R VENKATASWAMY NAIDU Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE question that has been referred to us under Section 66(2) of the Income Tax Act, 1922 runs :-- " Whether on the facts and circumstances of the case, the income from the sale of milk received by the assessee during the accounting year is not 'agricultural income' within the meaning of the Income-tax Act. " * THE accounting year of the assessee ended with 31st March, 1946. THE assessment year was 1946-47. THE assessee, an undivided Hindu family, owned about 70 acres of agricultural land at Perur near Coimbatore. THE family also owned 65 cows and ten pairs of bulls. With reference to the cows the statement of the assessee furnished to the Income-tax Officer was : " THE cows are purely pasture-fed and not stall-fed. It is not being run as a commercial proposition. THE cows are maintained purely for manuring and other purposes connected with agriculture and only surplus milk after satisfying assessee's needs is sold to outsiders. " * During the year of account, the assessee received about Rs. 28,000 as sale proceeds of milk. THE milk was sold to the Co-operative Milk Supply Union at Coimbatore. THE assessee claimed that the profits of the sale of milk constituted agricultural income which was exempt from the payment of income-tax. THE Income-tax Officer rejected that contention. In the absence of any accounts with reference to these cattle, the Income-tax Officer estimated the profits of the sale of milk in the year of account at Rs. 4,000 and assessed the amount to income-tax. THE Assistant Commissioner, and on further appeal, the Appellate Tribunal, upheld that assessment Income and agricultural income have been defined by Section 2 of the Income Tax Act, 1922. THE expression "agriculture", however, has not been defined by the Act. "Agricultural income" has been defined by Section 2(1) of the Act. "Agricultural income" means :-- " (a) any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land-revenue in British India or subject to a local rate assessed and collected by Officers of the Crown as such (b) any income derived from such land by-- (i) agriculture, or (ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market, or (iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in sub-clause (ii) (c) any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator, or the receiver of rent-in-kind, of any land with respect to which or the produce of which, any operation mentioned in sub-clauses (ii) and (iii) of clause (b) is carried on : " *

(2.) IN Commissioner of INcome-tax, Burma v. Kokine Dairy, Rangoon, Roberts, C.J., delivering the leading judgment of the Full Bench of the Rangoon High Court, observed at page 509 :--

(3.) IT would include horticulture, which involves intensive cultivation of land as garden in the production of fruits, flowers or vegetables. IT would also include growing of trees or plants whose growth is effected by the expenditure of human effort, skill and attention in such operations, as those of ploughing, sowing, planting, pruning, manuring, watering, protecting etc. as held by Spencer, J., in Panadai Pathan v. Ramasami Chetty. The word 'agriculture' applies to the cultivation of the soil for food products or any other useful or valuable growth of the field or garden and is wide enough to cover the rearing, feeding and management of livestock, which live on the land and draw their sustenance from the soil. " * We respectfully agree with those observations. IT should therefore be unnecessary for us to review again the case law on the subject which was considered in Commissioner of Income-tax, Madras v. K. E. Sundara Mudaliar. We shall content ourselves with a reference to the dicta of Lord Wright at pages 638, 639 in Lord Glanely v. Wightman :--