1. This reference arises out of the assessment of income-tax under Act VII of 1918 of the income, derived by the Zamindar of Singampatti from forests and fisheries within the ambit of his zamindari. The assessee objects to the assessment (1) on the ground that the income is agricultural income within the meaning of Section 4 of the Act and, therefore, not chargeable to income-tax; (2) that the assessment is illegal as contravening the terms of his permanent sanad for the zamindari and the provisions of Regulation XXV of 1802.
2. It is convenient to consider first the effect of the sanad, a copy of which has been filed before us, and the terms of the Regulation. The sanad is a lengthy document largely reproducing the language of the Regulation under which it was granted. Its general effect is this--in view of the bad effect of fluctuations in the assessment of land revenue, both in obstructing the development of the country and diminishing the security of property, the British Government has resolved 'to fix for ever a moderate assessment of public revenue on the lands' held by Zamindars and others; and to that end has fixed the permanent annual jumma (total, demand) of the Singampatti zamindari at 2,300 star pagodas. Clause (4) of the sanad says:
This permanent assessment of the land on your zamindari is exclusive of the revenue derived from the manufacture and sale of salt and saltpetre, exclusive of the sayer or duties of every description, whether by sea or land, the entire administration of which the Government reserves to itself; exclusive of the abkari or tax on the sale of spirituous liquors, and intoxication drugs; exclusive of the excise which is or may be levied on commodities or articles of consumption; exclusive of all taxes personal and professional, as well as of those from markets, fair and bazaar; exclusive of Lakhiraj lands (lands exempt from payment of public revenue) and of all other alienated lands paying a small quit rent (which quit rent uncle angeable by you, is included in the assets of your zamindari) and exclusive of all lands and Russooms heretofore appropriated to the support of Police establishment. The Government reserves to itself the entire exercise of its discretion in continuing or abolishing temporarily or permanently, the articles of revenue included, according to the custom and practice of the country, under the several heads above stated.
2. A later clause (No. 8) provides that no increase of the fixed jumma shall ever be made, whatever changes or improvements the grantee's interest or pleasure may lead him to introduce into the zamindari.
3. This is the grant under which the zamindari has been held since 1802. A dispute at one time arose as to whether it included the forest tracts with which we are now concerned, or only covered the villages and cultivated lands situated on the plains and contiguous thereto. This dispute was settled by the judgment of this Court in Sivasubramanya v. Secretary of State for India I.L.R(1886) . Mad. 285. confirmed on appeal by the Privy Council in the Secretary of State for India in Council v. Nellakutti Siva Subramania Tenar I.L.R. (1892) Mad. 101, and it was decided that the forest tracts a]so were included in the zamindari held under the ganad and that the latter was not confined to the plain villages and cultivated tracts. The learned Government Pleader has however argued that the peshkash was calculated on the rental of cultivated lands actually received by the Zamindar at the time of the grant, and that, no allowance was made for profits to be made out of forests and fisheries. He would have us therefore hold that, income from such sources was not included in the jumma, which was commuted into a fixed peshkash, and is therefore assessable to tax apparently under any designation.
4. Admittedly there is no record of the basis of calculation of the peshkash for this zamiudari. It is quite possible that only the rentals of cultivated lands were taken into account, receipts from other sources being at that time so small as to be negligible. But even assuming this to be so, it does not follow that the neglected items were not included in the commutation. On the contrary, it seems to us they must be held to be covered by the permanent annual jumma of the zamindari. But, in simple language, the effect of the document seems to be that, subject to the payment of the peshkash and the various demands referred to in Clause (4), the zamindari is given to the zamindar to make what he can out of it (the possibilities of improvements and developments being distinctly contemplated) free of all further demands from Government, If it had been intended to exclude profits from forests and fisheries, such profits would surely have been mentioned in Clause (4) along with such items as salt, sayer, abkari, excise and markets. We may add that if tike Government Pleader's contention is correct, then apart from the claim to ownership of the forests, which was first put forward by Government in 1865 and finally negatived by the Privy Council decision in 1891, it was at any time open to Government to add to the peshkash a direct cess on the forests, without having recourse to the indirect medium of the Income-tax Act. As far as f appears, there has never been any question of doing this.
5. It was argued that 'Income-tax' is covered by the fifth item in Clause (4) ('all taxes personal and professional'). We do not think this argument can be accepted. The last sentence in the clause shows that as regards Clause (4) the Government had in mind items of taxation then in force; and income-tax is of much later intention. Exactly what imposts were had in mind under this head we arc not in a position to say; but, the allocation of the words 'personal' and 'professional' seems to suggest taxes on individuals by reason of their status (caste or calling). Power to levy a tax in the shape of a percentage on income derived from the zamindari itself would apply to the rental of cultivated lands just as well as to income from forests and would render entirely nugatory the guarantee of fixity of demand, which was the keynote of the Government's policy.
6. We can only conclude therefore that the peshkash was fixed in commutation, not only of the rentals of cultivated lands but also of all income which might be derived from forests or fisheries; and the sanad and Regulation alike make it clear that these incomes in the lands of the Zamindar were exempted from further taxation by the Government.
7. For the explicit nature of the exemption we may quote the words of Section 1 of the Regulation, which recites that Government has resolved 'to fix for ever a. moderate assessment of public revenue on such lands, the amount of which shall never be liable to be increased under any circumstances'; and these words are reproduced in Clause (2) of the sanad with the immaterial substitution of the word 'change' for 'increase.'
8. That this exemption applies to taxes which might be imposed thereafter, as well as to taxes in force at the time of the sanad, is clear from the judgment of the House of Lords in Associated Newspapers, Limited v. City of London Corporation  2 A.C. 429, and it is no less clear from the same judgment that although it is competent to the legislature to withdraw or modify such an exemption by subsequent enactment, this can only be done expressly and not in general terms or by implication. For the latter proposition we may also refer to Maxwell on Interpretation of Statutes (6th Edition) Chapter VII, Section 3.
9. There is nothing in the Income-tax Act to indicate that the attention of its framers was ever drawn to Regulation XXV of 1802; and we find it impossible to treat as a legal and effective abrogation of the exemption the words of Section 3:
10. Have us hereinafter provided, this Act shall apply to all income from whatever source it is derived, if it accrues or arises or is received in British India, or is, under the provisions of this Act, deemed to accrue or arise or to be received in British India.'
11. In our opinion the assessee's objection based on the terms of the sanad is sound and must prevail.
12. It is therefore not necessary to determine whether income from forests and fisheries comes under the definition of 'agricultural.' At first glance it may seem difficult to include either, and especially the fishery income. It may however be pointed out that a reference to Murray's and Webster's dictionaries shows that the word 'Agriculture,' while sometimes used in the narrow sense of the art or science of cultivating the ground, is also used in a much wider sense so as to include even 'forestry,' according to Webster. In which sense it was used by the framers of the Income-tax Act would be a matter for determination and to this end it would not be out of place to consider the probable reason for the exemption of agricultural income from income-tax. No other reason is suggested than the equity of exempting from further burden income which had already paid toll to the State in the shape of land revenue. This applies equally whether the land is liable to ryotwari assessment, or whether Government demands have been permanently commuted as in the case of a permanently-settled estate. Logically, the exemption from further burden should apply to both; and it would seem that it ought to cover all sources of income which had been commuted under a permanent settlemaent.
13. We would answer the Reference by saying that the income from forests and fisheries in the Singampatti zamindari is not liable to income-tax.