TMI Blog1977 (9) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... t with in such manner as may seem expedient to the State Government. The land can also be acquired by the State Government after the necessary notice. Compensation for acquisition and requisition was payable under section 7. Section 7(3) provides that where any land is requisitioned under section 3, every person interested in such land is to be paid such compensation as might be agreed upon in writing between the person and the Collector and any damage done during the period of requisition. Under section 7(4), in the case of land, included in any grant or settlement made for special cultivation or other purposes, which is lying fallow or uncultivated and which is requisitioned for the purpose of cultivation, the compensation payable under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case, the Tribunal was right in holding that the sum of Rs. 1,24,638 was derived from land used for agricultural purposes and accordingly exempt from tax ?" The Tribunal rejected the application and thereafter a Division Bench of this court, acting under section 66(2) of the Act, rejected the first part of the aforesaid question and made the rule absolute on the second part of the question by reframing it as follows : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that a sum of Rs. 1,24,638 was exempt from tax ?" No appeal has been filed by the Commissioner to the Supreme Court from the order of the Division Bench rejecting the first part of the aforesaid question. In these circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the interest is not rent and rent is not land. At page 328 the Privy Council says thus: "Equally clearly the interest on rent is revenue, but ...... it is not revenue derived from land ...... The word 'derived' is not a term of art. Its use in the definition indeed demands an enquiry into the genealogy of the product. But the enquiry should stop as soon as the effective source is discovered. In the genealogical tree of the interest land indeed appears in the second degree, but the immediate and effective source is rent, which has suffered the accident of non-payment." In that view of the matter, it was held by the Privy Council that the arrears of rent were not agricultural income within the meaning of section 2(1) of the Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he receipt was not an agricultural income. In Commissioner of Income-tax v. K. S. Imam Saheb [1969] 71 ITR 742 (Mad), the assessee had a right to pluck coconuts from the lands of the proprietor, but the lands were not subject to any lease in favour of the assessee. The question was whether the income derived by the assessee from selling the coconuts was an agricultural income. It was held by the Madras High Court that there was no nexus between the income, land and agricultural operations and, therefore, the realisation was not an agricultural income. The relevant facts in the case of Commissioner of Income-tax v. Kunwar Trivikram Narain Singh [1965] 57 ITR 29 (SC) were as follows : Many years ago, Babu Ausan Singh was a jagirdar of cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land within the meaning of the definition in section 2(1)(a) of the Act. It seems to us that in this case the source of income is clearly the arrangement arrived at in 1837 and, therefore, it is not agricultural income as defined in the Act." The principles that emerge from the aforesaid decisions of the Privy Council and the Supreme Court which are relevant for our purposes may now be enumerated as follows : (i) Rent or revenue which is directly derived from any land which is used for agricultural purposes will be an agricultural income for the purposes of income-tax ; (ii) Revenue which is derived must also be directly and not indirectly associated with the land which is used for agricultural purposes before it can be said to be an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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