TMI Blog1980 (5) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... lore, Ranchi and Kashmir. The assessee owned a plot of land in Tollygunj in the suburbs of Calcutta measuring about 2.83 acres. This plot of land was utilised as trial ground where, according to the ITO, samples of seeds purchased by the assessee for re-sale were sown so that a record of the resultant crop could be maintained. This was done by the assessee-company with a view to keeping control over the quality of the seeds. During the year relevant for the present assessment year the said plot of land was sold by the assessee to Goenka Tea Timber Pvt. Ltd. for a sum of Rs. 1,62,000. In the original return of income filed by the assessee, the assessee-company had shown the capital gain for Rs. 98,405 in respect of sale of the said plot of land. Subsequently, however, the assessee modified its stand and urged that there was no capital gain involved in the sale of the said plot of land because, according to the assessee, the land in question did not constitute any capital asset within the meaning of the definition of " capital asset " in s 2(14) of the I.T. Act, 1961. The ITO rejected the assessee's claim and assessed the capital gains as shown by the assessee at Rs. 98,405. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd agricultural operation, though on a limited experimental scale. The Tribunal was of the opinion that the nature of the operations carried out and not the purpose for which the operations were carried out was the determining factor, and as the nature of the operations carried out, according to the well-settled definition, was agricultural, it was held that the said land was not a capital asset under s. 2(14) of the I.T. Act, 1961. On these facts, as directed by this court, the Tribunal has referred the question indicated before. Before we deal with the rival contentions it would be appropriate to refer to the meaning of agricultural land and agricultural income. Under s. 2(1) of the I.T. Act, 1961, as it stood at the relevant time, agricultural income meant any rent or revenue derived from land which is used for agricultural purposes and is either assessed to land revenue in India or is subject to a local rate assessed and collected by officers of the Govt. of India as such. Section 2(14), cl. (iii), defines agricultural land in India. Section 2(14) deals with the definition of capital asset. It may also be interesting in this connection to bear in mind that under the Indian I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se subsequent operations could not be said to have been spent on the land itself. The mere performance of these subsequent operations on the products of the land, where such products had not been raised on the land by the performance of the basic operations, would not be enough to characterise these as agricultural operations; in order to invest these lands with the character of agricultural operations, these subsequent operations must necessarily be in conjunction with and in continuation of the basic operations which were the effective cause of the products being raised from the land. The subsequent operations divorced from the basic operations could not constitute by themselves agricultural operations. Only if this integrated activity which constituted the agriculture was undertaken and performed in regard to any land could that land be said to have been used for agricultural purpose and the income derived therefrom could be said to be agricultural income derived from the land by agriculture under s. 2(1) of the Indian I.T. Act, 1922. Agriculture comprised, according to the Supreme Court, within its scope the basic as well as subsequent operations described above regardless of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary of Law). Horticulture, which denotes the cultivation of gardens or orchards, is a species of agriculture in its primary and more general sense.' Ramesam J., in Panadai Pathan v. Ramasami Chetti [1922] ILR 45 Mad 710 referred to the following connotation of ' agriculture ' : 'Wharton's Law Lexicon adopts the definition of " agriculture " in 8th Edn., VII, c. 36, as including " horticulture, forestry and the use of land for any purpose of husbandry, etc. " In 10 Edn., VII, c. 8, s. 41, it was defined so as to include the use of land as " meadow or pasture land or orchard or osier or woodland, or for market gardens, nursery grounds or allotments, etc. " In 57 and 58 Vict. c. 30, s. 22, the term " agricultural property " was defined so as to include agricultural land, pasture and woodland, etc. ' These are the various meanings ascribed to the term 'agriculture' in various dictionaries and it is significant to note that the term has been used both in the narrow sense of the cultivation of the field and the wider sense of comprising all activities in relation to the land including horticulture, forestry, breeding and rearing of live-stock, dairying, butter and cheese making, hu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in detail we do not find any warrant that the Supreme Court laid down that in considering whether a land in question is agricultural land or not, even in spite of the fact that agricultural operations are carried on on the land, it was necessary further to examine for what purpose those operations were carried out. As we have noticed before, in this connection, it is important to note the significant difference between " capital asset " under the 1922 Act and a capital asset so far as agricultural land is concerned in the 1961 Act. Agriculture, according to us, is cultivation which is signified by the word " cultura ", that is, culture and etager " means land. Thus, culture of land means cultivation of land. If a land is used for that purpose, irrespective of what happens to the resultant of the produce, in our opinion, it would merit to be considered an agricultural land. This view is fortified by the observations of the Supreme Court in the case of CWT v. Officer-in-charge, Paigah [1976] 105 ITR 133, where at page 136 of the report, the Supreme Court, after referring to the decision in the case of Raja Benoy Kumar Sahas Roy's case [1957] 32 ITR 466 (SC), observed that the que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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