Back
1957 Supreme(SC) 71
SUPREME COURT OF INDIA
23rd May, 1957
BHAGWATI, VENKATARAMA AYYAR AND KAPUR, JJ.
Maharajadhiraj Sir Kameshwar Singh, Appellant
Versus
Commissioner of Income-tax B. and O., Respondent.
Civil Appeals Nos. 112 to 117 of 1956.
Advocates appeared
Mr. L. K. Jha, Senior Advocate (M/s. K Mazumdar and I. N. Shroff, Advocates, with him), for Appellant; Mr. C K. Daphtary, Solicitor-General of India (M/s G. N. Joshi and R. H. Dhebar, Advocates, with him), for Respondent.
C.K.DAFTARY, G.N.Joshi, I.M.SHROFF, L.K.JHA, R.H.Dhebar, S.K.MAJUMDAR
Headnote:Section 2(1)-Agricultural income-Forest trees of spontaneous growth-Subsequent operations for their conservation and growth-Income from forest not agricultural.
Held: In regard to the forest trees of spontaneous growth which grow on the soil unaided by any human skill and labour and where no basic operations in agriculture are performed on the soil itself by the assessee, there is no cultivation of the soil at all. The only operations which are performed by the assessee are subsequent operations, which though in the matter of forest tree operatians are maili1ly performed for the conservation and growth/of the forest trees which have sprung into existence by forces of nature rather than by the expenditure of any human skill and labour on the land itself.
These subsequent operations though they may have the effect of nursing and fostering the growth of such forest trees, have nothing in common with the basic operations which are the efficient cause of raising these products from the soil and cannot constitute agricultural operations unless they form part and parcel of and integrate themselves with such basic operations. The operations which were performed by the assessee in the case under consideration had nothing in common with the basic agricultural operations and did not have the effect of converting the forest produce which was of spontaneous growth into produce raised from the land by agriculture within the connotation of that term as understood in section 2( 1) of the Income-tax Act, 1922.
Judgement
BHAGWATI J. - These are six consolidated appeals arising out of a common judgment and six separate orders of the High court of Judicature at Patna with certificates under S.66A (2) of the Indian Income Tax Act and they raise common questions of law:
(1) Whether in the facts and circumstances of the case, the receipts of Bankura forest lease are capital receipts or, in the alternative, constitute agricultural Income?
(2) Whether in the facts and circumstances of the case, the receipts from Kharagpur forest are agricultural Income?
2. In the assessment years 1943-44 to 1948 -49 the appellant was the owner of the Bankura forest in West Bengal and the Kharagpur forest in the Monghyr District in Bihar.
3. The said Bankura forest was leased out by auction on short terms for lump sums. The terms of the lease were not produced, but it was stated that according to the terms of the lease the lessee was entitled to cut down and remove all sal trees but not those which were more than three feet in girth and three feet from the ground and all other jungle trees other than fruit bearing trees and valuable timber trees. The lessee was further entitled to cut stumps not higher than five feet over ground. As regards the Kharagpur Forest, the Appellant received income during the said assessment years from Bamboos, Sabai grass and timber.
The officers concerned with the assessment of the appellant for these assessment years, by assessment orders made under S. 23 (3) of the Indian Income Tax Act, respectively on March 15, 1944, March 9, 1945, March 27, 1946, March 12, 1947, March 13, 1948 and February 24, 1946 rejected the contentions of the Appellant that the two sums of Rs. 7,436 & Rs. 11,468 received during the year of account 1349 Fasli, of Rs. 23,581 and Rs. 17,027 received during the year of account 1350 Fasli, of Rs. 20,582 and Rs. 59,514 received during the year of account 1351 Fasli, of Rs. 14,750 and Rs. 98,969 received during the year of account 1352 Fasli, of Rs. 13,836 and Rs. 1,17,173, received during the year of account 1353 Fasli and of Rs. 22,211 and Rs. 73,449 received during the year of account 1354 Fasli, by the appellant from his forests in Bankura in West Bengal and Kharagpur forest in Bihar respectively were not taxable as they were(i) capital receipts and/or (ii) agricultural income.
4. The appellant preferred appeals to the Appellate Assistant Commissioner of Income-tax, Patna Range, Patna, as the case may be, against these assessment orders but the said appeals were dismissed and the orders of assessment were confirmed.
5. The appellant carried further appeals against these orders of the Appellate Assistant Commissioner to the Income-Tax Appellate Tribunal, Calcutta Bench but the Tribunal also rejected the appeals and confirmed the assessments.
6. The appellant thereupon asked the Tribunal under S.65 (1) of the Indian Income Tax Act for reference to the High Court inter alia of the above questions. The Tribunal, however, held that no question of law arose out of these orders and accordingly refused to refer the said questions of law as formulated by the appellant or any other question to the High Court and rejected the appellant s said reference applications.
7. The appellant then applied to the High Court praying for a direction under S. 66 (2) of the Indian Income Tax Act, 1922, requiring the said Tribunal to state a case and the High Court directed the Tribunal to state a case inter alia on the said questions of law set out herein above.
8. The Tribunal accordingly drew up a statement of case and submitted it to the High Court, from which the following facts do appear:
BANKURA FOREST (WEST BENGAL)
The forest in this area in block is leased out by auction on short terms for lump sums. The lessee can cut down and remove all Sal trees but those which are more than three feet in girth above three feet from the ground and all other jungle trees other than fruit bearing trees and valuable timber trees; cut stumps not higher th
