Judgement

Consolidated Appeal (No. 26 of 1947) from three decrees of the High Court (February 15, 1944) and from a fourth decree of the same court (December 14, 1944) whereby four separate references made to the court under s. 66, sub-s. 1, of the Indian Income-tax Act, 1922, as amended, were all answered in favour of the assessees, the respondents to the several appeals. The following introductory statement is taken from the judgment of the Judicial Committee All of these appeals k raised the question whether interest on arrears of rent payable in respect of land used for agricultural purposes was exempt from income tax as being agricultural income within the definition of that phrase contained in s. 2, sub-s. 1, of the Indian Income-tax Act. In the second appeal a further question was raised, namely, whether when a usufructuary mortgage was given by the debtor in satisfaction of any such arrears of interest the amount of such interest could then be treated as received, so as to become taxable under the Act. Under s. 4, sub-s. 3 (viii.) of the Indian Income-tax Act, 1922, agricultural income was exempt from assessment to income tax. Agricultural income was defined in s. 2 of the A