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TMI Blog1979 (4) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ligious and charitable purposes has to be included in the total income and then a relief is to be granted under sub-section (2) of section 3 or is it to be excluded altogether from the total income of the assessee ? " The reference relates to the assessment year 1360 Fasli, the relevant accounting period for which is 1359 Fasli. The assessee returned an income of Rs. 21,63,075 under s. 5 of the Act. In this he did not include the income from the sale of grove and scattered trees. His contention was that the sale price of groves and scattered trees represented the price received from the sale of a capital asset, and, as such, was not exigible to tax. The amount received, according to the assessee, from the sale of scattered trees was Rs. 2,58,984 and from the sale of grove trees, Rs. 88,280. The assessing authority found that out of the amount aforesaid an amount of Rs. 78,267 represented the proceeds of sale in 1358 Fasli, and, as such, was not relevant for the accounting period 1359 Fasli. He, therefore, deducted this amount from the aggregate amount of the sale proceeds from scattered trees and grove trees. Taking the view that the particulars given regarding the break-up of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finitions.--In this Act, unless there is anything repugnant in the subject or context,-- (1) ' agricultural income ' has the same meaning as is assigned to it in the Indian Income-tax Act, 1922, and which in its adapted form is reproduced below :---- (a) ' agricultural income' means any rent or revenue derived from land which is used for agricultural purposes and is either assessed to land revenue in Uttar Pradesh or is subject to a local rate or cess assessed and collected by an officer of the State Government : (b) any income derived from such land by ...... " This Act has also been extended to Vindhya Pradesh with modifications (vide S. R. O. 1474 dated September 5, 1951, Pt. II, Sec. 3 p. 1632, published in the Gazette of India dated September, 29, 1951). For modifications, please see also Appendix A). Section 3, which is the charging section, brings to tax the agricultural income of every person. Thus, before any income can be brought to tax it must be agricultural income as defined in s. 2(1) of the Act. From the facts narrated earlier the prescribed authority had estimated the income received from the sale of planted trees at Rs. 90,359 and from the sale of groves and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a number of groves and stray fruit trees, this court took the view that it was not agricultural income as there was absence of a regularity of receipts. This case was decided on the principle that before an amount could constitute the income of an assessee the monetary return must be of a periodical nature. In the case of Consolidated Coffee Estates (1943) Ltd. v. Commr. of Agrl. IT [1970] 76 ITR 29 (Kar) the assessee had sold raw timber from jungles, and the question was whether the sale, proceeds would be liable to tax under the Mysore Agrl. I.T. Act. The court, proceeding on the principle that before an income could be treated as agricultural income, the land must be actually used for agricultural purposes in the accounting year held that as no agricultural operations had been carried on by the assessee on the land in that year the sale proceeds were not liable to tax. it was also held that sale, proceeds of grevelia trees which were also sold and which were maintained for purpose of affording shade to tea bushes constituted capital receipts, and hence, not liable to tax. The Madras High Court in the case of CIT v. M. S. P. Nadar Sons [1973] 87 ITR 202 held that where an asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is answered in the affirmative. As the first question is answered in the negative, and it has been held that the income was not liable to tax the question becomes academic. Coming to the third question, the assessee had created a trust for charitable purposes by a registered trust deed. As will be seen the assessing authorities excluded the income from the trust while calculating the total agricultural income of the assessee. The Commissioner took the same view. The Board took a contrary view, and in doing so it appears to have relied on s. 8 of the Act. Section 8 of the Act runs as under : " Exclusion of income from trust, etc. --Any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes and, in the case of property so held in part only for such purposes, the income applied or finally set apart for application thereto, shall be exempt from liability to tax under this Act. Object of the section.--The section provides for the exemption of liability of the income derived from property held under religious and charitable trust. " As will be seen s. 8 exempts income derived from the property held under trust. Under s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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