TMI Blog1948 (1) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... 1947, it was held that the income from forest in this particular case was not agricultural income, and therefore, not assessable under the Agricultural Income-tax Act. On an application by the Commissioner of Agricultural Income-tax this reference has been made for determining the question: "Whether on the facts and circumstances of the case, the sum of ₹ 90,220-1-0 derived from the sale of Sal trees in the forests of the assessee can be treated as agricultural income within the meaning of Section 2 of the Bengal Agricultural Income-tax Act, 1944." Agricultural income is defined in Section 2(1) of the Bengal Agricultural Income-tax Act. The relevant portion of the section which requires consideration in the present case is in the following terms:- "2. (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 rate assessed and collected by officers of the Crown as such; (b) any income derived from such land by- (i) agriculture, or (ii) the performance by a cultivator or receiver of rent-in-kind of any process ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation": Hedayet Ali v. Kamalanand Singh [1912] 17 C.L.J. 411. The latter term is defined in Murray's Oxford Dictionary as meaning tilling of land, tillage and husbandry. It is, therefore, obvious that a purpose may be connected with agriculture but not necessarily ancillary to cultivation. The dictionary meanings as quoted above indicate the great diversity as to the scope of the word in its ordinary sense. This word, as used in various English Acts, has been interpreted in decisions by the Courts in England but I would refrain from going into the grounds mentioned in those decisions as both the idea of agriculture and the scheme of taxation in that country are altogether different from those in India. It will, therefore, be necessary to consider the background of the use of this word in this particular Act. The definition of the term "agricultural income" in this Act, viz., Bengal Agricultural Income- tax Act, is in terms similar to the one appearing in Section 2(1) of the Indian Income-tax Act. The test applied for considering what class of income is excluded from assessment under the Income-tax Act as being agricultural income will, accordingly, be the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income-tax, Bihar and Orissa v. Raja Bahadur Kamakhaya Narayan Singh [1948] 16 I.T.R. 325. The following observation by the Judicial Committee, in my opinion, concludes the question as raised:- "It was stated--and the statement was not disputed--that for a considerable period Income-tax authorities had not treated interest on rent in arrears as taxable, and that in their Manuals published from time to time this view was openly stated. In their view such interest fell within the definition of agricultural income. The Income-tax Act, 1922, had in that period been amended from time to time without a change in the definition of agricultural income. Their Lordships were asked to make the inference that the definition had thereby obtained the meaning attributed to it by the Income-tax authorities and that the legislature must be taken to 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[1891] A.C. 531, at p. 591, and of their Lordships in Burah's case [1877] I.L.R. 3 Cal. 63, were relied on. Their Lordships are unable to accept this contention for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, provided no violence is done to the language used." The question whether sale proceeds of forests are agricultural income or not came up for consideration recently by the Judicial Committee in Raja Mustafa Ali Khan v. Commissioner of Income- tax, U.P. & Ajmer-Merwara [1948] 16 I.T.R. 330 and on appeal from the decision in Raja Mustafa Ali Khan v. Commissioner of Income-tax, U.P. & C.P. [1945] 13 I.T.R. 98; A.I.R. 1945 Oudh 44. The question which was referred to the Chief Court of Oudh under Section 66(1) of the Income-tax Act was as follows:- "Whether income from the sale of forest trees growing on land naturally and without the intervention of human agency, even if the land is assessed to land revenue is agricultural income within the meaning of Section 2(1)(a) of the Income-tax Act and as such exempt from income-tax under Section 4(3)(viii) of the Act." The only question no doubt was about the "forest trees growing naturally and without the intervention of human agency," and it was held that the sale proceeds such trees could not be held to be agricultural income. Their Lordships indicate a test to find out whether the trees are growing on the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdships agree with the High Court in thinking that there is no evidence which would justify the conclusion that this condition is satisfied." The Judicial Committee makes it clear that (1) no assistance is to be sought from the meaning of the word "agriculture" as given in other statutes and (2) unless there is "so measure of cultivation of the land, some expenditure of skill and labour upon it," it cannot be said to be used for agricultural purposes. It is, therefore, incontrovertible that income from a virgin forest or forest of spontaneous growth is not agricultural income. The view that tilling of the soil was the sine qua non for bringing within the term agriculture has also been exploded. If there is actual tilling of the soil for producing the product, it is the unquestionable result of agricultural pursuit. It is quite evident that the view now expressed by the Judicial Committee about income from virgin and natural forests is in affirmance of the decisions of the different High Courts in India [Raja Ravu Venkata Mahipati Gangadhara Rama v. Commissioner of Income-tax, Madras ([1946] I.L.R. 1946 Mad. 745; 14 I.T.R. 92), Province of Bihar v. Mahara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Act, viz., under Section 3(1) of the Madras Estates Land Act, and there are observations on the general questions, and though obiter indicate that the test is the extent of human agency or intervention. In the case of cardamoms cultivation "in the first place, the seeds are sown in beds where they germinate and are left to grow for six months. Then they are transplanted in another bed where they are left to grow for further six months; the third stage is the replanting of the young plants in the forest. They are permanently planted there as cardamom cultivation requires a considerable amount of shade. Therefore, the human element plays an important part in the bringing of cardamom plant to fruition, independent of special provision in local statutes. There is no doubt that the extent of human intervention in this case is such as to make the income from such yields an agricultural one. In In re Moolji Sicka [1939] 7 I.T.R. 493, decided by this Court in 1939, a question arose in connection with tendu leaves which were recovered from the tendu trees or shrubs for wrapping tobacco in manufacturing country. made cigarettes. A claim was put forward that the income from the sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y blocks of about 1,000 acres are sold up. All the trees in the blocks sold up are cut down by the purchasers for sale as fuel and house posts. During the rainy season from the stumps of the trees cut down new shoots come out which grow into matured trees in 15 years, to be cut down again. In order to prevent damages to the young shoots in the early stages of their growth, the areas cut down are closely guarded for one year at least from the time when the block in question has been completely denuded of trees, in order to keep cattle and men off from the lands so that they may not damage the young growing shoots. In order to promote the growth of shoots, the ground is also kept free from under growth of jungle. This is not cleared at the appellant's expense but the villagers are allowed to clear the ground of undergrowth and take the same away free of costs." These findings are accepted by the Tribunal. Mr. Khaitan, appearing on behalf of the Department, summarises the different processes adopted or required in the following terms:- (1) Parcelling out the total area of 14,000 acres into about 1,000 acres each, trees on each parcel being sold when the trees are about 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Under the system in force as introduced by the assessee for the use of particular plots on fixed and stated intervals and after one plot is denuded of the old trees, the new shoots appearing during the rains without any human intervention have to be properly guarded, which may be described as tantamount to tending. Mere guarding the forest area from poachers or against surreptitious removal of fuel, wood or logs cannot be considered to be any case of human intervention sufficient to make the forest produce as being an agricultural one; but the guarding of the new shoots from either being trampled under foot or being browsed by animals is something quite different in nature than simply guarding the forest area. The operation of removing undergrowth or fallen leaves, though not by the owner of the forest but by his permission accorded to villagers and others, is of some significance though not of the same extent as "tending" at the initial stage when the shoots appear after clearing of each period of 15 years. The last operation which is alleged to relate to agricultural planning is a part of forestry for removal of trees of certain description only. This is using human k ..... X X X X Extracts X X X X X X X X Extracts X X X X
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