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TMI Blog1961 (8) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... e from bamboos, thatching grass and fuel timber. It is this amount thus added by the Agricultural Income-tax Officer to the agricultural income of the appellant in the relevant year that has given rise to the present reference. The facts leading to the reference are not in dispute. The appellant holds a large tract of land under lease from the local Government and it is common ground that in a part of the said land it grows bamboos, thatching grass and fuel timber. During the relevant year it cut down some bamboos, some thatching grass and fuel timber and used the same for the purpose of its business. The bamboos, the thatching grass and fuel timber were grown by the appellant on its land by agricultural operations which were carried on by the servants and labourers employed by the appellant. After they were grown they were utilised by the appellant for the purpose of its tea business and were not sold either in the market or otherwise. It has been found that the appellant has been utilising the bamboos, thatching grass and fuel timber grown by it on its land in this way every year. Before the tax authorities the appellant urged that the agricultural produce in question did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these questions in the affirmative and against the appellant. The appellant then applied for and obtained a certificate from the High Court under section 64(2) of the Act read with article 135 of the Constitution. The High Court has certified that the case is a fit case for appeal to this court because it was conceded by both the parties before the High Court that this case had been chosen by the assessee and the department as a test case since all the tea companies are interested in the questions raised in the present reference. It is with this certificate that the appellant has come to this court with its present appeal. The answer to the first question would depend upon the construction of the definition of agricultural income contained in section 2(1)(b) of the Act. The charging section is section 3. If provides that subject to its two provisos agricultural income-tax shall be charged for each financial year in accordance with and subject to the provisions of the Act at the rate or rates specified in the schedule in respect of the total agricultural income of the previous year of every individual, Hindu undivided family, company, firm or other association of individuals and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e definition of agricultural income prescribed by section 2 of the Act is common to all the State enactments in respect of agricultural income and is the same as the definition of agricultural income prescribed by section 2(1) of the Income-tax Act. The same definition has been adopted by the Constitution under article 366(1). That being so, it is contended that in interpreting the word " income " it would be relevant to rely on the decisions under the Income-tax Act. In Alexander Tennant v. Robert Sinclair Smith, Lord Halsbury has cited with approval Lord Wensleydale's observation in In re Micklethwait that " it is a well-established rule, that the subject is not to be taxed without clear words for that purpose ; and also, that every Act of Parliament must be read according to the natural construction of its words. " In that case it was held that the benefit which the appellant assessee derived from having rent-free house provided for him by the bank brought in nothing which can be reckoned up as receipt or properly be described as income. Mr. Mitra, for the appellant, contends that income obviously and necessarily denotes the coming in of profit or gain, and what is true about th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner of Income-tax v. Shaw Wallace & Co., the object of the Indian Income-tax Act is to tax " income ", a term which it does not define. It is expanded, no doubt, into income, profits and gains, but the expansion is more a matter of words than of substance. Similar is the observation of Lord Russell in Maharaj Kumar Gopal Saran Narain Singh v. Commissioner of Income-tax, where it has been observed that " the word ' income ' is not limited by the words ' profits ' and ' gains '. Anything which can properly be described as income is taxable under the Act unless expressly exempted ". The diverse forms which income may assume cannot exhaustively be enumerated, and so in each case the decision of the question as to whether any particular receipt is income or not must depend upon the nature of the receipt and the true scope and effect of the relevant taxing provision. The receipt may be an income for the purpose of taxation though it may not amount to profit. The case of Gopal Saran Narain Singh itself is an illustration in point. In that case the assessee aged 47 had transferred an estate worth two crores of rupees for a relatively small annuity of Rs. 2,40,000 for life. The said annuit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject to any process other than that contemplated by clause (ii). Thus it may be stated that reading clauses (ii) and (iii) together they contemplate the sale of the produce---clause (ii) indirectly inasmuch as it refers to the process employed for making the produce marketable and clause (iii) directly inasmuch as it refers to the price realised by sale of the produce which has been subjected to the process contemplated by clause (ii). Therefore, it is clear that income derived from sale of agricultural produce has been provided for by clauses (ii) and (iii) and prima facie that would show that clause (i) which does not refer to sale even indirectly cannot be intended to cover cases of income derived from the sale of agricultural produce. Considered in the light of clauses (ii) and (iii) of section 2(1)(b) what is the true scope and effect of the income contemplated by clause (i) ? In terms the clause takes in income derived from agricultural land by agriculture ; and as we have already pointed out giving the material words their plain grammatical meaning there is no doubt that agricultural produce constitutes income under this clause. Is there anything in the context which requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stified in contending that the answer made by the High Court in reference to question No. 1 is wrong. The second question relates to the computation of agricultural income for the purposes of the Act. Rule 4, with the construction of which the second question is concerned, reads thus : " 4. For the purposes of the Act the market value of any agricultural produce shall, except in the case referred to in clause (a) of the proviso to sub-section (1) of section 8, be determined in the following manner, namely : (1) If the agricultural produce was sold in the market, the market value shall be deemed to be the price for which such produce was sold ; (2) if the agricultural produce has not been sold in the market, the market value shall be deemed to be--- (a) where such produce is ordinarily sold in the market in its raw state, or after the performance of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render it fit to be taken to market, the value calculated according to the average price at which such produce has been so sold in the locality during the previous year in respect of which the assessment is made ; (b) where such produce is not ordi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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