Case: The Commissioner Of Income-Tax,Bihar And Orissa Vs. Sri Ramakrishna Deo

decision of the High Court that the income thus realised is within the exemption under S. 4 (3) viii) could be supported even on the view of law taken in 1958 S C R 101 : ((S) AIR 1957 SC 768 ). The argument was that there was unimpeachable evidence that the old forests had disappeared under Podu cultivation, that the estate had been regularly engaged in planting trees at least from the year 1904, as is shown by the accounts of the zamin, that it was a reasonable inference to make that there had been similar plantations even during the years prior to 1904 notwithstanding that no accounts were produced for those years, because it would not be reasonable to expect that such accounts would now be available, that though the amount shown as spent for plantation might not be considerable, that was understandable when regard is had to the fact that the agricultural operations were conducted on the hills and not on the plains, that, on these facts, it would be proper to conclude that the forests were in their entirety the result of plantation. It would be an erroneous approach, it was argued, to call upon the assessee to prove tree by tree that it was planted.Now, these are matters of appreciation of evidence on what is essentially a question, of fact, viz., whether the trees were of spontaneous growth or were products of plantation. On this, the Tribunal has given a clear finding on a consideration of all the material evidence, and its finding is final and not open to challenge in a reference under S. 66 (1) of the Act.Even the learned Judges of the High Court who considered themselves free to review that finding-and, as already pointed out, without -justification, could only observe that the trees must have mostly grown from the stumps left when the forests were burnt for purposes of Podu cultivation - a finding which is fatal to the contention now urged for the respondent that they were the result of plantation. We are of opinion that there are no grounds on which the finding of the Tribunal could be attacked in these proceedings.9. It remains to deal with one other contention urged on behalf of the respondent, and that is based on the fact that the amounts spent in the upkeep of the forests were large in comparison with the receipts therefrom. The following are the figures relating to the forest receipts and expenses for the years with which the present assessments are concerned :YearsReceiptsExpenses1942 43Rs. 438,894Rs. 174,4371943-44Rs. 407,447Rs. 209,8951944 45Rs. 552,122Rs. 228,8301945-46Rs. 372,971Rs. 247,2161946-47Rs. 689,366Rs. 460,369The argument is that from the high proportion of the expenses in relation to the receipts it could be inferred that the income from trees planted by the estate formed a substantial portion of the income derived from the forests. And support for this conclusion is sought in the following observations in 1958 S.C R 101 : (AIR 1957 S C 768) :"The expenditure shown by the assessee for the maintenance of the forest is about Rs.17,000 as against a total income of about Rs. 51,000. Having regard to the magnitude of this figure, we think that a substantial portion of the income must have been derived from trees planted by the proprietors themselves."10. To appreciate the true import of these observations, we must have regard to the context in which they occur. The facts found in that case were that portions of the forest which was originally of spontaneous growth had gradually been denuded, that the proprietor had planted trees in the areas so denuded, that this had gone on for a period of over 150 years, and that therefore "the whole of the income derived from the forest cannot be treated as non-agricultural income". It was then observed that "If the enquiry had been directed on proper lines, it would have been possible for the Income-tax authorities to ascertain how much of the income is attributable to forest of spontaneous growth and how much to trees planted by the proprietor", but that, in view of the long lapse of time, it was not desirable to remand the case for enquiry into the matter. Then follow the observations on which the respondent relies, and when read in the light of the findings that the plantations made by the proprietors were not negligible, they mean nothing more than that out of the total income a substantial portion was likely to be agricultural income, and that it was therefore not a fit case for ordering fresh enquiry.These observations do not lay down that if considerable amounts are expended in the maintenance of forests, then it must be held that the trees were planted by the proprietors. They only mean that it a considerable portion of the forests is found to have been planted, a substantial portion of the forest income may be taken to have been derived therefrom. And this too, it must be remarked, is only a presumption of fact, the strength of which must depend on all facts found.In the face of the clear finding in the present case that the forests with which the assessment years are concerned were of spontaneous growth, the observations quoted above can be of no assistance to the respondent, it is scarcely necessary to add that the observations "If the enquiry had been directed on proper lines, it would have been possible for the Income-tax authorities to ascertain how much of the income is attributable to forest of spontaneous growth and how much to trees planted by the proprietors" quoted above cannot be read, as was sought to be done for the respondent, as throwing on the Department the burden of showing that the income sought to be taxed was not agricultural income. That, in their context, is not the true meaning of the observations, and the law is as laid down in 1956-29 I T R 529: ((S ) A I R 1956 S C 522).

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]5. At the very outset, we should dissent from the view expressed by the learned Judges that the burden is on the department to prove that the income sought to be taxed is not agricultural income.The law is well settled that it is for a person who claims exemption to establish it, and there is no reason why it should be otherwise when the exemption claimed is under the Income taxis ample authority for the view that the principle that a person who claims the benefit of an exemption has to establish it, applies when the exemption claimed is under the provisions of theAct. Vide the observations of the Lord President and of Lord Adam in Maughan v. Free Church of Scotland,Tax Cas 207 at p. 210and the observations of Lord Hanworth, M. R. in Keren Kayemeth Le Jisroel Ltd. v. Commissioners of Inland Revenue,Tax Cas 27 at p.decisions of Indian Courts have likewise ruled and quite rightly that it is for those who seek exemption under S. 4 of the Act to establish it. Vide Amritsar Produce Exchange Ltd., In re,I T R 307 at p. 327 : ( AIR 1938 Cal 44 at p. 48) and Sm. Charusila Dassi, In re,1 T R 362 at p. 370 : (AIR 1947 Cal 148 at p. 151).On the merits, the question what is agricultural income within S. 2 (1) of the Act is the subject of a recent decision of this Court in Commissioner ofWest Bengal, Calcutta v. Benoy Kumar Shahs Roy, 1958 S C R 101 at pp. 158 155, and 160:((S) AIR 1957 S C 768 at pp. 788, 789 and 790). There, it was held that before an income could be held to be agricultural income, it must be shown to have been derived from land by agriculture or by one or the other of the operations describe in cls. (i) and (ii) of S. 2 (1) (b) of the Act, that the term "agriculture" meant, in its ordinary sense, cultivation of the field, that in that sense it would connote such basic operations as tilling of the land, sowing of trees, plantation and the like, and that though subsequent operations such as weeding, pruning, watering, digging the soil around the growth and removing under growths could be regarded as agricultural operations when they are taken in conjunction with and as continution of the basic operations mentioned before, they could not, apart from those operations, be regarded as bearing the character of agriculturalthese are matters of appreciation of evidence on what is essentially a question, of fact, viz., whether the trees were of spontaneous growth or were products of plantation. On this, the Tribunal has given a clear finding on a consideration of all the material evidence, and its finding is final and not open to challenge in a reference under S. 66 (1) of the Act.Even the learned Judges of the High Court who considered themselves free to review thatas already pointed out, withoutjustification, could only observe that the trees must have mostly grown from the stumps left when the forests were burnt for purposes of Podu cultivationa finding which is fatal to the contention now urged for the respondent that they were the result of plantation. We are of opinion that there are no grounds on which the finding of the Tribunal could be attacked in theseobservations do not lay down that if considerable amounts are expended in the maintenance of forests, then it must be held that the trees were planted by the proprietors. They only mean that it a considerable portion of the forests is found to have been planted, a substantial portion of the forest income may be taken to have been derived therefrom. And this too, it must be remarked, is only a presumption of fact, the strength of which must depend on all facts found.In the face of the clear finding in the present case that the forests with which the assessment years are concerned were of spontaneous growth, the observations quoted above can be of no assistance to the respondent, it is scarcely necessary to add that the observations "If the enquiry had been directed on proper lines, it would have been possible for theauthorities to ascertain how much of the income is attributable to forest of spontaneous growth and how much to trees planted by the proprietors" quoted above cannot be read, as was sought to be done for the respondent, as throwing on the Department the burden of showing that the income sought to be taxed was not agricultural income. That, in their context, is not the true meaning of the observations, and the law is as laid down inI T R 529: ((S ) A I R 1956 S C 522).