The assessees are the sons of the Maharajah of Pithapuram, the proprietor of the zamindari of Pithapur which was permanently settled under the Madras Permanent Settlement Regulation (Madras Regulation XXV of 1802). They are the joint proprietors of an estate settled upon them by their father. The estate which formed part of the zamindari of Pithapur includes certain forests from which the assessee derive the income by the sale of wood, bark, leaves, other usufruct of trees, minor forest produce, and licence fees. They supplement this income by the sale of trees in non-forest areas of the estate held by them. It is admitted that the trees in the forest and non-forest areas have grown wild and that agricultural operations are not carried on in any of the areas. For the year of the account 1941-42, the income from these sources amounted to Rs. 7,612 and the assessees were taxed on this sum for the year 1942-43. They maintained that they were exempt from taxation for two reasons. In the first place they said that the income was derived from the produce of a permanently settled estate which was free from all taxation, other than that imposed by way of peishkush, by reason of the provisions of the Madras Regulation. In the second place they contended that the income was agricultural income within the meaning of Section 2(1) of the Indian Income-tax Act, 1922, and as such is exempt from income-tax by reason of Section 4(3)(viii). The Income-tax Officer rejected both these pleas. His decision was upheld by the appellate Assistant Commissioner and by the Income-tax Appellate Tribunal. At the request of the assessees, the Tribunal has, under section 66(1) of the Income-tax Act, referred for the opinion of this Court two questions. The Tribunal has worded them as follows :-
'(1) Whether the imposition of income-tax in respect of income derived from a permanently settled estate would be a breach of Regulation XXV of 1802 relating to permanent settlement.
(2) Whether the income of Rs. 7,612 derived from the sale of wood etc. (as detailed hereinabove), is exempt under Section 4(3)(viii) read with Section 2(1) if the Indian Income-tax Act, 1922.'
The words 'as detailed hereinabove' mean of course as detailed in the order of reference.
In Chief Commissioner of Income-tax v. Zamindar of Singampatti, a special Bench of three Judges of this Court held that income from a permanently settled estate was exempt from all taxation beyond the peishkush payable to Government. The precise question in that case was whether the income from forests and fisheries was agricultural income and therefore not chargeable to income-tax. The Court did not decide whether such income came within the definition of agricultural income, although it would appear that the learned Judges were inclined to the view that it was. They based their decision on the broad ground that the Madras Regulation and the sanad issued to the zamindar precluded further taxation by the Government. The sanad followed the provisions of the Regulation. In the present case, the sanad has not been produced, but it may be taken that it was also in accordance with the Regulation.
If the decision in Chief Commissioner of Income-tax v. Zamindar of Singampatti stood alone we should be bound to answer the first question referred in favour of the assessees; but it does not stand alone. There is a judgment of the Privy Council of later date which has direct bearing. It was delivered in Probhat Chandra Barua v. King Emperor, where the same question arose with reference to the Bengal Permanent Settlement Regulation (Bengal Regulation I of 1793). Their Lordships pointed out that while that Regulation contains assurance against any claim to an increase of the jama, based on an increase of the zamindari income, no promise is given in it that a zamindar shall in respect of the income which he derives from his zamindari be exempt from liability to any future general scheme of property taxation, or that the income of the zamindari shall not be subjected with other incomes to any future general taxation of incomes.
The Bengal Regulation is differently worded from the Madras Regulation, but they are both to the same effect. Article 4 of the Bengal Regulation reads as follows :-
'The Governor-General in Council accordingly declares to the zamindars, independent talookdars and other actual proprietors of land with or on behalf of whom a settlement has been concluded under the Regulations abovementioned that at the expiration of the term of the settlement no alteration will be made in the assessment which they have respectively engaged to pay, but that they, and their heirs, and lawful successors, will be allowed to hold their estates at such assessment for ever.'
The Madras Regulation opens with this statement :-
'Whereas it is known to the zamindars, mirasidars, raiyats and cultivators of land in the territories subject to the Government of Fort St. George that from the earliest until the present period of time the public assessment of the land revenue has never been fixed; but that, according to the practice of Asiatic Governments, the assessment of the land-revenue has fluctuated without any fixed principles for the determination of the amount, and without any fixed principles for the determination of the amount, and without any security to the zamindars or other persons for the continuance of a moderate land-tax; that, on the contrary, frequent inquiries have been instituted by the ruling power, whether Hindu or Muhammadan, for the purpose of augmenting the assessment of the land revenue; that it has been customary to regulate such augmentations by the inquires and opinions of the local officers appointed by the ruling power for the time being; and that in the attainment of an increased revenue on such foundations, it has been usual for the Government to deprive the zamindars, and to appoint persons on its own behalf to the management of the zamindaris, thereby reserving to the ruling power the implied right and the actual exercise of the proprietary possession of all lands whatever; and whereas it is obvious to the said zamindars, mirasidars, raiyats and cultivators of land that such a mode of administration must be injurious to the permanent prosperity of the country by obstructing the progress of agriculture, population and wealth, and destructive of the comfort of individual persons by diminishing the security of personal freedom and of private property; wherefore, the British Government, impressed with a deep sense of the injuries arising to the State and to its subjects from the operation of such principles, has resolved to remove from its administration so fruitful a source of uncertainty and disquietude, to grant to zamindars and other landholders, their heirs and successors, a permanent property in their land in all time to come, and 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.'
In the clauses which follow effect is given to this declaration.
In Probhat Chandra Barua v. King Emperor, the Judicial Committee held that the zamindar of a permanently settled estate is assessable to Indian income-tax in respect of the income, profits and gains derived from his zamindari, subject to the exemptions provided in Section 4(3) of the Act. The assessment should be computed after making proper allowance under Section 12(2) in respect of the jama assessed and paid. Their Lordships affirmed the decision of the Calcutta High Court that the following items of the income derived by the appellant from his zamindari were not agricultural income and therefore not exempt from income-tax by Section 4(3)(viii).
'(i) Jalkar or rents received from fisheries.
(ii) Ground rent from land used for potteries.
(iii) Ground rent from land used as brickfields.
(iv) Fees received from the tying-up of boats against the assessees land.
(v) Fees received from land used for strong purchases of crops (paliali).
(vi) Fees received from cart-stands.
(vii) Punyaha nazar or nazar paid by tenants of agricultural holdings at the beginning of the zamindari year.
(viii) Nazar for petitions presented to the zamindar, dealing with questions of succession, settlement and partition of agricultural holdings.
(ix) Ground rent for permanent shops at hauts and bazars.
(x) Stall fees paid by temporary (daily) sellers at hauts and bazars.'
The learned counsel for the assessees has not been able to advance any reason why this Court should not apply the decision in Probhat Chandra Barua v. King Emperor to the Madras Regulation. If the Bengal Regulation permits of the profits and gains of a zamindari, other than those derived from agriculture, being assessed to income-tax, the same considerations must apply to the Madras Regulation. We hold that their Lordships judgment impliedly overrules the judgment of this Court in Chief Commissioner of Income-tax v. Zamindar of Singampatti, and accordingly we answer the first question by saying that the imposition of income-tax in respect of income-tax in respect of income other than agricultural income derived from a permanently settled estate would not be a breach of the Madras Regulation.
We have now to decide whether the income derived from forests of spontaneous growth and from trees which have grown wild in non-forest areas represents agricultural income within the meaning of the definition given in Section 2(1) of the Income-tax Act. As we have indicated, the learned Judges who decided Chief Commissioner of Income-tax v. Zamindar of Singampatti were inclined to the view that income from forests and fisheries would be agricultural income, although they did not decide this question. It is very difficult to see how income from fisheries could be classified as agricultural income. In fact the decision of the Privy Council in Probhat Chandra Barua v. King Emperor shows clearly that it cannot be so classified. Their Lordships did not, however, have to consider whether income from forests or individual trees of spontaneous growth comes within the definition and therefore it is necessary to examine the question for ourselves in the light of the reported cases which have bearing on it.
In Province of Bihar v. Maharaja Pratap Udai Nath Sahi Deo, the Patna High Court held that the income derived from wild jungle fruits was not income derived from land used for agriculture or from agricultural and therefore was not assessable to income-tax under the Bihar Agricultural Income-tax Act, 1938.
In Kaju Mal v. Salig Ram, the Lahore High Court held that a stretch of natural forest which did not lie within a village site was exempt from pre-emption under the Punjab Pre-emption Act, 1905, as it was not agricultural land or land used for purposes subservient to agriculture, and this decision was upheld by the Judicial Committee in Kaju Mal v. Salig Ram. Of course, what is agriculture within the meaning of the Indian Income-tax Act may not be agriculture within the meaning of another Act, as my learned brother pointed out when delivering the judgment of this Court in Sarojini Devi v. Subrahmanyam, but we think that the Lahore case does render material assistance in deciding the question now before us.
Another judgment of the Privy Council which has bearing is that delivered in Kesho Prasad Singh v. Sheo Pragash Ojha. The question there was whether a mango grove was land used for agricultural purposes within the meaning of Section 79 of the Agra Tenancy Act, 1901, and it was held that it was not.
The Oxford Dictionary defines 'agriculture' as 'the science or art of cultivating the soil, including the allied pursuits of gathering in the crops and rearing live-stock; tillage, husbandry, farming (in the widest sense).' The word 'agriculture' implies something which is achieved with the aid of human agency. In our judgment, income derived from trees which have grown wild cannot legitimately be described as agricultural income. In inclining to the opinion that income from forests was agricultural income, the learned Judges who decided Chief Commissioner of Income-tax v. Zamindar of Singampatti were obviously influenced by the opinion which they had formed on the main question, namely, that no other tax beyond that involved in the payment of peishkush could be levied on income derived from a permanently settled estate. There is ample authority for holding that income derived from trees which have grown wild is not agricultural income, but without the aid of authority, we should have no hesitation in saying that to describe it as such would involve a distortion of the meaning of the word 'agriculture.'
We answer the second question referred by saying that the Rs. 7,612 does not represent agricultural income and is taxable.
As both the questions have been answered against the assessees, they must pay the costs of the reference which we fix at Rs. 250.
Reference answered accordingly.