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Commissioner of Agricultural Income-tax, West Bengal Vs. Molla Md. Abdul Halim. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 22 of 1952
Reported in[1952]22ITR214(Cal)
AppellantCommissioner of Agricultural Income-tax, West Bengal
RespondentMolla Md. Abdul Halim.
Excerpt:
- .....that the agricultural income which the landlord derived from these 60 acres of land was either 'income derived from the land by agriculture' within the meaning of section 2(1)(b) of the act or rent or revenue derived from the land within the meaning of section 2(1)(a).now it seems to me that whether the alleged income in the present case is considered from the point of view of either section 2(1)(a) or section 2(1)(b), the primary requirement if it is to be treated as agricultural income is that it must be either be income derived from the land which is used for agricultural purposes or income derived from the land by agriculture. it is thus essential under both parts of the definition section that the user of the land for agricultural purposes must be established. most curiously.....
Judgment:

CHAKRAVARTTI, J. - This is reference under Section 63(1) of the Bengal Agricultural Income-tax Act by which the Agricultural Income-tax Appellate Tribunal, West Bengal, has submitted for the opinion of this Court at the instance of the Commissioner the following question of law :-

'Whether on the facts and in the circumstances of the case the profits or any part thereof, derived from the lands given to the Halsanas in lieu of services and enjoyed by them as such should have been treated as the agricultural income of the landlord and assessed in his hand ?'

The income concerned is the income supposed to have been derived from 60 acres of khas lands belonging to the assessee landlord but in the possession of the Halsanas during the accounting year. The accounting year Sraban 1351 B.S. to Ashar 1352 B.S. and the relative assessment year was 1946-47. The amount of the disputed income is stated to be Rs. 1,680.

It is not easy to discover what the real facts of the case are. All that can be ascertained is that 60 acres of land have been given to four Halsanas in lieu of services to be rendered by them to their landlord, the assessee. As regards the nature of the services rendered the finding is that the services are of a diverse nature of necessarily of the agricultural type. It is further stated in the statement of the case that settlement would subsist so long as the Halsanas were willing to serve the landlord and on their refusal or unwillingness to serve any further the landlord would be entitled to resume the lands.

All this, however, appears only in the statement of the case. The appellate order of the Tribunal where the final findings of fact ought really to occur is a singularly bald document, containing but a bare reference to these sixty acres of land.

The question having been referred must however be answered as best as it can be. The first enquiry is if the assessee landlord is to be taken as having derived some income from these 60 acres of land, what was that income In answer to our question Mr. Sen who appears on behalf of the Department submitted that this contention would be first that the income was really the actual produce of the land less the statutory allowances or in the alternative the monetary value of the services rendered by the Halsanas. In other words his contention was that the agricultural income which the landlord derived from these 60 acres of land was either 'income derived from the land by agriculture' within the meaning of Section 2(1)(b) of the Act or rent or revenue derived from the land within the meaning of Section 2(1)(a).

Now it seems to me that whether the alleged income in the present case is considered from the point of view of either Section 2(1)(a) or Section 2(1)(b), the primary requirement if it is to be treated as agricultural income is that it must be either be income derived from the land which is used for agricultural purposes or income derived from the land by agriculture. It is thus essential under both parts of the definition section that the user of the land for agricultural purposes must be established. Most curiously neither the parties nor the Tribunal seem to have ever paid any attention to that requirement of the definition. There is no finding at all that the land was used for agricultural purposes in the accounting year and necessarily no finding that the income was derived from the land by agriculture. Nor is there any finding that the lands are agricultural lands at all. Although the lands might have been given over to the Halsanas to be enjoyed by them in lieu of services to be rendered, it was in no way binding on the Halsanas to use the lands for agricultural purposes. In any event no stipulation of that kind has been suggested or found. In those circumstances it is perfectly conceivable that the lands were not put to agricultural use by the Halsanas after the latter had taken possession of them but they were put to some other kind of use at their will and pleasure. If the lands were not used for agricultural purposes there could not possibly be either any rent or revenue within the meaning of Section 2(1)(a) or any income derived from such land by agriculture within the meaning of Section 2(1)(b). It seems to me therefore that the only answer that can be rendered to the question referred is that on the facts stated it does not arise.

But it was contended by Mr. Sen that although it might not have been specifically found that the lands had been put to agricultural use during the accounting year or were agricultural lands both parties had proceeded on that basis and that the question formulated by the parties for reference to this Court themselves suggested that agricultural user of the lands was never disputed. As I have already stated on the statement of the case submitted by the Tribunal the question does not arise and it cannot be said to arise because the parties chose to advance certain contentions of certain kinds. Nevertheless I shall test the contention of Mr. Sen on the assumption of fact which he has asked us to make.

As I have already stated the first part of Mr. Sens contention was that the agricultural income derived by the landlord from the 60 acres of land concerned was the produce itself. I am entirely unable to see on facts of this case it can be said that the landlord derived any income of the nature of agricultural produce from the lands concerned. The main distinction between Section 2(1)(a) and Section 2(1)(b) is that the income under the first sub-section is broadly speaking the hire of the land whereas under the second sub-section it is the yield of agricultural operations carried out by the assessee himself personally or through members of his family or through hired labourers. The agricultural operations actually carried out on the land concerned must therefore be operations carried out by or on behalf of the assessee. In other words the income must be the income directly derived from agricultural operations. I cannot see how if the Halsanas were given these lands to be enjoyed by them in lieu of services to be rendered and they carried out agricultural operations on the lands such operations could be said to be operations carried on by or on behalf of the landlord. Quite clealy in cultivating the lands the Halsanas would not be acting as agricultural labourers in the employ of the landlord. They would be cultivating the lands on their own account. They would not be growing on lands such crops as the landlord suggested or dictated. Nor would they be answerable to the landlord in any way for the kind or the quantity of the crops grown. Their only obligation would be to render to the landlord the services stipulated for. In those circumstances I cannot see how the actual produce of the land yielded by agricultural operations carried out by the Halsanas can be said to be the product of agriculture carried on by the landlord himself and thus to be income assessable under Section 2(1)(b).

Turning now to the other branch of Mr. Sens contention I am equally unable to see how the money value of the services rendered by the Halsanas can be said to be rent or revenue derived from the 60 acres of land. I may point out first that in order that this question may be properly answered it is essential that the terms and conditions of the contract between the Halsanas and the landlord should be first ascertained. As is well known it is of the utmost importance to know in what way the remuneration paid to a particular person was made dependent on agricultural income from certain lands if it was made so dependent at all. Necessarily it is important to know whether the terms relating to the payment were entirely unconnected with the land or its produce but depended entirely on the contract. Quite inexplicably the Tribunal made no investigation as to the actual incidents of Halsanas tenures, nor has it given us the assistance of any finding as to what the actual terms of the contract between the parties in the present case were. But taking so much of the terms and conditions as can be gathered from the statement of the case I cannot see how it can be said that the money value of the services rendered by the Halsanas was rent or revenue derived from the land. All that we find in the statement of the case is that the Halsanas were given a certain quantity of land, that in return they were to render certain services and that only so long as they rendered the services they would be entitled to hold possession of the lands. In those circumstances it seems to me that the source of the benefit which the landlord derived from the services rendered by the Halsanas was the contract itself and not the land. The services could in no way be said to be derived from land. It could perhaps be plausibly argued that the services were merely payment of rent in kind for the use and occupation of the land applied to agricultural purposes. But I am unable to accept that contention because it seems to me that what happens in such a case is not that the land is settled under such terms as bring a recurring benefit to the settlor but that the servant it paid for his wages by the produce of the land. In other words the landlord buys the services by paying the servant with the use of the land and not that the servant takes a settlement on condition of paying a rent in the form of services. The second branch of Mr. Sens contention must also, in my opinion, be rejected.

The above were the contentions of Mr. Sen which I have dealt with on the basis of the facts set out in the statement of the case and the further assumption which I have made at the suggestion of Mr. Sen. But as I have pointed out there is no finding in the case as regards the primary requirement of Section 2 that the land must be used for agricultural purposes. I have to add that the basis on which the Tribunal disposed of the matter in its appellate order was that the settlement of the 60 acres of land with the Halsanas was in the nature of a gift and that, consequently, the usufruct or income from those lands should be left out of the scope of the assessment. The only meaning of that finding can be that the lands formed no part of the Landlords estate having been given away to the Halsanas in substance if not in form. If that be the finding of the Tribunal the question obviously does not arise out of the Tribunals order and that is another reason why we cannot answer it.

For the reasons given above the answer to the question referred should in my opinion be -

(a) does not arise;

(b) even on the assumption that the lands were used for agricultural purposes during the accounting year and remained the landlords property - no.

The respondent assessee will have his costs of this reference.

BACHAWAT, J. - I entirely agree. There is no finding of the Appellate Tribunal that during the accounting year the land was used for agricultural purposes or that there was any agricultural operation on the land. Therefore there cannot be any question of receipt of rent or revenue from land used for agricultural purposes nor any question of receipt of income from agriculture. On the facts the income cannot be agricultural income.

Reference answered accordingly.


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