Compensation paid for the requisition of land used for agricultural purposes is agricultural income and is, therefore, exempt from tax.

( 1 ) THIS is a reference under Section 66 (2) of the Indian Income-tax Act, 1922. The assessee is a company having a tea estate in Assam. The relevant assessment year is 1958-59.

( 2 ) THE Assam Legislature passed the Assam Land (Requisition and Acquisition) Act, 1948, in order to accommodate the refugees and other landless persons. Section 3 of that Act provides for requisitioning lands. Under Section 4 the requisitioned land may be used or dealt with in such manner as may seem expedient to the State Government. The land can also be acquired by the State Government after the necessary notice. Compensation for acquisition and requisition was payable under Section 7. Section 7 (3) provides that where any land is requisitioned under Section 3, every person interested in such land is to be paid such compensation as might be agreed upon in writing between the person and the Collector and any damage done during the period of requisition. Under Section 7 (4), in the case of land, included in any grant or settlement made for special cultivation or other purposes, which is lying fallow or uncultivated and which is requisitioned for the purpose of cultivation, the compensation payable under Clause (a) of Sub-section (3) shall in no case be more than double the annual land revenue. Rest of the provisions of the Act need not be referred to.

( 3 ) THE lands of the assessee were in Singrimari and were requisitioned under Section 3 (1) of the aforesaid Act in January and May, 1949. The assessee got Rs. 1,24,638 as compensation.

( 4 ) THE Income-tax Officer included the aforesaid amounts under the head " Other sources " by rejecting the claims of the assessee that it was exempt from taxation as it was agricultural income.

( 5 ) IN appeal, the Appellate Assistant Commissioner found that the assessee was using the requisitioned lands for agricultural purposes at the time of requisition and also before it. He, therefore, held that compensation paid was agricultural income.

( 6 ) THE department filed appeal before the Tribunal. The facts found by the Tribunal may now be briefly stated. The assessee was using the requisitioned land for agricultural purposes in the accounting year and also in the earlier years. Those lands were under actual cultivation when they were requisitioned. Compensation was paid for requisitioning the lands. After requisition, the Government of Assam gave those lands to the refugees who also cultivated those lands.

( 7 ) IN view of those facts found by the Tribunal, it sustained the order under appeal. The Commissioner of Income-tax raised the following question under Section 66 (1) of the Indian Income-tax Act, 1922 :" Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 1,24,638 was derived from land used for agricultural purposes and accordingly exempt from tax. "

( 8 ) THE Tribunal rejected the application and thereafter a Division Bench of this court, acting under Section 66 (2) of the Act, rejected the first part of the aforesaid question and made the rule absolute on the second part of the question by refraining it as follows : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that a sum of Rs. 1,24,638 was exempt from tax ? "

( 9 ) NO appeal has been filed by the Commissioner to the Supreme Court from the order of the Division Bench rejecting the first part of the aforesaid question. In these circumstances, Mr, B. L. Pal, learned counsel for the revenue, rightly says that the findings of the Tribunal that the assessee was using the requisitioned lands for agricultural purposes at the time of their requisition and also in the earlier years and that those lands were actually under cultivation at the time of such requisition are binding on the Commissioner. He also rightly admits that the finding of the Tribunal, viz. , that the refugees were cultivating those lands after the Government of Assam g