1969 (1) TMI 23 - HC - Income Tax

Agricultural Income Tax Act, 1948 - Whether arrears of rent of 1359F. and earlier years realised in 1360F. are to be included in the agricultural income of the assessee since under the amended law he was not required to own or hold property in the assessment year - whether income from groves was agricultural income within the meaning of section 2(1) of the U. P. Agricultural Income-tax Act

Summary

Issues:
1. Inclusion of arrears of rent in the agricultural income of the assessee for a specific assessment year.
2. Determination of whether income from groves constitutes agricultural income under the U.P. Agricultural Income-tax Act.

Analysis:

Issue 1:
The judgment pertains to a reference under section 24(4) of the U.P. Agricultural Income-tax Act concerning the inclusion of arrears of rent in the agricultural income of the assessee for the assessment year 1361F. The assessee, who owned zamindari properties, realized arrears of rent in 1360F. against tenants for the year 1359F. The Collector included these arrears in the agricultural income of the assessee for the subsequent assessment year. The Revision Board referred to the Amendment Act of 1953, clarifying that owning or holding property during the assessment year was not a requirement for tax liability under the Act. The court, citing precedent, held that if an assessee owned property during the relevant year, it was immaterial whether the income derived was from property no longer owned in that year. Therefore, the arrears of rent were rightly included in the agricultural income for the assessment year 1361F.

Issue 2:
The second question addressed in the judgment was whether income from groves constituted agricultural income under the Act. The Supreme Court's interpretation of "agriculture" emphasized operations necessary for raising produce, including weeding, planting, and fostering growth. The court noted that the groves in question involved planting trees on the land and performing basic agricultural operations to foster their growth. Accordingly, the income derived from such groves was deemed to be agricultural income. Thus, the court answered the second question in the affirmative for both references.

In conclusion, the court answered the references by affirming the inclusion of arrears of rent in the agricultural income for the specific assessment year and confirming that income from groves constituted agricultural income under the U.P. Agricultural Income-tax Act. The Commissioner of Agricultural Income-tax was awarded costs and counsel's fees for the proceedings.