Case: The Commissioner Of Income-Tax,West Bengal, Calcutta Vs. Raja Benoy Kumar Sahas Roy

2. The respondent owns an area of 6,000 acres of forest land assessed to land revenue and grown withal trees. The forest was originally of spontaneous growth, "not grown by the aid of human skill and labour" and it has been in existence for about 150 years. A considerable income is derived by the assessee from sales of trees from this forest.The assessment year in which this forest income was last taxed under the Indianer and tillwhich is the assessment year in question, it wasalways left out of account. The assessment foralso was first made without including therein any forest income, but the assessment was subsequentlyn response to a notice under2) read withof the Act, the respondent submitted a return showing the gross receipt of Rs. 51,798 from the said forest. A claim was, however, made that the said income was not assessable under the Act as it was agricultural income and was exempt under) of the Act. The IncomeOfficer rejected this claim and added a sum of Rs. 34,430 to the assessable income as income derived from the forest after allowing a sum of Rs. 17,548 as expenditure.e Assistant Commissioner confirmed the assessment and the IncomeAppellate Tribunal also was of opinion that the said income was not agricultural income but was income derived from the sale of jungle produce of spontaneous growth and as such was not covered by2(1) of the Act. At the instance of the assessee the Tribunal referred to the High Court under1) of the Act two questions of law arising out of its order, one of whichon the facts and in the circumstances of this case, the sum of Rs. 51,977 is agricultural income and as such is exempt from payment of tax under) of the Indian Income) The Tribunal submitted a statement of case from which the following facts appear as admitted orThe area covered by the forest is about 6,000 acres, trees growing beingi) It is of spontaneous growth being about 150 years old. It is not a forest grown by the aid of human skill andThe forest is occasionally parcelled out for the purposes of sale and the space from which trees sold are cut away is guarded by forest guards to protectIt has been satisfactorily proved that considerable amount of human labour and care is being applied year after year for keeping the forest alive as also for reviving the portions thatdenuded as a result of destruction by cattle and otherThe staff is employed by the assessee to perform the following specific) Cutting of channels to help the flow of rainGuarding the trees against pests and other destructiveSowing of seeds after digging of the soil in denuded areas.The Tribunal found that the employment of human labour and skill in items (a) to (f) was necessary for the maintenance and upkeep of any forest of spontaneous growth. Regarding item (g), however, it found that the said operation had been performed only occasionally and over a small fraction of the area where the original growth had been found to have been completely denuded. Such occasions werefew and far between, the normal process being that whenever a tree was cut, a stump of about 6" height was left intact which sent forth offshoots all round bringing about fresh growth in course of time. This went on perpetually unless an area got otherwise completely denuded.The reference was heard by the High Court and the High Court held that actual cultivation of the land was not required and as human labour and skill were spent for the growth of the forest the income from the forest was agricultural income. It accordingly answered the above question in the affirmative. The Revenue obtained the requisite certificate of fitness for appeal to this Court and hence this appeal.

Court's reasoning:
An argument based on entries 14 and 19 of List II of the Seventh Schedule to the Constitution may be disposed of at once.It was urged that entry No. 14 referred to agriculture including agricultural education and research, protection against pests and prevention of plant diseases while entry No. 19 referred to forestand there wasa clear line of demarcation between agriculture and forestwith the result that forestry could not be comprised within agriculture.If forestry was thus not comprised within agriculture, any income from forestry could not be agricultural income and the income derived by the assessee from the sale of the forest trees could not be agricultural income at all, as it was not derived from land by agriculture within the meaning of the definition of agricultural income given in the Indians argument, however, does not take account of the fact that the entries in theof the Seventh Schedule to the Constitution are heads of legislation which are to be interpreted in a liberal manner comprising within their scope all matters incidental thereto.They are not mutually exclusive. If the assessee plants on a vacant site trees with a view that they should grow into a forest, as, casuarina plantationss labour and skill for that purpose, the income from such trees would clearly be. It hasto be remembered that even though this demarcation between agricultureforestry was available in the Lists contained in the Seventh Schedule to the Government of India Act1935, no such demarcation existed in the Devolution Rules made under the Government of India Act, 1919, and in any event the definition of agricultural income with which we are concerned was incorporated in the IndianActs as early as 1886, if not earlier; videof the IndianAct, 1886 (II ofso to be remembered that in spite of this demarcation between agriculture and forests in the Constitution, taxes on agricultural income are a separate head under entry 46 of List II of the Seventh Schedule and would comprise within their scope even income from forestry operations provided it falls within the definition of agricultural income which according to the definition given under1) means agricultural income as defined for the purposes of the enactments relating to Indian. It was urgedon behalf of the assessee that the Court should accept the wider significance of the term and include forestry operations also within its connotation even though they did not involve tilling of the land, sowing of seedsplanting, or similar work on the land. The argument was that tilling of the land, sowing of the seedsplanting or similar work on the land were no doubt agricultural operations and if they were part of the forestry operations carried on by the assessee the subsequent operations would certainly be a continuation of the same and would therefore acquire the characteristic of agricultural operations.But the absence of these basic operations would not necessarily make any difference to the character of the subsequent operations and would not divest them of their character of agricultural operations, so that if in a particular case one found that the forest was of spontaneous growth, even so if forestry operations were carried on in such forests for the purpose of furthering the growth of forest trees, these operations would also enjoy the character of agricultural operations.If breeding and rearing of live, butter andetc., could be comprised within the term "agriculture", it was asked, why should these also be notile recognizing the force of the above expressions of opinion we cannot press them into service in favour of the assessee for the simple reason that "agricultural income" has been defined in the Constitution itself in1) to mean agricultural income as defined for the purposes of enactments relating to Indian incometax and there is a definition of "agricultural income" to be found in1) of thee have therefore got to look to the terms of the definition itself and construe the same regardless of any other consideration, though, in so far as the terms "agriculture" and "agriculturalare concerned, we feel freein view of the same not having been defined in the Act itself, to consider the various meanings which have been ascribed to the same in the legal and other dictionaries.The cases above noted all of them interpret the term "agriculture" in its narrower sense, though there is a marked progress fromthe extremely narrow construction put upon it by Bhashyam Ayyangar, J., in Murugesa Chettiat p.) anda Sastri, J., inat p.at p.. It is interesting to notethat all throughthese cases runs the central idea of either tillage of the land or sowing of seeds or planting or similar work on the land which invests the operation with the characteristic of agricultural operations and wheneverl idea is fulfilled there is the user of land for agricultural purposes and the income derived there from becomes agricultural income.The cases above noted all of them involve some expenditure of human skill and labour either on the land or the produce of the land, for without such expenditure there would be no question of the income derived from such land being agricultural income. Where, however, the products of the land are ofor spontaneous growth involving no expenditure of humanand skill there is unanimity of opinion that no agricultural operations were at all involved and there is no agricultural income. In such cases, it would be the absence of any such operations rather than the performance thereof which would be the prime cause of growth of such products.fa Ali Khan v. Commissioner of, which went up to the Privy Council, the Oudh Chief Court held that income from the sale of forest trees growing on land naturally and without the intervention of human agency, evenif the land was assessed to landrevenue, was not agricultural income within the meaning of(a) of theAct. The Courtfollowed an earlier decision given by it in the case of Maharaja of Kapurthala v. Commissioner of Incomeand Cat p., in which thehad discussed the meaning to be ascribed to the term "agriculture" and observed atof I"A fiscal statute should nodoubt be construedand, if there be any doubt about its construction, the subject must be given the benefit. But we do not feel any doubt that the expression"land used for agricultural purposes"in the Incometax Act does not extend to forests of spontaneous growth, where nothing is done to prepare the soil for trees to be planted therein, and where the growth of the trees is not fostered by tillage. We should not be justified in giving the taxpayer the benefit of the dictionary definition when it is not disputed that the meaning of the term"agricultural&quot; cannot beextended for the purpose of theAct to all the secondarytherein suggested. We therefore construe the term in its primary sense. Wed that income from the sale of forest treesof spontaneous growthgrowing on land which is assessed to land revenue is not agricultural income within the meaning of(a) of the0. It may benoted at the outset that the definition of "agricultural income" given in1) of thex Act is in identical terms with the definitions of that term as given in the various AgriculturalActs passed by the several States. It will be idle therefore to treat "Taxes on Agricultural Income" which fall within the legislative competence of the Stateas having no relation at all to the corresponding provisionsof the Indiance it is determined that the income in question is derived from land used for agricultural purposes by agriculture, it would be agricultural income and as such exempt from tax under) of thex Act and would fall within the purview of the relevant provisions of the several AgriculturalActs passed by the various States.The result of this determination would be that the assessee would not be liable to assessment under the IndianAct but he would have to pay thex which would be levied upon him under the relative Agricultural. In order that an income derived by the assessee should fall within the definition of agricultural income two conditions are necessary to be satisfied and they(i) that the land from which it is derived should be used for agricultural purposes and is either assessed for land revenuethe taxable territories or is subject to local rates assessed and collected by the officers of the Government as such; and (ii) that the income should be derived from such land by agriculture or by one or the other of the operations described in(b) of. It was at one time thought that the assessment of the land to land revenue in the taxable territories was intended to exempt the income derived from that land from liability for payment ofaltogether and that theory was based on the assumption that an assessee who was subject to payment of land revenue should not further be subjected to the payment of incometax, because if he was so subjected he would be liable to pay double taxation.Whatever may have been the genesisexemption of agricultural income fromthe liability to pay land revenue or fixed peishkush under Regulation XXV of 1802 was not considered by Rankin, J.