ANAND BALA BHUSHAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Delhi Bench "D", has referred the following question for the opinion of this court under Section 256(1) of the Income-tax Act, 1961 :

(2.) WE have heard learned counsel for the assessee, Sri R.S. Agarwal, and learned counsel for the Revenue, Sri R.R. Agarwal.

(3.) THE last question relates to the nature of income arising from the sale of the crop of leechee fruits. THE assessee had certain land situate within the jurisdiction of Dehradun Municipality and which contained certain leechee trees. During the year under consideration, the assessee earned a sum of Rs. 925 by selling fruit crop of those trees and the question was whether the income in question was agricultural income. THE Income-tax Tribunal has held that since the land in question was situate within the limits of a municipality and was not assessed to land revenue, the income arising from the trees situate thereon could not be treated as agricultural income. Agricultural income has been defined in Section 2(1A) of the Income-tax Act which includes income derived from land by agriculture ; or 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 the market ; or the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him. THE proviso to Sub-section (1A) of Section 2, however, requires that the land from which the income is derived must be assessed to land revenue in India or is subject to a local rate assessed and collected by the officers of the Government or where the land is not so assessed to land revenue or subject to a local rate, it is not situated in any area which is comprised within the jurisdiction of a municipality. Admittedly, the land in question is not assessed to land revenue or a local rate and it was situate within the jurisdiction of the municipality of Dehradun. THE result, therefore, is that by virtue of the proviso, the income derived from the said land cannot be treated as agricultural income. THE Tribunal was, therefore, right in holding that the income in question was not agricultural income. We, therefore, hold that the sale proceeds of the leechee fruits was not agricultural income and was not exempt from tax. We answer the said question accordingly. THE respondent-Revenue shall get its costs of this reference from the assessee which we assess at Rs. 1,000.