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Assessment of income tax on a receipt claimed as agricultural income. Analysis: The appeal concerned the assessment of income tax on a receipt of &8377; 91,283 included in the respondent's income for the year 1929-30. The appellant argued that the receipt, arising from a money-lending transaction, should be taxable, while the respondent contended it qualified as "agricultural income" exempt from taxation under the Indian Income Tax Act. The transaction involved a loan made by the respondent's father to Thakurain Kusum Kumari, secured by properties in Bhagalpur and Sonthal Parganas. The appellant asserted that despite being "agricultural income," the receipt was part of the respondent's money-lending business profits, making it taxable. The High Court held that the receipt qualified as "agricultural income" under the Act and thus exempt from taxation. The appellant argued that since the receipt was derived from the money-lending business, it should be considered business profits and not exempt agricultural income. However, the Court rejected this argument, emphasizing that the Act explicitly excludes agricultural income from taxation, regardless of the recipient or the nature of the business. The Court cited precedents to support the view that the exemption for agricultural income is absolute and not contingent on the recipient's business activities. The Court clarified that while the taxability of certain receipts may depend on the nature of the recipient's business, in this case, the Act clearly excluded agricultural income from taxation. The Court affirmed the High Court's decision, dismissing the appeal and affirming that the sum of &8377; 91,283 qualified as agricultural income and was exempt from taxation. The correct amount exempt from taxation was determined to be &8377; 91,283, not the initially assessed &8377; 97,283. The respondent was awarded costs of the appeal. In conclusion, the judgment upheld the High Court's decision, confirming that the receipt in question constituted agricultural income exempt from taxation under the Indian Income Tax Act. The Court emphasized the absolute nature of the exemption for agricultural income, regardless of the recipient's business activities, and advised dismissing the appeal while awarding costs to the respondent.
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