Hon'ble Judges/Coram:
Mudholkar

JUDGMENT

Mudholkar, J.

1. The following question has been referred to this Court for its decision by the Income-tax Appellate Tribunal, Bombay, under Section 66(1) of the Income-tax Act :-

Whether on the facts of this case, the two amounts of Rs. 14,208 and Rs. 1,275 derived from sale of timber and letting out of the pasture meadows respectively, or either of them, is agricultural income within the meaning of Section 2(1) and exempt from taxation under Section 4(3) (viii) of the Indian Income-tax Act, 1922 ?

2. The question arises out of an application made by the applicant to the Income-tax Appellate Tribunal in which, among other matters, he sought a reference on the following question of law :-

Whether income derived from forests and pastures as a result of spontaneous growth of the trees and grass without special effort on the part of the landlord cannot be called agricultural for the only reason that the landlord is inactive ?

3. Before formulating the question the Income-tax Appellate Tribunal observed as follows :-

As regards the timber it is of a spontaneous growth and had been standing for a very long time without being planted or without any particular care being taken to promote its growth. Then as regards the pasture meadows the grass growing there on was equally a spontaneous growth, no agricultural operation being undertaken upon the land.

4. From this it would be clear that what we are called upon to decide is whether income derived from land upon which no human skill or labour has been expended is agricultural income or not. I may state here that it is common ground that the land in question is assessed to land revenue.

5. The definition of "agricultural income" is contained in Section 2(1) of the Income-tax Act and is as follows :-

(1) Agricultural income means -

(a) 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;

(b) any income derived from such land by -

(i) agriculture, or

(ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to he taken to market, or

(iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in sub-clause (ii);

(c) any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupies by the cultivator, or the receiver of rent-in-kind, of any lands with respect to which, or the produce of which, any operation mentioned in sub-clauses (ii) and (ii) of clause (b) is carried on.

6. Clearly, the income from the natural forests or naturally growing grass obtained by the applicant cannot possibly fall under either subclass (ii) or sub-clause (iii) of Section 2(1) j(b) of the Income-tax Act. For, it is not his case that he was carrying on any regular operations in forestry, and grazing leases are neither "sale of the produce ........