JUDGMENT

BRAUND, J. - We have before us three references by the Income Tax Appellate Tribunal u/s 66 of the Indian Income Tax Act. The three references raise between them two questions and we need not for this purpose distinguish between the three references. It is sufficient to say that the references relate to a lady called Mst. Sarju Bai, who apparently lived at Jhansi and there owned a very considerable area of land situated in the civil station. It is out of her transactions in respect of this property that these questions have arisen in relation to the assessment year 1939-40 and 1940-41. I propose to deal with the two questions quite separately.

The first one is a very simple question indeed. In the assessment of the year 1939-40 the Income Tax Officer included as against the assessee a sum of Rs. 365 in respect of interest on arrears of rent due by the assessees agricultural tenants. It is common ground that such interest was charged and was received and the only question is whether it constituted "agricultural income" within the meaning of the definition contained in Section 2 (1) (a) of the Indian Income Tax Act. Of that definition there are only six material words, as far as we are concerned, and those are the words "rent or revenue derived from land," within which in this case the interest in question would have to come if it is to stand any chance of being classified as agricultural income and, therefore, being held to be exempt from Income Tax. The Income Tax Officer assessed her to tax on this sum and the Assistant Income Tax Commissioner up held the assessment. In due course she appealed to the Income Tax Tribunal which held that the sum of Rs. 365 in question was "agricultural income." Finally a question was framed and submitted to us in this form :-

"Whether the sum realized by the assessee on account of interest on arrears of rent of agricultural land is agricultural income within the meaning of Section 2 (1) of the Income Tax Act and as such exempt from tax u/s 4 (3) (vii) of the said Act."

It has to be observed that under the United Provinces Tenancy Act by Section 146 it is made a statutory attribute of arrears of rent that they shall carry interest. It can, therefore, be said, for what it may be worth, that if is statutorily inherent in the character of rent under the United Provinces Tenancy Act is that it shall carry interest when in arrear. That is a material consideration since it and similar provisions of other relevant Acts have formed the basic of discussion in a good many of the cases to which we have been referred. The argument on the one hand is that interest payable (whether by statute or not) on arrears of rent which have already become a debt due is not referable in any way to the agricultural relationship as landlord and tenant, but is attributable solely to their character as creditor and debtor. It is said that interest is in its nature merely that commercial compensation which either the accepted practice of business or in some cases the legislature has adopted to see that a creditor does not suffer from the default of his debtor. That, it is said, has nothing whatever to do with the relationship of landlord and tenant and, therefore, is not in any way derived from the agricultural land which is the subject-matter of the tenancy. That is one way of putting it. The other way of putting it is that interest on arrears of rent is something which in this case has been introduced by the United Provinces tenancy Act as a condition of the relationship between landlord and tenant. Arguing from that, it is said that, whether or not such interest can be strictly classified as rent, it certainly can be classified as coming within the larger expression "revenue" which forms part of the definition of agricultural income. It will be remembered that the definition speaks of "any rent or revenue derived from land." Those who put it in this way say that such interest, when received, has its origin in the tena