DERBYSHIRE, C. J. - The applicant asks for a Rule to be issued upon the Commissioner of Income-tax, Bengal, ordering him to state a case for the opinion of this Court under Section 66 (2) of the Income-tax Act.
The applicant is a zemindar who has granted patni leases over a large portion of his land. Those patni leases were granted many years ago when the land was almost entirely used for agricultural purposes and were for fixed rents.
Under the Income-tax Act agricultural income is not taxable. The income-tax Officer did not assess the whole of the rents derived from these patni leases to income-tax but only a part amounting to a round sum of Rs. 50,000.
On appeal by the assessee to the Assistant Commissioner the Rs. 50,000 was reduced to Rs. 21,000 which sum was based on an assessment of the assessee under Section 33 of the Act for the year 1936-37, when the Commissioner had estimated the portion of the patni rent assessable to income-tax at Rs. 20,430.
The assessee appealed to the Commissioner of Income-tax and asked him to state the following questions of law for the opinion of the High Court.
(1) Whether in view of the facts of the case there was any evidence or material before the Income-tax Officer to support or justify his finding that the portion of the rent from the Patnidars was not agricultural income.
(2) Whether on proper construction of Section 2 (1) and 3 of the Act and of the leases produced before him the rent derived from the Patnidars and other permanent leases was agricultural income and exempt from assessment.
(3) Whether the basis of the estimate of the assessable rent is in accordance with law.
The Commissioner dismissed the appeal and refused to state a case on the ground that the question as to whether any portion of the income from the patni leases was agricultural income or not was essentially a question of fact.
Section 2 (1) of the Income-tax Act gives the definition of 'agricultural income' which is relevant in this matter as -
'Any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land-revenue in British India or subject to a local rate assessed and collected by officers of the Crown as such.'
It is admitted that the land in question was assessed to land revenue in British India subject to a local rate assessed and collected by an office of the Crown.
The only relevant question in this case is whether the land was used for agricultural purposes. The assessee has contended that that question has to be decided on an examination of the leases to see if they were granted for agricultural purposes or by the fact that when the leases were granted the land was used for agricultural purposes.
In my opinion that contention is negatived by the clear words of the statute which says 'rent derived from land which is used for agricultural purposes.' It is entirely a question of fact whether in the year in question the rent was derived from land which was used for agricultural purposes. It is not a question what the land was leased for originally or what it was used to bring himself within the exemptions from taxation provided by the Act in the case of agricultural land, it is for him to show that the income was derived from land which was used for agricultural purposes. That is a question of fact.
The learned Commissioner giving his decision seems to have appreciated the law correctly. He says :
'Though the leases do not indicate that agricultural lands and agricultural lands alone were given out on lease, the point is immaterial since the question as to whether the rent which is derived from these lands is agricultural or not stands to be determined not with reference to the nature of the leases by which the lands were let out but by reference to the use to which the land has been put.'
Later he says with reference to the case that has been cited the Income Tax Reports :
'Now it is established from the report of the Income-tax Officer that a certain portion of the land which the assessee has given out on patni lease is used for non-agricultural purposes and it therefore follows that the portion of the rent paid by the Patnidars to the assessee which is attributable to this portion of the lands is non-agricultural income within the meaning of the Act. To my mind, therefore, the question as to whether any portion of this income is agricultural or not is essentially a question of fact, inasmuch as the question stands to be determined by the use to which the lands has been put'.
In my opinion that is the only question which arises in this case. It is a question of fact and no question of law arises. If the assessee considers that he has not been fairly dealt with (upon that I say nothing, because it is a question of fact entirely) it is for him to place materials before the Income-tax authorities to show that the assessment on a portion of the land which the Income-tax authorities found to be non-agricultural land is too high. That is a question of evidence which the assessee can produce and that evidence the Income-tax authorities can check from their own records. But it is all a question of evidence.
For these reasons in my opinion, no question of law arises in this matter and this application must be dismissed.
MUKHERJEA, J. - I agree.