The main legal point established in the judgment is the interpretation of agricultural income under the Indian Income-tax Act, 1922, emphasizing the requirement for the land to be used for agricultural purposes involving cultivation, skill, and labor.

Judgement

Consolidated Appeal (No. 33 of 1947) resulting from the consolidation of two appeals and two cross-appeals from two judgments of the Chief Court (September 29, 1944, and October 9, 1944, respectively) given on two references made under s. 66, sub-s. 1, of the Indian Income-tax Act, 1922, as amended up to and including the Indian Income-tax (Amendment) Act, 1939. The first of the two judgments of the Chief Court is reported at 13 I. T. R. 98.

The following facts are taken from the judgment of the Judicial Committee. Two of these appeals related to the income of Raja Mustafa AH Khan of Utraula, who will be referred to as "the assessee," for the year of assessment 1939-40, and two appeals to his income for the year of assessment 1940-41. In each case there was one appeal by the assessee and one by the Commissioner of Income-tax, United Provinces, who will be referred to as " the Commissioner." The same questions were raised in regard to each year and it is necessary to state and consider the facts in regard to one year only. By an assessment order dated September 18, 1939, the Income-tax Officer, Gonda, made an assessment for the year 1939-40 on the assessee which included as income from " other sources " (as defined in s. 12 of the Act) three separate items as follows

1. 1. Forest Rs. 25,144.

2. 2. Malikana Rs. 6,967.

3. 3. Annuity and interest Rs. 1,07,000.

Those items will be explained later [see the judgment of the Judicial Committee], but it is convenient here to state that the assessee having appealed against that assessment, the first item was reduced to Rs. 21,040 by the Assistant Commissioner of Income-tax, and was at that figure upheld by the Income-tax Appellate Tribunal and the Chief Court at Oudh ; that the second item had throughout been upheld at the figure of Rs. 6,967 less 10 per cent, for expenses, that was, Rs. 6,271 ; and that the third item was in the first place reduced by the Assistant Commissioner to Rs. 61,797, that from his decision the assessee appealed, but the commissioner did

7 Law. Rep. 75 Ind. App. 268 ( 1947- 1948) Raja Mustafa Ali Khan V. Commissioner of Income-Tax

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not, that the appellate tribunal allowed the assessees appeal and that its decision was affirmed by the Chief Court. The appeals therefore to their Lordships Board were by the assessee against assessments in respect of the first item at Rs. 21,040 and the second item at Rs. 6,271, and by the commissioner against an order quashing an. assessment in respect of the third item in the figure of Rs. 61,797. In the case of each item the question was whether the moneys received by the assessee were exempted from income tax as being " agricultural income " under s. 4, sub-s. 3 (viii.), of the Act.

By the Indian Income-tax Act, 1922, as amended

" Section 2.—In this Act, unless there is anything repugnant in the subject or context,—

"(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 be 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.) ;"

Section 4.—(3.) Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them " (i.) to (vii.)

* * * * * *

" (viii.) Agricultural income."

The Chief Court (Bennett and Madeley JJ.) held that for reasons given in their judgment in Maharaja of Kapurthala v. Co