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TMI Blog1950 (2) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... r to raise casuarina plantation it is necessary to prepare the soil, raise seedlings, cultivate the land and plant them. After the plantation, the plants require watering for periods ranging from 3 to 5 years according to the nature and the quality of the soil. Even after the expiry of the period of 3 years or 5 years, the trees in order to facilitate their growth require pruning. The trees are cut usually 8 to 10 years after they are transplanted. It is therefore an undoubted fact that the tillage of the soil and the employment of labour and skill are required to grow a plantation. The wood of the trees is used mostly either for fuel or for building purposes. The question is whether the income realised by the sale of the trees after they are cut is agricultural income within the meaning of Section 2(1) of the Act and exempt from taxation under Section 4(3)(viii). The Act defines Agricultural income in these terms:- '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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hips, however, did not decide the question whether even if the trees were planted on the land and cultivated in the regular course of arboriculture, the land could be said to be used for agricultural purpose as it was not necessary for the decision of the case before their Lordships. It is that question that is raised in this reference. The test laid down in that decision is satisfied in the present cases as the trees did not grow on the land spontaneously but were the result of cultivation of land, expenditure of skill and labour on it by the assessee. Even if the trees were raised by human labour on the land, unless the purpose was agriculture, the definition would not apply and the exemption does not operate. The land according to the definition should be used for agricultural purpose. Is the raising of casuarina plantation on the land an agricultural purpose? According to the concise Oxford Dictionary agriculture means cultivation of the soil . Webster's Dictionary gives the meaning of agriculture as farm, horticulture, forestry, butter and cheese making, etc. There are also other dictionary meanings given to the word which have been collected by Mookerjee, J., in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment the word agriculture must be interpreted in the general sense and not in a restricted and narrower sense. It is unnecessary again to subject the decisions to a detailed examination which have been, if I may say so with respect, ably considered by the learned Judge and it will be sufficient to state the conclusion of the learned Judge which occurs at page 68. He observed: We are of opinion that for the purposes of the relevant entries in Lists II and III of Schedule VII, the expression 'agricultural land' must be taken to include lands which are used or are capable of being used for raising any valuable plants or trees or for any other purpose of husbandry. It follows that the mango grove in question is agricultural land in respect of which the Hindu Women's Rights to Property Act 1937, does not operate to regulate succession. The trend of the decision of Varadachariar, J., in Federal Court in Megh Raj v. Allah Rakhia [1942] ILR 23 Lah. 623 also supports the views of Patanjali Sastri, J. In Kaju Mal v. Salig Ram [1924] ILR 5 Lah. 50 the Privy Council held that cultivation of tea is an agricultural purpose. The test laid down by Patanjali Sastri, J., was applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1894] ILR 17 98 . In Panadai Pathan v. Ramasami Chetti [1922] ILR 45 Mad. 710, Spencer and Ramesam, JJ., decided that the lease of land for growing casuarina trees was a lease for agricultural purpose within the meaning of Section 117 of the Transfer of Property Act. Both the learned Judges referred to the dictionary meaning of the word. Spencer, J., at page 713 stated his conclusion in these words: In my opinion agriculture connotes the raising of useful or valuable products which derive nutriment from the soil with the aid of human skill and labour; and thus it will include horticulture, arboriculture and sylviculture in all cases where the growth of trees is effected by the expenditure of human care and attention in such operations as those of ploughing, sowing, planting, pruning, manuring, watering, protecting, etc. Ramesam, J., at page 714 was against placing a narrower interpretation upon the word for he says: To give a narrower interpretation to the term and to confine it to the raising of products used as food for man and beast will exclude all cultivation of fibrous plants such as cotton, jute and linen and all plants used for dyeing purposes, such as indigo, etc., an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was fit only for pasturage it was not ryoti land within the meaning of the Act. A person who holds a land for pasturage cannot be said to hold the land for agricultural purpose under the Estates Land Act. The Act itself contains clear indications to this effect. Firstly, the fee payable for pasturage is included in the definition of rent and is not treated otherwise as part of rent. In the second place Section 6(2) enacts that if land is held under a contract for pasturage of cattle the tenant so holding the land would not acquire permanent rights of occupancy in the land and by reason of such letting the land, it does not become ryoti land. Agriculture is defined in the Act as including horticulture, which is an indication that the word is used in a narrower sense. It is for these reasons that those decisions held that the holding of a land 'for pasturage was not for agricultural purposes. These decisions, in my opinion, afford no assistance in deciding the question under the Income-tax Act. It was held in Moolji Sicka Co. In re [1939] 7 ITR 493 , that acts of pruning tendu shrub and separating the leaves constituted cultivation of the shrub and the profits deriv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icultural purposes. The expression such land in Section 2(1)(b) refers back to the land mentioned in Section 2(1)(a) and must have the same quality, i.e., of being used for agricultural purposes. I shall briefly advert to the genesis of the provision exempting agricultural income derived from lands assessed to land revenue, as I consider that the subject-matter with which the legislature was dealing, and the facts existing at the time with respect to which the legislation was made, are legitimate topics for consideration in ascertaining the object and scope of the exemption from income-tax conferred on agricultural income. This exemption, it would be noticed, has been a persistent feature of the Income-tax legislation of this country from 1867 onwards, and nothing like it is found in the English Income Tax Acts. Even at a time when there was no provision like Section 100 of the Government of India Act, 1935, with Federal and Provincial Lists and there was no incompetency on the part of the Central Legislature to levy a tax on agricultural income, the Income-tax Acts passed from time to time by the Central Legislature including the existing Act of 1922, exempted from income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o draw the dividing line between what is. and what is not agriculture with reference to operations carried out on land have been very successful. But help in deciding the question before us may be obtained by examining the reported decisions as showing how in particular circumstances the dividing line has been drawn. There being no definition of agriculture and agricultural purpose in the Income-tax Act, the words have to be construed and understood in their popular sense and according to their ordinary meaning: Queen v. Income-tax Commissioner [1883] 22 QB 296, 309 affirmed on appeal in Commissioners for Special Purposes of Income Tax v. Pemsel [1891] AC 531, 545. Exemption from tax granted by a Statute should be given full scope and amplitude and should not be whittled down by importing limitations not inserted by the legislature: Associated Newspapers Limited v. City of London Corporation [1916] 2 AC 429; Sinclair v. Cadbury Brothers [1933] 18 Tax Cas. 157, 169; Hughes v. Bank of New Zealand Limited 6 ITR 636; In re North British and Mercantile Insurance Co. 5 ITR 349 To some extent the connotation of the word agriculture depends on the common notions of people in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... watering, protecting, etc. as held by Spencer, J., in Panadai Pathan v. Ramaswami Chetty [1922] ILR 45 Mad. 710, 712. The word agriculture applies to the cultivation of the soil for food products or any other useful or valuable growth of the field or garden and is wide enough to cover the rearing, feeding and management of livestock, which live on the land and draw their sustenance from the soil. In Mustafa Ali Khan v. Commissioner of Income-tax [1948] 16 ITR 330, the Judicial Committee approved of the decisions in Yuvarajah of Pithapuram v. Commissioner of Income-tax [1946] 14 ITR 92 and Benoy Ratan Banerji v. Commissioner of Income-tax [1947] 15 ITR 98 and held that income derived from the sale of trees described as forest trees growing on land naturally was not agricultural income and was therefore not exempt from tax. Lord Simonds in delivering the judgment of the Board observed: Though it must always be difficult to draw the line, yet, unless there is some measure of cultivation of the land, some expenditure of skill and labour upon it, it cannot be said to be used for agricultural purposes within the meaning of the Income-tax Act. If the matter had stood there, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eltaic tracts. Young plants are often brought and planted in pits dug for the purpose in a row with sufficient interspaces. Trenches are dug by the side of a row of plantain trees in order to catch and retain water. The plantain tree lasts for about 2 years, and from each tree off-shoots spring up and grow in the place of the parent tree. There is thus a natural replenishment of the plantain garden. It cannot be said that the raising of plantains is not an agricultural purpose. Similarly in the case of sugarcane, the plants stand on the land for two years or a little more, and there are usually two cuttings. Castor plants stand for some years on the soil and the seeds are periodically gathered in. Bamboo is often planted in enclosed lands by digging pits, filling them with sand and manure and then planting the young stalks in a bunch at suitable distances. Watering is done for the first 2 or 3 years. Every year, the land surrounding each bamboo cluster is dug with a spade and small earthern ridges are put up so as to catch and retain rain water. Bamboo plants attain maturity in about 3 or 4 years, and the thorny branches which grow on the main stem are then fit to be cut off and us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant earlier cases are reviewed, decisions turning on the interpretation of local Tenancy Acts are not of relevance in this connection. Both in Meghraj s case (supra) and in Sarojini Devi v. Krishna Anjaneya [1945] ILR 1945 Mad. 61 it was pointed out that the expression agricultural land in Lists II and III of Schedule VII of the Constitution Act, 1935, should receive a wide interpretation and that Parliament could not have intended that the particular circumstances under which cultivation was carried on or the nature of the produce raised on the land should determine the law which governed the devolution of the land. In the latter of the two cases above cited, a mango grove was held to be agricultural land. It is equally unlikely that when the legislature enacted the Income-tax Act it intended that the income from assessed land should be exempt from income-tax if one kind of crop was grown thereon but should be subjected to tax if another variety was raised. Cultivation of cocoanut trees which stand on the land for decades and yield cocoanuts periodically has been held to be an agricultural purpose in Venkayya v. Ramasami [1898] ILR 22 Mad. 39 which was approved in Murugesa Chet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l with the aid of human labour or skill. Having regard to. (1) the history of the relevant provision and the reason for the exemption of agricultural income from income-tax, (2) the more extended signification acquired by the word agriculture in modern usage and wider ambit of interpretation allowed by other taxing statutes, English and Indian, than the mere tilling or cultivation of an open field and (3) the unlikelihood of the legislature differentiating arbitrarily between different kinds of plants or crops grown on the same land for the purpose of exemption from income-tax, I would answer the question referred to us in the affirmative. In Commissioner of Agricultural Income-tax v. Raja Jagadish Chandra Deo [1949] 17 ITR 426 , it was held by a Division Bench of the Calcutta High Court that income derived from the sale of sal trees growing spontaneously in forests and not planted by man was agricultural income within the meaning of Section 2(1) of the Bengal Agricultural Income-tax Act. There was no digging or ploughing of the land nor planting of trees but there were operations in forestry such as guarding the forest trees to keep away cattle and allowing leave ..... X X X X Extracts X X X X X X X X Extracts X X X X
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