KR VISHVA NATH SINGH Vs. STATE

JUDGEMENT

(1.) On the 27th February, 1956, a Bench of this Court directed the Board of Agricultural Income-tax to state a case. The Board has in accordance with that direction stated the case. This statement covers cases of three assessees which were referred to as References Nos. 310, 311 and 312 of 1956. These assessments related to district Si'tapur. All these references raise the same question. The question of law which was raised at the time when this Court directed the statement of case by the Board was formulated thus:

(2.) Section 5 provides for the determination of agricultural income while Section 6 provides for the computation of the agricultural income of a kind which is not determinable under Section 5 or which would not come for determination under Section 5. It is, therefore, clear that total agricultural income in accordance with the definition contained in Section 2(16) of the Act is the aggregate of the income under Section 5 and income under Section 6. Further, it is clear that it is income that is taxed. The question which has to be determined is what is income. Income must be something which is left over after the permissible expenditures, for in order to have an income one has to have a surplus out of the venture whatever the nature of that venture.

(3.) The controversy between the parties was that, according to the department, the permissible deductions provided for under Section 6 of the Act were to be allowed and could be taken advantage of only up to a point when that expenditure equals the return; in other words what was contended was that if the expenditure--the permissible expenditure exceeded the return, then that expenditure which was in excess of the income was to be completely ignored in determining the total income of the assessee.