1928 (2) TMI 14

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..... receiving rent from him, is that rent assessable to income-tax. When the case came on at first before three of us, on hearing arguments to some extent, it became clear that the decision and opinion of the three Judges of this Court in Income-tax Referred Case No. 18 of 1925 required reconsideration and it was thereupon that this case was directed to be posted for being heard before a bench of five Judges. It is correct as pointed out by the Income-tax Commissioner in his letter of reference that the question proceeds on the assumption that the subject-matter of the mortgage is land used for agricultural purposes and either assessed to land revenue in British India or subject to a local rate assessed and collected by officers of Government .....

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..... Section 10 read with Section 6 the Act provides that the tax shall be payable by an Assessee under the heading of business , in respect of the profits or gains of such business, the exemption under Sub-clause (8) of Clause (3) of Section 4 of agricultural income, must, having regard to the context, be construed as referring only to such agricultural income as is not capable of being properly designated as income from business. There is no warrant for such a contention. The expression agricultural income in Section 4 has no special context apart from all the classes of income exempted from assessment, and the expression agricultural income the definition of which is in question does not occur in any context in either Section 6 or in Se .....

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..... uctuary mortgage referred to in the question is a simple or pure usufructuary mortgage and that there is no stipulation as to any interest and that the income accruing from the properties mortgaged is to be taken and enjoyed by the mortgagee with possession. No doubt, as indicated in the question itself, the land subject to the mortgage is leased back again by the mortgagee to the mortgagor and therefore even reading both the instruments of mortgage and the instrument of lease together as indicated by the Judicial Committee in Abdullah Khan v. Basharat Husain I.L.R. (1918) All. 48, it must appear that the amount sought to be assessed is legally only rent. If it be rent and in this case there is nothing to show that it is anything else, then .....

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