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TMI Blog1940 (7) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... on arrear rents collected from agricultural tenants under the provisions of Section 67 of the Bengal Tenancy Act, 1885 which is as follows: An arrear of rent shall bear simple interest at the rate of six and a quarter per cent. per annum from the expiration of that quarter of the agricultural year in which the instalment falls due to the date of payment or of the institution of the suit whichever date is earlier. The simple question is-is the sum of ₹ 2,841, which is interest on rents in arrear collected from agricultural tenants, agricultural income, and so not assessable under the Income- tax Act? The learned Commissioner relied upon the case of Sheik Eusuf v. Jatindra Nath Roy reported in 38 C.W.N. 184 and held that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of lands or houses . 'Revenue' is defined by the same dictionary as The return, yield, or profit of any lands, property or other important source of income . Revenue would include, in India, any non-periodic payment to the landlord in respect of the use of his lands such as salami. Rent is always associated with land. It is a payment for the use of land. Interest, on the other hand, is associated with money; it is a payment for the use of money. In this case the rent was payable to the landlord by the tenant by virtue of a contract of tenancy of land. The cause of action in respect of rent arises out of contract. On the other hand the interest which is payable in respect of arrears arises out of a statutory prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under clause (a) of that sub-section and the remaining clauses, therefore, are not at all material for our purposes. It is also not disputed that the rents upon which interest was paid by the tenants were due in respect of lands which were used by them for agricultural purposes and which are assessed to revenue in British India. The whole question, therefore, narrows down to this, namely, whether the interest paid by the tenants upon arrears of rent under Section 67 of the Bengal Tenancy Act would be rent or revenue derived from these agricultural lands as contemplated by Section 2(1)(a) of the Income-tax Act. A large number of authorities have been cited to us by the learned Advocates on both sides, but none of them seems to be directl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de interest due upon it under Section 67 of the Bengal Tenancy Act or damages awarded under Section 68 of the Bengal Tenancy Act [vide B.T. Act, Section 161(c)] and for the entire arrears including interest the tenure or holding itself may be sold. Then again in computing the amount claimed in a rent suit for purposes of an appeal under Section 153 of the Bengal Tenancy Act, the interest or statutory damages claimed by the landlord might be taken into account (vide the observation of Sir George Rankin in the case of Tarini Charan Bhattacharyya v. Kedar Nath Haldar I.L.R. 56 Cal. 723 at p. 729.) The question, however, which we have to determine in the present case is a different one and it is as to whether the interest that was paid by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon arrears of rent after the due date even though there is no stipulation to that effect in the contract. In the second place it operates as a check upon any imprudent contract that might be entered into between the landlord and the tenant on this point and prevents the landlord from realising interest from the tenant in excess of the rate fixed by the statute. Section 67 does not say that the interest payable on arrears of rent would be treated as rent. It is undoubtedly true, as I have already pointed out, that a rent decree which includes both rent proper as well as interest can be enforced by sale of the entire tenure or holding, but here again the test is not whether it could be realised by sale of the land, but whether the income as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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