MUSTAFA ALI KHAN Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THIS consolidated appeal results from the consolidation of four appeals from the Chief Court of Oudh, all of which relate to assessments of income-tax under the Indian Income-tax Act, 1922.

(2.) TWO appeals relate to the income of Raja Mustafa Ali Khan of Utraula, who will be referred to as "the assessee" for the year of assessment 1939-40 and two appeals to his income for the year of assessment 1940-41. In each, case there is one appeal by the assessee and one by the Commissioner of Income-tax, United Provinces, who will be referred to as "the Commissioner. " The same questions are raised in regard to each year and it will be necessary to state and consider the facts in regard to one year only.

(3.) THE relevant provisions of the Act are as follows: 2.In this Act, unless there is anything repugnant in the subject or context, (1) "agricultural income" means (a) any rent or revenue derived from land which is used for agricultural purposes, and if 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) ; Section 4 .Any income, profits or gains falling, within the following classes shall not be included in the total income of the person receiving them: (i) to (vii) (viii) Agricultural income. In regard to the first item the question referred to the Chief Court of Oudh under Section 66 (2) of the Act was as follows: Whether income from the sale of forest trees growing on land naturally and without the intervention of human agency, even if the land is assessed to land revenue, is agricultural income within the meaning of Section 2 (1) (a) of the Income-tax Act and as such exempt from income tax under Section 4 (3) (viii) of the Act ? THEir Lordships would observe that, inasmuch as (as is stated in the order passed by the Appellate Tribunal under Section 33 of the Act) the Income-tax Officer and the Assistant Commissioner "have devoted considerable parts of their orders to a consideration of the question whether the land is assessed to land revenue or not and have both found it is not so assessed", and from this finding there has been no dissent, there appears to be little justification for raising the hypothesis in the question referred to the Court. THE Chief Court has, however, been content to entertain a question thus referred and their Lordships, since they concur in the conclusion reached by the Court, will take the same course.