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Issues:
1. Whether income from the sale of forest trees growing naturally is agricultural income exempt from income tax? 2. Interpretation of Section 66(1) of the Indian Income Tax Act regarding references by the Income Tax Tribunal. Detailed Analysis: 1. The judgment involved references by the Income Tax Tribunal under Section 66(1) of the Indian Income Tax Act regarding income from the sale of forest trees. The key issue was whether such income qualified as agricultural income exempt from income tax under Section 8(1)(a) and Section 4(3)(viii) of the Act. The cases pertained to assessments for the years 1940-41 and 1941-42, with sums of Rs. 22,347 and Rs. 3,791 realized, respectively, from the sale of forest trees. 2. The primary question raised in both cases was whether income from the sale of forest trees growing naturally, without human intervention, qualified as agricultural income exempt from income tax. The wording of the question differed slightly between the two references, but the essence remained the same. The judgment highlighted that the issue of whether the receipts were capital rather than income was not raised, and the focus was solely on the taxability of the income. 3. The judgment delved into the history and interpretation of Section 66 of the Income Tax Act, emphasizing the importance of the specific question referred for consideration by the High Court. It cited previous cases and legal provisions to clarify that the High Court's role in such references was advisory and limited to addressing the actual question referred without delving into additional issues not raised by the parties. 4. The Court also discussed the ambiguity in the wording of Section 66(1) regarding whether the Tribunal should refer a question of law or the entire case. It concluded that the intention was for the Tribunal to refer specific questions of law raised by the applicant, as indicated in the application form. The judgment emphasized the importance of clarity in formulating the question of law for reference. 5. Ultimately, the Court reiterated its stance on the nature of income from the sale of forest trees, stating that such income did not qualify as agricultural income under the relevant provisions of the Income Tax Act. The judgment referenced a previous case where a similar question was addressed, leading to the same conclusion regarding the taxability of such income. 6. In conclusion, the Court ruled that the income from the sale of forest trees was not exempt from income tax as agricultural income under the Act. The assessee was directed to pay the costs of each reference, with the Counsel for the Income-tax department awarded a fixed fee. The judgment provided a comprehensive analysis of the legal issues involved and clarified the scope of the High Court's consideration in such income tax references.
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