing on land naturally and without the intervention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the zamindari at the time of the settlement. In support of the above argument reliance was placed on Chief Commissioner of Income-tax, Madras v. Zamindar of Singampatti [1922] ILR 45 Mad. 518, and Maharajadhiraj of Darbhanga v. Commissioner of Income-tax [1924] ILR 3 Pat. 470, both of which support the appellants. It is not necessary to discuss these decisions, or to consider further the arguments of the learned counsel, for it was decided by the Board in Probhat Chandra Barua v. King Emperor [1930] LR 57 IA 228-a case under the Bengal Permanent Settlement Regulation-that:- While the Bengal regulations contain assurances against any claim to an increase of the jama, based on an increase of the zamindari income, they contain no promi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t hauts and bazars. The Bengal Permanent Settlement Regulation is Bengal Regulation I of 1793. Though the two Regulations are differently worded it was conceded by the learned counsel, and their Lordships think rightly, that the language of both the Regulations is to the same effect. The decision of the Board was sought to be distinguished by the learned counsel on the ground that the items mentioned in the case before the Board had been excluded from the assessment of the jama at the time of the permanent settlement. If that was so, no doubt the decision would be inapplicable to the present case. As pointed out by Mr. Tucker, the learned counsel for the respondent, from the case stated by the Commissioner of Income-tax, Bengal, for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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