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TMI Blog1971 (10) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion was negatived by the Income-tax Officer on the short ground that the land was not assessed to land revenue or a local rate as required by section 2(1)(a). Appeals against this decision to the Appellate Assistant Commissioner by the assessees also failed. The assessees then preferred further appeals to the Income-tax Appellate Tribunal (hereinafter referred to as " the Tribunal "). The Tribunal accepted the contention of the assessees and ordered the deletion of the amount of Rs. 21,000 from each of the assessees' total income. The department being dissatisfied moved an application under section 256(1) of the Income-tax Act, 1961, to the Tribunal and the Tribunal has stated the following question of law for our opinion in the case of both the assessees: " Whether, on the facts and in the circumstances of the case, the income of Rs. 21,000 was liable to be exempt as agricultural income under section 4(3)(viii) of the Indian Income-tax Act, 1922, equal to section 10(1) read with section 2(1)(a) of the Income-tax Act, 1961? " The contention of the learned counsel for the department is that the Tribunal has completely gone wrong in holding that the income from the land in disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, therefore, can it be presumed that the amount which the assessee paid to the army authorities to enjoy the benefit of the use and the limited possession of the land by growing agricultural product was anything else but an amount paid in relation to the land on a definite pre-determined basis ? It may not be land revenue paid in the normal sense as is commonly understood but it is a payment on a determined basis which is relatable to and related to the agricultural land. Coming to the other argument of the learned departmental representative that the land exempted from the payment of land revenue is not the land assessed to land revenue within the meaning of section 2(1)(a) of the Income-tax Act. The land may be assessed to land revenue. The land may be exempted from land revenue by the Government for considerations of the State policy. If a land is exempted from land revenue by an order of the Government, the exempted land does not pay land revenue but it was once assessed to land revenue. It has been exempted from the payment of land revenue. Does it mean that the exempted piece of agricultural land ceases to be agricultural land ? No. Can we say that it was not assessed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the lessee but share the yield or the income from the agricultural land. Can the share from that income be assessed in the hands of the officer for the reason that even when undoubtedly, the yield is from agricultural land, but as the land is exempt from land revenue it should be taken as not assessed to land revenue. Hence, the exemption under the Act is no more available to the officer. If it were to be taken to be so, the very purpose of the reward would be defeated. That is not what the Government intended. What was not intended to be by the Government cannot be done by the Revenue Collectors of the Government. May be of the State Government or the Central Government. What the Government intends must be intended by those who collect the revenue for the Government and the Revenue Collectors cannot but intend what the Government intended. If it was to be otherwise, the two wings of the Government would be pulling in opposite directions. When you pull in opposite directions, you remain where you are. This renders the revenue machinery unworkable. That cannot be as it should not be. What cannot be because it should not be, cannot be permitted. " It appears to us that the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here could be a special order to the contrary. In that case lands within the military cantonment would be assessed to land revenue. The warrant for exemption of lands in military cantonments is to be found in clause 1 of Appendix XV in Douie's Settlement Manual (4th edition), which reads thus: " All lands in a military cantonment and all village sites of ancient standing will be exempt from assessment in the absence of special orders and if exempt heretofore." Paragraph 461 of the said Manual deals with assessment of land in civil stations and cantonments and is in the following terms: " Instructions regarding the assessment of land in civil stations and cantonments will be found in Appendix XV, in which have also been embodied instructions issued by the Government of India regarding the assessment of land in municipalities. " It is, therefore, clear that lands in military cantonments would not be assessable to land revenue unless there is a special order therefore. In our opinion, the Tribunal's decision cannot be sustained, either on principle or on authority. The mere fact that any sum due to the Central Government is recoverable as arrears of land revenue does not make t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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