1. The petitioner here is the Zemindar of Kirlampudi. He has been assessed to income-tax on Rs. 7,441, as being income from money-lending. What happened was that when the ryots were unable to pay rents the Zemindar took promissory notes from them for the amount of rent with interest. The Income-tax Officer has assessed the Zemindar on the amount of accrued interest on such promissory notes. Mr. Rajamannar contends before us that this amount of interest must be regarded as agricultural income and he relies on Section 61 of the Estates Land Act. Section 61 says that the rate of interest on arrears of rent should be at half per cent, per mensem and Section 187(2) prohibits the landlord from taking a higher rate of interest than that provided by Section 61. All this is no doubt quite true. But these sections only apply if a suit is brought directly on the liability of the ryot to pay rent. But in this case by a fresh contract between the Zemindar and the ryots the actual character of the liability has been changed into a loan. It has ceased to be rent and has become merely a loan; and when so converted, the sections relating to interest do not apply nor does the section which prohibits the landlord from suing in a Civil Court.
2. The result is that the interest cannot be regarded as agricultural income. Our answer to the question referred must be in the negative. Costs Rs. 250 to the Commissioner.
Horace Owen Compton Beasley, Kt., C.J.
3. I agree.
4. I agree.