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TMI Blog1992 (8) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... of developing the said land as a beach resort for tourists, is " agricultural income " assessable to tax under the abovesaid Act. The Tribunal, while reversing the concurrent decision of the authorities below, has held that the said income is not agricultural income. Consequently, the Tribunal below set aside the abovesaid assessments and allowed the appeals filed by the assessee. Hence, these revisions by the Revenue. On the other hand, the assessee has filed the other W. P. No. 7604 of 1992 for a direction to the respondent-assessing authority to grant refund of the tax amount of Rs. 2,65,215 consequent upon the abovesaid order dated January 10, 1992, of the Tribunal. So, the decision in the said writ petition depends only on the decision to be given in the five tax revision cases. Hence, both the revisions and the writ petition are heard together. Based on the following facts on which there is no dispute, the Tribunal came to the conclusion that the abovesaid income is " agricultural income ". The lease deed entered into between the lessor-assessee and the abovesaid lessee shows that the lessee should use the lease land exclusively for commercial purposes for catering to to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oming to its abovesaid conclusion are correct. Hence, he submits that the decision of the Tribunal cannot be disturbed in these revisions. We have considered the rival submissions. The Constitution of India, while granting the power to tax agricultural income to the States as per entry 46 of List 11 of the Seventh Schedule therein, and correspondingly denying the said power to the Union, defines the term "agricultural income" in article 366(1) thus : "Agricultural income' means agricultural income as defined for the purposes of the enactments relating to Indian income-tax." At the time when the Constitution was framed in 1950, the Indian Income-tax Act, 1922, was in force and it contained the definition of " agricultural income " and granted its exemption from the levy under the said Act. When the Income-tax Act, 1961, replaced the abovesaid 1922 Act, it also contained the definition of the term almost identical to what was contained in the definition under the 1922 Act. The Supreme Court also has held in Karimtharuvi Tea Estates Ltd. v. State of Kerala [1963] 48 ITR 83 (SC), 86 ; AIR 1963 SC 760, thus : " The agricultural income about which a State Legislature may enact unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sirable undergrowths, tending, pruning, cutting, felling and preservation of the plants from insect, pests and other animals by themselves would not constitute 'agriculture'. But in cases where the subsequent operations are combined with the basic operations, the subsequent operations would also constitute part of the integrated activity of agriculture'. (c) activities not involving any basic operation on the land would not constitute agriculture merely because they have relation to or connection With the land. " It has also been held in Maharajadhiraj Sir Bijay Chand Mahtab Bahadur of Burdwan, In re [1940] 8 ITR 378 (Cal), CIT v. Burdhan Kuti Wards Estate [1949]17 ITR 191 (Dacca), Raja Bahadur Vishweshwara Singh v. CIT [1954] 26 ITR 573 (Patna) and other decisions that the purpose for which the land is leased, is an immaterial consideration in deciding the question whether the income in question in relation to the land is agricultural income or not. Now, the relevant portions of the definition of the abovesaid term contained in the Tamil Nadu Agricultural Income-tax Act, 1955, in section 2(a) thereof are as follows : "2. In this Act, unless the context otherwise requires ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Income-tax Act, 1961, which is in identical terms with section 2(i) of the Indian Income-tax Act, 1922. " (emphasis supplied) Then, regarding the abovesaid Explanation found in the said section 2(a)(2) of the abovesaid Act, it is clear that the abovesaid Explanation shall not apply to the present case since the said Explanation seeks to explain only "income derived from such land", spoken to in section 2(a)(2) and so, the. Explanation is not with reference to "rent or revenue derived from land" spoken to in section 2(a)(1), about which alone we are concerned in the present case. No doubt, if the said Explanation is applicable we have to see the above-referred to rules 7 and 8 of the Income-tax Rules in order to ascertain what portion is agricultural income where the income in question is composed both of agricultural and non-agricultural incomes and would fall under any one of the abovesaid rules. But, since the Explanation is not applicable to the present case, we do not go into the said question any further. However, even though the present case is not falling under section 2(a)(2), but only under section 2(a)(1), yet in view of the finding of the Appellate Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said sentence, there is no scope for any interference in revision by us. But, it is clear on going through the entire order of the Tribunal that the abovesaid observation by the Tribunal was only passed on what is contained in the lease deed between the assessee-lessor and the above-referred to lessee and what is contained in the memorandum and articles of association of the lessee-company and also the fact that house tax alone was paid in relation to the property in question and not land revenue. These facts: are absolutely irrelevant for coming to the conclusion as to whether the income in question is agricultural income. Based on these irrelevant factors only and not on any other factual data regarding the " basic operations " carried on over the said land, the Tribunal has observed that there is no proof that agricultural operations are being carried on over the land in question. Therefore, it is but proper that the revisional jurisdiction of this court has necessarily to be exercised in this matter by setting aside the order of the Tribunal and remitting the matter back for fresh assessment based on relevant factors. Even in the assessment order of the Agricultural In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent. Out of the abovesaid total extent of land of 53 acres, it appears that part of it is used for agricultural purposes and the remaining part is used for non-agricultural purposes. In the said remaining part, some buildings are there and hotel and other business activities are carried on. In such a case, there are no specific rules of apportionment as found in the abovesaid rule 7 or B. In the above circumstances, it has to be seen whether the theory of dominant use is applicable. Actually, first of all, it has to be seen which part and to what extent, the land is used for agricultural purposes and what is the remaining part which is not used for agricultural purposes. Then only it could be said whether the dominant use is a commercial or agricultural one. In the circumstances and particularly since learned counsel for the assessee or the Revenue did not throw much light on this aspect, we are not further probing the matter for coming to any conclusion regarding the application of the abovesaid theory of dominant use. Anyway, since we are remanding the matter back, the assessing authority may make fresh assessment after ascertaining the necessary facts relating to the extent to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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