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TMI Blog1948 (7) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... from income-tax as being agricultural income within the definition of that phrase contained in Section 2(1) of the Indian Income-tax Act. In the second appeal a further question is raised to which their Lordships will refer later. Under Section 4(3)(viii) of the Indian Income-tax Act, 1922, agricultural income is exempt from assessment to income-tax. Agricultural income is defined in Section 2 of the Act as follows:- (1) "agricultural income" means- "(a) any rent or revenue derived from land which is used for agricultural purposes and is either assessed to land revenue in British India or subject to a local rate assessed and collected by officers of the Crown as such: "……………&hell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t none of the other provisions of the Income-tax Act throws any light on the construction or meaning of the definition. The point therefore lies within a very small compass. The conflicting points of view are put with clarity in the judgment of Braund, J., in Sarju Bai's case( supra) at pages 144-145, where he expresses himself as follows:- "The argument on the one hand is that interest payable (whether by statute or not) on arrears of rent which have already become a debt due is not referable in any way to the agricultural relationship of landlord and tenant, but is attributable solely to their character as creditor and debtor. It is said that interest is in its nature merely that commercial compensation which either the accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n money or in kind by one person to another in respect of the grant of a right to use land. Interest payable by statute on rent in arrear is not such a payment. It is not part of the rent, nor is it an accretion to it, though it is received in respect of it. Equally clearly the interest on rent is revenue, but in their Lordships' opinion it is not revenue derived from land. It is no doubt true that without the obligation to pay rent-and rent is obviously derived from land-there could be no arrears of rent and without arrears of rent there would be no interest. But the affirmative proposition that interest is derived from land does not emerge from this series of facts. All that emerges is that as regards the interest, land rent and non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have adopted the definition in the sense in which the Income-tax authorities had understood and applied it. The observations of Lord Macnaghten in Pemsel's case (supra) and of their Lordships in Burah's case (supra) were relied on. Their Lordships are unable to accept this contention, for the reason that they are unable to draw from the facts brought to their attention the inference that the legislature had by the repetition of the debated phrase adopted the meaning attributed to it by the taxing authorities. There is indeed no evidence that the legislature was aware of the practice, and their Lordships are not prepared to make the assumption that a practice purporting to give effect to a definition has resulted in the creation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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