1. This is a Reference by the Board of Agricultural Income-tax, Assam, under Section 28 (2), Assam Agricultural Income-tax Act of 1939.
2. This case has a chequered history, and has been to several Courts and Tribunals.
3. The assessee is Sri Jyotirindra Narayan Sinha Choudhury, a co-sharer in a Zemindary known as Parbatjoar Estate. The share of the assessee is 8 annas 9 pies. In September, 1941, the assessee filed a return of his agricultural income. In column 6 (ii) of Schedule A to his return which is headed as selamis or premia received by the landlords for settlement of waste lands or abandoned holdings for agricultural purposes etc an item of Rs. 2025-3-11 1/4 pies was shown. In a letter accompanying the return the assessee stated that the amount collected as selamis or premia for waste lands and abandoned holdings, namely, Rs. 9331-9-4 ps had not been shown as this was not subject to assessment of agricultural income-tax.
4. The Agricultural Income-tax Officer, however, made an order of assessment including a sum of Rs. 9332/- less collection charges at the rate of 15 per cent, amounting to Rs. 1398/- = Rs. 7934/- as agricultural income. The order of assessment was made on 10-11-1941.
Against this order the assessee took an appeal to the Appellate Assistant Commissioner for Agricultural Income-tax, Assam. The appeal was dismissed on 13-5-1942. Against this order the assessee made an application for review under Section 27 of the Assam Agricultural Income-tax Act before the Commissioner. The assessee also filed a reference petition before the Board of Agricutural Income-tax, Assam.
The review petition was dismissed by the Commissioner and on the application for reference the Board made an order referring two questions of law to this Court for its opinion. The questions are:
'1. Whether selami received for settlement of agricultural holdings where the rate of annual rent reserved for such holdings is uniform and where the selami is taken once in the period of the occupation by a particular tenant but where the period of occupation is not ascertainable as no written leases are given is agricultural income within the meaning of Section 2 (a) (1) of the said Assam Agricultural Income-tax Act? 2. Whether in view of the facts and circumstances of the case the sum of Rs. 7934/-received by the assessee as salami for settlement of agricultural holdings is agricultural income within the meaning of Section (25 (a) (1) of the said Assam Agricultural Income-tax Act?'
5. The reference was heard by a Bench of this Court and by a judgment dated 12-4-1945, this Court answered question No. 2 in the affirmative. In the course of its judgment this Courtobserved that salami for the grant of lettings of waste lands or re-settling of abandoned holdings is agricultural income. Against this decision an appeal was taken to the Privy Council. Later on, by virtue of the passing of the Federal Court Extension of Jurisdiction Act the appeal was registered as Civil Appeal No. 30 of 1948.
The appeal was heard by the Federal Courtand by its judgment dated the 16th of May, 1949,the Federal Court directed that the order of thisCourt be set aside and the case sent back to theHigh Court to be dealt with after ascertainingand considering the following factors which werelikely to show the true nature of the receiptsdescribed as selami in the present case:
'1. Number of settlements of waste lands orabandoned holdings during the accountingyear and the maximum and the minimumextents settled and selami received.
2. Does the selami vary with the quality of the land, the facilities for irrigation and such other favourable factors?
3. How many tenants were ejected under Section 69 during the accounting year and how long they had been in occupation before such eviction?
4. Is selami received when lands are relet after eviction?
5. Is selami that is paid in the zemindary of the assessee in the nature of the 'present' given by the tenant to the landlord for his permission to occupy the land or whether it is in substance a premium payable by lessee at the inception of the tenancy?' (6) On receipt of the order of the Federal Court the Assam Board has answered the above questions in the following way:
' 1. Total number of settlements--414. Amount of selami Rs. 9332/-. There is a note appended settlement of virgin and estate purchased lands.
2. Maximum extent--59 Bighas 2 cottahs and 10 Dhurs. Selami Rs. 161-8-6 1/2 ps. Minimum extent--15 cottas. Selami Rs. 2-11-9 pies.
3. Rate of selami varies with the quality of lands. There are generally two fixed rates of selami, namely, Rs. 7/- per bigha for jungle lands and Rs. 10/- per bigha for lands which are not jungle;
4. No tenant was ejected under Section 69 of the Goalpara Tenancy Act. Action was taken under Section 68.
5. Lands were sold in execution of rent decrees and purchased by the landlord and then settled on receipt of selami; -
6. Selami was not present. There is a compulsory payment at the inception of the letting.' (7) The question is whether on the facts found by the Board, the selami that was received in the present case by the assessee could be regarded as agricultural income or not. The term 'Agricultural income' is defined in Section 2 (a) of the Assam Agricultural Income-tax Act. The relevant portion runs as follows: 'Unless there is anything repugnant in the subject or context agricultural income means--(1) Any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land revenue in Assam or subject to a local rate assessed and collected by officers of Government.
(2)...... (This is not relevant for the presentpurpose).'
8. In order to determine whether the selami received in the present case is agricultural income within Section 2 (a) we have then to consider the following elements, namely, (1) whether the receipts can be regarded as rent or revenue, (2) whether the rent or revenue was derived from land, (3) whether the land was used for' agricultural purposes and (4) whether the land was assessed to land revenue or local rates. In the present case it is not disputed that conditions Nos. 2 and 4 have been satisfied, namely, that the alleged receipt was derived from land which was assessed to land revenue or local rates. The question which has been agitated before us concerns the 1st and the 3rd conditions referred to above, namely, whether the amount received is rent or revenue and secondly whether it was derived from land used for agricultural purposes.
Taking the 1st condition, namely, whether the receipt was rent or revenue, the taxing authorities and this Court before remand were of the opinion that the receipt was revenue. It was not the case of the taxing authorities that it was rent. I shall first deal with this question, namely, whether the receipt in question can be regarded as revenue. In the case of -- 'Province of Bihar v. Protap Udai Nath' AIR 1941 Pat 289 (SB) (A), a Special Bench of the Patna High Court was of the opinion that the word 'revenue' means a payment in the nature of income other than rent derived from agricultural land. The question therefore is whether the receipt with which we are now concerned can be regarded as income.
9. The Indian Income-tax Act merely describes the various sources of income and prescribed methods of computing the same but it discreetly refrains from saying what constitutes income. The word 'income' is undoubtedly a term of elusive import and it is not capable of a precise definition which will adequately meet legislative requirements. The Court has to form an opinion I of its own on the facts of each particular case bearing in mind the dictionary meaning of the word and the principles which have been enunciated in judicial decisions.
10. In the case of -- 'The Commissioner of Income-tax, Bengal v. Shaw Wallace and Co.' , Sir George Lowndes attempted a definition of the term 'income'. The relevant observations are as follows: 'Income, their Lordships think, in this Act' (Indian Income-tax Act) 'connotes a periodical monetary return 'coming in' with some sort of regularity or expected regularity from definite sources. The source is not necessarily one which is expected to be continuously productive, but it must be one whose object is the production of a definite return excluding anything in the nature of a mere windfall.'
11. The opinion expressed by the Board in the case above cited was quoted with approval in a later decision of the Board in the case of --'Gopal Saran Narain Singh v. Commissioner of Income-tax. B. and O.' . Lord Russell of Killowen stating the opinion of the Board however made an important reservation, the reservation being that the word 'income' is not limited by the words 'profits' and 'gains'; anything which can properly be described as income is taxable under the Act unless expressly excluded.
The Judicial Committee again considered the meaning of the term 'income' in the case of --'Kamakshya Narain v. Commr. of Income-tax,E. and O.' . In that case the question before the Board was whether selami paid by a lessee of mineral rights for a term of 999 years as also the minimum royalty payable under the lease or the royalty per ton provided for in the lease, could be regarded as income and assessable as such. In the course of the judgment Lord Wright observed at page 156: 'the selami has been rightly treated as a capital receipt. It is a single payment made for the acquisition of the right of the lessees to enjoy the benefits granted to them by the lessors. That general right may properly be regarded as a capital asset and the money paid to purchase it may properly he held to be a payment on capital account.'
It was also pointed out at page 158 that 'income is not necessarily the recurrent return from a definite source though it is generally of that character. Income again may consist of separate receipts as it generally does in case of professional earnings.'
The above discussion clearly indicates that the fundamental idea of an income being the result of a continuous exercise of an activity as laid down by Sir George Lowndes in -- 'Shaw Wallace's case (B) has been whittled down to a certain extent by the later pronouncement of the Board. The element of periodicity which is emphasised by Sir George Lowndes has been explained in a later decision in the case of --Staney v. The Rev. E. S. Starkey' (1931) 2 KB 148 , to which our attention was drawn by Mr. Mitter appearing for the Board. The observations of Rowlat J. at page 154 may be quoted: 'When one speaks of the element of periodicity, I think what is intended is to refer to a thing which has reference to the recurrence of the periods, even though the periods may only come round once, or may only have come round once so far.'
In that case the question was whether the offerings received by the respondent at Whitsuntide were assessable as such. The Court held that it was assessable.
At the same time it must be observed that these offerings were received or were expected to recur at Whitsuntide. The question was whether it was a capital receipt or not in my opinion the question whether a particular receipt like selami can be regarded as income or as capital receipt cannot be answered in the abstract. Each case has to be decided on its special facts. It was for this reason that the Federal Court directed a remand to this Court for the purpose of enabling this Court to find out the precise nature of the selami in the present case, after obtaining from the Board the answers to the five factors which were mentioned in the judgment.
12. The facts which have now been found by the Board may be summarised as follows:
The assessee is a co-sharer in the Parbatjoar Estate having 8 annas 9 pies share therein. The Tenancy Act in the area is the Goalpara Tenancy Act I of 1929. Under that Act the ejectment sections are spread over Sections 65 to 69. Section 65 makes a general provision that a tenant can only be ejected in execution of a decree. Section 66 speaks of ejectment of permanent tenants on the ground of a breach of a covenant. Section 66 speaks of ejectment of occupancy raiyats. This is permissible only in two cases, namely, cases of improper use or cases of breach of a condition consistent with the Act. Section 68 lays down that a permanent tenure holder or a raiyat at fixed rates oran occupant raiyat cannot be ejected for nonpayment of arrears of rent. Section 69 speaks of ejectment of non-occupancy raiyats on the ground of non-payment of arrears of rent or improper use of service of a six months' notice.
A perusal of these sections indicates that the tenants of the above descriptions cannot be turned out at the mere whim of the landlord, In all cases the landlord has got to obtain a decree for ejectment. The protection is greater in case of occupancy raiyats where the ejectment can only be allowed in two classes of cases mentioned above. A non-occupancy tenant may be ejected no doubt for non-payment of rent or by the service of a notice for 6 months.
In the present case it has been found that the settlements in regard to which selami was received by the landlord were settlement of virgin lands or of lands purchased by the landlord in execution of a decree for rent. The total number of settlements of virgin land has been found to be 278 and that of estate purchased land 136. There has been no instance of re-settlement after eviction by service of a 6 months' notice to quit. There has been no written lease taut the rent is more or less fixed at 11 annas per bigha plus local rates. The amount of selami received varies with the quality of the land, the amount generally realised being Rs. 7/- per bigha for Jungle lands and Rs. 10/- per bigha for other lands. The maximum area settled is 59 bighas, selami received being Rs. 161/- and odd annas, the minimum quantity of land settled being 15 cottas. It has not been suggested that the selami that was realised represents advance rent nor has it been suggested that the selami realised in case of estate purchased lands includes the rents which were unrealised during the period the landlord was in khas possession.
13. In these circumstances the question is whether the selami sought to be assessed can be regarded as income or whether it is a capital receipt. It is undoubtedly a single payment made at the inception of the settlement. The landlord, receives the selami in addition to the rent which is to be paid from time to time. The period of occupation of the tenant is uncertain. It is not a present made to the landlord at the inception of the tenancy as has been observed by the Board. For the same land there is hardly any chance of re-settlement to the tenant, the receipts being receipt of selami in case of settlement of virgin lands or estate purchased lands occasioned by default of the tenant in paying arrears of rent In these circumstances, in my opinion, a fair conclusion to draw is that the selami is received by the landlord for permission to the lessee to enter the land for enjoying the benefits of the settlement. In this view, the receipts that have been sought to be assessed in the present case must be regarded as capital receipts and not income within the meaning of the Assam Agricultural Income-tax Act.
14. The view taken above receives support from two decisions of the Patna High Court, namely, the cases of -- 'Commr. of Income-tax v. Visheswar Singh' AIR 1940 Pat 24 (F) and -- 'AIR 1941 Pat 289 (A)'. It is true that in these cases the selami that was received concerned one item of property, but this fact is not material for the present discussion. In my opinion, the true character of the receipt in the present case does not materially differ from the receipts in those cases.
15. It remains for me to consider a decision of this Court in the case of -- 'Birendra Kishor v. Secy, of State' AIR 1921 Cal 262. A perusal of that judgment indicates that the parties conceded that the receipts sought to be assessed was income. The only question before this Court was whether this was agricultural income within the meaning of the Income-tax Act. A bench of this Court was of the opinion that the income received as selami was either rent or revenue. In my opinion, this decision stands on its special facts and is not conclusive of the matter. The decision was dissented from by the Patna High Court and its authority has been shaken by the decisions of the Privy Council referred to above.
16. The answer to question No. 2 must therefore be that the sum of Rs. 7934/- received by the assessee as selami for settlement of agricultural holdings is not agricultural income within The meaning of the Assam Agricultural Income-tax Act.
17. In the above view it is not necessary to express our opinion on a point which cropped up towards the close of the argument, namely, whether the selami that was received in the present case was derived from agricultural land. It may be pointed out that in the case of -- 'In re Sir Bijay Chand Mahtab Bahadur : 8ITR378(Cal) , it has been held that the land in respect of which income is derived must be actually used for agricultural purposes in the accounting year; the purpose for which the lease was originally given or the purpose for which the land was being used at the inception of the tenancy before the year of assessment is immaterial. ' In the present case, as this point was not discussed at an earlier stage of this case the relevant enquiry was not made but it seems to me that there is much, force in the contention that the land from which income was derived in the present case was not used for agricultural purposes and condition No. 3 was not fulfilled.
18. In the result the assessee is not liable to be assessed to agricultural income-tax for the sum of Bs. 7934/- which was sought to be assessed in regard to the selami received by the assessee in the present case. As the assessee has succeeded the Board must pay the costs of this hearing as also of the hearing before the Federal Court. Certified for two Counsel as of a defended suit.
Sen , J.
19. I agree.