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1957 Supreme(SC) 69
SUPREME COURT OF INDIA
BHAGWATI, VENKATARAMA AYYAR AND KAPUR JJ.
Commissioner of Income-tax, Appellant
Versus
Smt. Jyotikana Chowdhurani and others, Respondents.
Civil Appeals Nos. 57 to 62 of 1956.
In C. A. No. 57 of 1956.
In C. A. No. 58 of 1956.
Commissioner of Income-tax, Appellant v. Birendra Narayana Chowdhary, Respondent.
In C. A. No. 59 of 56.
Commissioner of Income tax, Appellant v. Smt. Sulochama Chowdhurari, Respondent.
In C. A. No. 60 of 56.
Commissioner of Income-tax, Appellant v. Kamal Krishna Choudhury, Respondent.
In C. A. No. 61 of 56.
Commissioner of Income-tax, Appellant v. Sourindra Narain Choudhary, Respondent.
In C. A. No. 62 of 56.
Commissioner of Income-tax, Appellant v. Smt. Sindhurani Chaudhurani and others, Respondents.
Mr. S. M. Lahiri, Advocate-General Assam Intervener.
Advocates appeared
M/s. G. N. Joshi and R. H. Dhebar, Advocates, for Appellant; Mr. S. C. Isaacs, Senior Advocate, (Mr. R. R. Biswas, Advocate, with him), for Respondents; Mr. S. M. Lahiri Advocate-General, Assam, in person (Mr. Naunit Lal, Advocate, with him), for the Intervener.
G.N.Joshi, NAUNIT LAL, R.H.Dhebar, R.R.BISWAS, S.C.ISAACS, S.M.LAHIRI
Forestry operations performed by the assessee on forests of spontaneous growth cannot be assimilated to agricultural operations so as to constitute the income derived from the sale of the forest trees agricultural income.
Headnote:
INCOME TAX - Agricultural income - Forestry operations - Whether income from sale of sal trees is agricultural income - Held, no.
Fact of the Case:
The assessee, a co-sharer proprietor of an estate in Assam, was assessed to income tax on his receipts from the sale of sal trees from his forests. He contended that the income was agricultural income and therefore exempt from taxation under S. 4 (3) (viii) of the Income Tax Act, 1922. The Income Tax Appellate Tribunal referred the question to the High Court for its opinion.
Finding of the Court:
The High Court held that the income was agricultural income and answered the referred question in the affirmative.
Issues: Whether the income from the sale of sal trees is agricultural income.
Ratio Decidendi: The Supreme Court held that the income from the sale of sal trees was not agricultural income. The Court held that there was no planting or sowing of the seeds nor was any human agency employed for the purpose of tilling the soil. The soil had remained untouched and in the production of the income the assessees had made no contribution by way of cultivation. There were no basic operations either which were performed by the assessees on the forest lands.
Final Decision: The appeals were allowed and the referred question was answered in the negative.
Judgment
Bhagwati, J. - These six appeals with certificates of fitness under S. 66A (2) of the Indian Income Tax Act (Act XI of 1922) are directed against a common judgment and order passed by the Full Bench of the High Court of Judicature in Assam delivered on a consolidated Reference by the Income Tax Appellate Tribunal under S. 66 (1) of the Act whereby Sarjoo Prasad C. J. and Ram Labhaya J. answered the referred question in the affirmative and Deka J. answered it in the negative.
The referred question was:
"Whether on the facts and in the circumstances of this case the receipts from the sale of sal tress can be said to be agricultural income under S. 2 (1) and exempt from taxation under S. 4 (2) (viii) of the Income Tax Act."
2. These appeals were consolidated and the High Court ordered that a consolidated amount of security of Rs. 4,000 together with one set of printing costs be deposited by the appellant, the Commissioner of Income-tax, Assam.
3. The appellant filed one statement of case but the respondents in the six appeals filed separate statements of case each one of them.
4. Smt. Jyotikana Chowdhurani, the respondent in Civil Appeal No. 51 of 1956, is the widow and legal representative of the late Jyotsna Nath Choudhury who was a co-sharer and proprietor of Mechpara Estate situate in the District of Goalpara in the State of Assam. The said estate is assessed to land revenue payable to the State of Assam and is also subject to local rates assessed and collected by the officers of the Assam Government. The said estate has vast areas of forest tracts, considerable portions of which are covered mainly by Sal tress. The trees in the forests are of spontaneous growth and there was no planting or sowing or employment of any human agency for the purpose of tilling the soil.
5. The late Rai Sourindra Narayan Sinha Chowdhury father of Shri Jyotirindra Narayan Sinha Choudhury was a co-sharer of "Parbat Joar Estate", and had been assessed by the Income-tax Officer in the year 1923 on receipts from the sale of Sal trees from his forest as income within the meaning of the Indian Income Tax Act. The Assistant Commissioner of Income Tax on appeal held by his order dated April 28, 1923, that receipts from forests were agricultural income and the Income Tax Authorities accepted the said decision and ceased to assess such receipts for a good number of years.
6. On December 17, 1946, the said Jyotsna Nath Chowdhury was assessed for the year 1946-47 to income on his receipts from the sale of Sal trees from his forests by the Income Tax Officer, Gauhati. An Appeal filed by him against the said order of assessment failed and so did a further appeal filed by him to the Income Tax Appellate Tribunal, Calcutta. He thereupon asked for a reference by the Income Tax Appellate Tribunal of certain questions of law arising out of its order under S. 66 (1) of the Indian Income Tax Act. The Tribunal drew up a common statement of case in regard to the assessments of the said Jyotsna Nath Chowdhury as also the other respondents in the appeals before us and referred the question set out above to the High Court for its opinion. The said reference was heard by a Special Bench of the Assam High Court with the result indicted above.
7. Birendra Narayana Choudhury, the respondent in C. A. No. 58 of 1956 was a co- sharer proprietor of the same estate. He also was assessed on December 17, 1946, to income-tax on his receipts from the sale of sal trees from his forests for the year 1946-47 by the Income Tax Officer, Gauhati, The appeals filed by him before the Appellate Assistant Commissioner of Income Tax, Calcutta "B" Range and the Income Tax Appellate Tribunal were also dismissed. The latter however referred the same question to the High Court under S. 66 (1) of the Indian Income Tax Act, at his instance.
8. Shrimati Sulochana Chowdhury, the respondent in civil Appeal No. 59 of 1956 is the legal representative of the late Jagadindra Narayan Chowdhury who was a co-shar
