9911796707
TMI Blog1946 (9) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ity at the outset. It is important to emphasise that we are not a Court of appeal and accordingly are not free to debate such questions as might seem to us to arise in the case, however important they may appear to be. We are only an advisory body which is not free to tender unsolicited advice. We can only advise on the questions referred and accordingly will have to confine our answers to the questions asked. We have certain other powers, and indeed it will be necessary to exercise them in one of the cases heard along with these (we shall deal separately with that), but these powers only enable us to send the matter back and compel a reference. Until that is done, we have no power to debate questions which have not been referred. This is clear from the Act, but the matter has been placed beyond controversy by their Lordships of the Privy Council in Commissioner of Income-tax, Bihar & Orissa v. Kameshwar Singh of Darbhanga [1933] 12 Pat. 318, at p. 335; 1 I.T.R. 94, Rajendra Narayan v. Commissioner of Income-tax, Bihar & Orissa [1940] 8 I.T.R. 495, Trustees Corporation (India), Ltd. v. Commissioner of Income-tax, Bombay [1930] 54 Bom. 437, at p. 445 and National Mutual Life Associa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d analyse the root of the word. The dictionaries tell us that agriculture comes from ager, a field, and cultura, cultivation. This implies the use of human skill and labour; and that is exactly how the dictionaries define it. Webster, for instance, says that agriculture is the "art of science of cultivating the ground," and includes in it the rearing and management of livestock, husbandry, farming, and so forth. Other dictionaries, including the Oxford English Dictionary, employ the same basic conception. Some include "forestry" in the term. It is to be observed, however, that the word used when forestry is included, is forestry and not forests. The distinction is important because when one turns to the definition of forestry in the dictionaries one finds that is also an art or a science. Thus, Webster says it is "the art of farming or cultivating forests; the management of growing timber," and the Oxford English Dictionary says much the same thing. Therefore, throughout we find that the essence of agriculture, even when it is extended to include "forestry," is the application of human skill and labour. Without that it can be neither an art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at least part of the decisions in each is based upon matters special to those Acts: Venkayya v. Ramasami ([1899] 22 Mad. 39), Murugesa Chetti v. Chinna Thambi Goundan ([1901] 24 Mad. 421), Chandrasekhara Bharathi v. Duraisami Naidu ([1931] 54 Mad. 900), Kesho Prasad v. Sheo Pargash Ojha ([1922] 44 All. 19), Kesho Prasad v. Sheo Pargash Ojha ([1924] 46 All. 831), Hiralal Ravchand v. Parbhulal Sakhidas ([1922] 46 Bom. 48, at p. 51), Kaju Mal v. Salig Ram ([1919] A.I.R. 1919 Lah. 222) and Imam Ali v. Priyawati Devi ([1938] I.L.R. 1938 Nag. 31). The other cases in this class, though dealing with special Acts, base the decision on general grounds and to that extent are more in point. But all they serve to show is that difference of opinion is possible, the meaning being extended in some cases and restricted in others. Thus, Panadai Pathan v. Ramasami Chetty ([1922] 45 Mad. 710) holds that the growing of casuarina trees for fuel is an agricultural purpose and Hiralal Ravchand v. Parbhulal Sakhidas ([1922] 46 Bom. 48) discards what we might term the human agency test and employs instead one which determines whether the income is derived from the produce of the land and not what is the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; might be regarded as agriculture. We stress, however, the use of the word "forestry" as opposed to "forest". Emperor v. Probhat Chandra ([1924] 51 Cal. 504) held that income derived from pasturage was agricultural income but not that from fisheries or from land leased for stacking timber. The "pasturage" part of the decision would, at first sight, appear to offend the rule we have suggested but the point was not decided because it was not contested once the case reached the High Court (see page 527). But that apart, nearly every rule has its exceptions and the pasturing of cattle is so closely allied to agriculture that it has become to be considered part and parcel of it and the meaning of the term is now so well established that there is no longer room for doubt. That, however, does not apply to forests, or even to forestry, though we think it possible that the latter might fall within the scope of the definition. Commissioner of Income-tax, Madras v. Manavedan Tirumal- pad (54 Mad. 21) holds that income from unassessed forest land is not agricultural income and Province of Bihar v. Pratap Udai Nath Sahi Deo (20 Pat. 699, at p. 724; 9 I.T.R. 313) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces [1945] A.I.R. 1945 Oudh 35, at p. 39; 13 I.T.R. 74. The learned Judges point out there that the fact that the Act requires the income not only to be subject to land revenue or cesses but also to be derived from agriculture or from land used for agricultural purposes shows that incomes from other types of land are not exempt even though they pay land revenue. And that of course is patent. Rents derived from bungalows on malik makbuza land in a town are already taxable. Nor indeed is there any reason why there should not be double taxation if the legislature chooses to impose it. That is also dealt with in the Oudh case. The argument is also met by what their Lordships of the Privy Council say in Probhatchandra Barua v. Emperor [1931] 58 Cal. 430, at p. 444. Their Lordships point out that in such cases the land revenue or cesses paid are deducted from the gross receipts because the tax is not levied on gross receipts but on income. In practice, therefore, there is no double taxation. It was also argued that this income is not taxable at all because Section 6 of the Act sets out the only sources of taxable income. It cannot fall under the head "income from property" bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable elsewhere because the same words used in the Income-tax Act mean one thing in one place and another in another. It is pertinent here to quote the Privy Council in Srimathoo Moothoo Vijia Ragoonadah Kolandapuree Netchiar v. Dorasinga Tevar [1875] 23 W.R. 314. The case is not in point but the observations are pertinent. At page 317 their Lordships say: "It is obvious that an enactment which is intended to apply to all the Courts in India, and which is also a modern enactment, ought to receive the same construction in all those Courts, and that no inconsistent course of practice should be allowed to spring up in any of the presidencies"; and at page 320, "unless, therefore, etc...............we must come to the absurd conclusion that the same words are to be interpreted by the High Court in one sense when it is exercising its original jurisdiction or sitting on an appeal from a decree made under that jurisdiction, and in a different sense when it is sitting on an appeal from a mofussil court; and further that the legislature has by the same form of words intended to make one law for the mofussil Courts, and another for those of the Presidency towns." Anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it still leaves the burden of deciding what "agriculture" means. As we have said whatever else may be necessary it is essential that the income should be derived from some activity which necessitates the employment of human skill and labour and which is not merely a product of man's neglect or inaction except for the gathering in of the spoils. Not only must be labour to reap the harvest-that of course he must do, else there could be no income-but he must also labour to produce it. An attempt was also made to get us to take into consideration the previous practice of the department and the instructions embodied in the Income-tax Manual. This also is not permissible. It shows no more than that either certain officers of the department hold a certain view of the law, or that it was considered expedient at that time, for this reason or that, not to tax income of this kind. The Courts are here to interpret the law and what departmental officers thought is not relevant. The argument is doubtless founded on certain observations of Lord Halsbury in Commissioners for Special Purposes of Income Tax v. Pemsel ([1891] A.C. 531) at page 546 but Lord Macnaghten said in the same c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age operations in this province." In the circumstances we are of opinion that for the purposes of the Income-tax Act lac cultivation cannot be regarded as an agricultural operation. In any case it has not been shown that in this case the conditions were otherwise than as described above. Our answer to the question referred in this case is that the ₹ 10,835 derived from the sale of forest produce is not "agricultural income" and so is not exempt from taxation. Miscellaneous Civil Case No. 7 of 1945.-Here also the facts are agreed. The forest income is derived from a sale of timber which the assessee cuts into beams, logs, poles etc.; also from the sale of tendu leaves which are used in the manufacture of bidis. The finding regarding the nature of the forest is to be found in the Tribunal's appellate order and is given in these words:- "It is impossible that all these forest trees or tendu shrubs could have been planted or reared by any process of agriculture, that is to say, by the cultivation of the soil. It may be that at some stage in their growth the trees required to be watered or watched. But the fact is that they had been standing upon the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us Civil Cases Nos. 92 and 98 of 1945.-The income in both these cases was from the sale of forest trees. The findings in each regarding the facts are the same as in Miscellaneous Civil Case No. 91 of 1945, and are given in the same words. Our conclusion is, therefore, the same in these two cases as in Miscellaneous Civil Case No. 91 of 1945. We now turn to points which are not common to all the cases. A question of interest arises in Miscellaneous Civil Case No. 63 of 1944, as also in Miscellaneous Civil Cases Nos. 8 and 85 of 1945. We will deal with that. The question has been posed in much the same language in all three cases except for the figure. It was (we quote from Miscellaneous Civil Case No. 85 of 1945):- "Whether the sum of (Rs. 1,270) representing interest received by the assessee on the arrears of agricultural rents due to him from his tenants is agricultural income within the meaning of Section 2(1)(a) of the Income-tax Act?" This matter has been recently decided by a Division Bench of this Court in Pratapmal Laxmichand, Firm v. Commissioner of Income- tax, U.P., C.P., & Berar Miscellaneous Civil Case No. 34 of 1945. We do not feel free to differ from thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt instead of from a bank need not. But anomalies arise on the other view too. The interest is recoverable under the Central Provinces Tenancy Act in the same way and along with the rent which is in arrear. It creates the same burden on the land and subjects a defaulting tenant to the same penalty. In the circumstances, we hold, following Pratapmal Laxmichand, Firm v. Commissioner of Income-tax, U.P., C.P., and Berar Miscellaneous Civil Case No. 34 of 1945, that the interest in these three cases is exempt from taxation, it being agricultural income. Miscellaneous Civil Case No. 7 of 1945 raises another question. We are asked to decide whether a profit of ₹ 19,447 arising from the sale of forest produce, such as timber and tendu leaves, is a receipt of a capital nature and so exempt on that score. Their Lordships of the Privy Council point out in Kamakshya Narain Singh v. Commissioner of Income-tax, Bihar & Orissa [1943] 22 Pat. 713, at p. 724; 11 I.T.R. 513, that whether a given receipt is capital receipt or income depends on circumstances, so that what is income in the hands of one man may be capital receipt in those of another. The facts here are admitted and are stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of interest in three of the cases, namely, Miscellaneous Civil Case No. 63 of 1944 and Miscellaneous Civil Cases Nos. 8 and 85 of 1945. They will, therefore, pay the costs of the Commissioner in all but these three cases. Counsel's fee ₹ 100 in each case.
As regards the remaining three cases, the success of the assessee on this point in two of the cases is so negligible as compared with his failure that we think it proper that each should pay the Commissioner's costs there as well. In Miscellaneous Civil Case No. 63 of 1944 the assessee lost on the item of ₹ 10,835 and succeeded only as regards ₹ 504. In Miscellaneous Civil Case No. 8 of 1945 the assessee failed as regards ₹ 12,373 and succeeded as regards ₹ 314. We, therefore, direct that each of these two assessees should pay the Commissioner's costs. Counsel's fee ₹ 100 in each case.
That leaves Miscellaneous Civil Case No. 85 of 1945. There, the success and failure is almost equal. The assessee lost as regards ₹ 1,799 and won as regards ₹ 1,270. There will be no order as to costs in this case.
Reference answered accordingly. X X X X Extracts X X X X X X X X Extracts X X X X
|
