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Petitioner: COMMISSIONER OF INCOME-TAX, WEST BENGAL, CALCUTTA VS Respondent: RAJA BENOY KUMAR SAHAS ROYHonorable Justice BHAGWATIG. N. Joshi,Iyotish Chandra Pal
1966 P T D 768
1966 P T D 768
[Supreme Court India]
Present : Bhagwati, Venkatarama Aiyar and Kapur, JJ
COMMISSIONER OF INCOME-TAX,
WEST BENGAL, CALCUTTA
versus
RAJA BENOY KUMAR SAHAS ROY
Civil Appeal No. 165 of 1954, decided on 23rd May 1957.
Indian Income-tax Act (XI of 1922), Ss. 2(f) & 4(3) (viii) Agricultural income-"Agriculture"-"Agricultural purposes "Meaning and scope of-Necessity of basic operations of cultivation upon land itself- [Commissioner of Income-tax, Burma v. Kokine Dairy Rangoon (1938) 6 I T R 502; Moolji Sicka & Co., In re (1939) 7 I T R 493; Jyotirindra Narayan Sinha Choudhury v. State of Assam (1950) 19 I T R 379 and Jyotikana Choudhurani v. Commissioner of Income-tax, Assam (1954) 26 I T R 424 overruled].
"Agriculture" in its primary sense denotes the cultivation of the field and is restricted to cultivation of the land in the strict sense of the term, meaning thereby tilling of the land, sowing of the seeds, planting and similar operations on the land. These are basic operations and require the expenditure of human skill and labour upon the land itself.
Those operations which the agriculturist has to resort to and which are absolutely necessary for the purpose of effectively raising produce from the land, operations which are to be performed after the produce sprouts from the land, e.g., weeding, digging the soil around the growth, removal of undesirable undergrowth, and all operations which foster the growth and preservation of the same riot only from insects and pests but also from depradation from outside, tending, pruning, cutting, harvesting and rendering the produce fit for the market, would all be agricultural operations when taken in conjunction with the basic operations. The human labour and skill spent in the performance of these subsequent operations cannot be said to have been spent on the land itself.
The mere performance of these subsequent operations on the products of the land, where such products have not been raised on the land by the performance of the basic operations, would not, be enough to characterize them as agricultural operations; in order to invest them with the character of agricultural operations these subsequent operations must necessarily be in conjunction with and in continuation of the basic operations which are the effective cause of the products being raised from the land. The subsequent operations divorced from the basic operations cannot constitute by themselves agricultural operations.
Only if this integrated activity which constitutes agriculture is undertaken and performed in regard to any land can that land be said to have been used for "agricultural purposes" and the income derived therefrom be said to be "agricultural income" derived from the land by agriculture, under section 2(1) of the Indian Income-tax Act, 1922.
Agriculture comprises within its scope the basic as well as the subsequent operations described above regardless of the nature of the products raised on the land. These products may be grain or vegetable or fruits which are necessary for the sustenance of
human beings, including plantations and groves, or grass or pasture for the consumption of beasts or articles of luxury, such as betel, coffee, tea, spices, tobacco, or commercial crops like cotton, flax, jute, hemp, indigo. All these are products raised from the land but the term agriculture cannot be confined merely to the production of grain and food products for human beings and beasts; it must be understood as comprising all the products of the land which have some utility either for consumption or for trade and commerce and would also include forest products such as timber and sal and piyasal trees, castiarina plantations, tendu leaves and horra nuts.
There is no warrant at all for extending the term "agriculture" to all activities which have some relation to the land or are in any way connected with the land, for the term "agriculture" cannot be dissociated from the primary significance thereof, which is that of cultivation of the land. The extension of the term "agriculture" to denote such activities as breeding and rearing livestock, dairy farming, butter and cheese-making, and poultry farming, is an unwarranted distortion of the term.
Chandrasekhara Bharathi Swamigal v. Duraiswami Naidu (1931) I L R 54 Mad. 900 ; Murugesa Chetti v. Chinnathambi Goundan (1922) I L R 45 Mad. 710 and Raja of Venkatagiri v. Ayyappa Reddi (1913) I L R 38 Mad. 738, commented upon and held to be restricted.
Commissioner of Income-tax, Burma v. Kokine Dairy Rangoon (1938) 6 I T R 502, Moolji Sicka & Co., In re (1939) 7 I T R 493, Jyotirindra Narayan Sinha Choudhury v. State o f Assam (1950) 19 I T R 379 and Jyotikana Choudhurani v. Commissioner of Incometax, Assam (1954) 26 I T R 424 overruled.
Lord Glanely v. Wightman (1933) A C 618 and Lean & Dickinson v. Ball (1925) 10 Tax. Cas. 341 explained and distinguished.
Benoy Ratan Baner i. v. Commissioner of Income-tax, U. P., C. P. & Berar ([ 947) 15 I T R 98 and Pratap Singh Balbeer Singh v. Commissioner of Income-tax, U. P., C. P. & Berar (1952) 22 I T R 1 approved.
Raja Benoy Kumar Sahas Roy v. Commissioner of Income-tax West Bengal (1953) 24 I T R 70 afrmed.
[Case-law referred.]
G. N. Joshi and R. H. Dhebar for Appellant.
Iyotish Chandra Pal and D. N. Mukherjee for Respondent.
JUDGMENT
BHAGWATI, J.-This appeal with certificate of fitness under section 66-A (2) of the Indian Income-tax Act (XI of 1922) is directed against the judgment and order of the High Court of Judicature at Calcutta on a reference under section 66 (1) of the Act.
The respondent owns an area of 6,000 acres of forest land assessed to land revenue and grown with sal and piyasal trees. The forest was originally of spontaneous growth, "not grown by the aid of human skill and labour" and it has been in existence for about 150 years. A considerable income is derived by the assessee from sales of trees from this forest. The assessment year in which this forest income was last taxed under the Indian Income-tax Act was 1923-24, but, thereafter and till 1944-45, which is the assessment year in question, it was always left out of account. The assessment for 1944-45 also was first made without including therein any forest income, -but the assessment was subsequently re-opened under section 34. In response to a notice under section 22 (2) read with section 34 of the Act, the respondent submitted a return showing the gross receipt of Rs. 51,798 from the said forest. A claim was, however, made that the said income was not assessable under the Act as it was agricultural income and was exempt under section 4 (3) (viii) of the Act. The Income-tax Officer rejected this claim and added a sum of Rs. 34,430 to the assessable income as income derived from the forest after allowing a sum of Rs. 17,543 as expenditure. The Appellate Assistant Commissioner confirmed the assessment and the Income-tax Appellate Tribunal also was of opinion that the said income was not agricultural income but was income derived from the sale of jungle produce of spontaneous growth and as such was not covered' by section 2 (1) of the Act. At the instance of the assessee the Tribunal referred to the High Court under section 66 (1) of the Act two questions of law arising out of its order, one of which was:
"Whether on the facts and in the circumstances of this case, the sum of Rs. 51,977 is agricultural income' and as such is exempt from payment of tax under section 4 (3) (viii) of the Indian Income-tax Act?"
The Tribunal submitted a statement of case from which the following facts appear as admitted or established:.
"(i) The area covered by the forest is about 6,000 acres, trees growing being sal and piyasal;
(ii) It is of spontaneous growth being about 150 years old. It is not a forest grown by the aid of human skill and labour;
(iii) The forest is occasionally parcelled out for the purposes of sale and the space from which trees sold are cut away is guarded by forest guards to protect offshoots;
(iv) It has been satisfactorily proved that considerable amount of human labour and care is being applied year after year for keeping the forest alive as also for reviving the portions that get denuded as a result of destruction by cattle and oth;c causes;
(v) The staff is employed by the assessee to perform the following specific operations
(a) Pruning,
(b) Weeding,
(c) Felling,
(d) Clearing,
(e) Cutting of channels to help the flow of rain water,
(f) Guarding the trees against pests and other- destructive elements,
(g) Sowing of seeds after digging of the soil in denuded areas."
The Tribunal found that the employment of human labour and skill in items (a) to (f ) was necessary for the maintenance and upkeep of any forest of spontaneous growth. Regarding item (g), however, it found that the said operation had been performed only occasionally' and over a small fraction of the area where the original growth had been found to have been completely denuded. Such occasions were, however, few and far between, the normal process being that whenever a tree was cut, a stump of about 6? height was left intact which sent forth offshoots all round bringing' about fresh growth in course of tine. This went on perpetually unless an area got otherwise completely denuded.
The reference was heard by the High Court and the High Court held that actual cultivation of the land was not required and as human labour and skill were spent for the growth of the forest the income from the forest was agricultural income. It accordingly answered the above question in the affirmative. The Revenue obtained the requisite certificate of fitness for appeal to this Court and hence this appeal.
The question that arises for consideration in this appeal is whether income derived from the sale of sal and piyasal trees in the forest owned by the assessee which was originally a forest of spontaneous growth "not grown by the aid of human skill and labour" but on which forestry operations described in the statement of case had been carried on by the assessee involving considerable amount of expenditure of human skill and labour is agricultural income within the meaning of section 2 (1) and as such exempt from payment of tax under section 4 (3) (viii) of the Indian Income-tax Act.
Section 2 (1) of the Act defines agricultural income and states (so far as it is relevant for the purposes of this appeal)':
(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
the taxable territories or subject to a local rate assessed and collected by officers of the Government 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) of the Act provides:
"(3) Any income, profits or gains falling within the following classes shall not be included in the total income of the person receiving them:
(viii) Agricultural income."
Even though "agricultural income" which is exempted under section 4 (3) (viii) of the Act is defined in section 2 (1) as above, there is no definition of "agriculture" or "agricultural purpose" to be found in the Act and it, therefore, falls to be determined what is the connotation of these terms.
An argument based on entries 14 and 19 of List II of the Seventh Schedule to the Constitution may be-disposed of at once. It was urged that entry No. 14 referred to agriculture including agricultural education and research, protection against pests and prevention of plant diseases while entry No. 19 referred to forests and there was, therefore, a clear line of demarcation between agriculture and forests with . the result that forestry could not be comprised within agriculture. If forestry was thus not comprised within agriculture, any income from forestry could not be agricultural income and the income derived by the assessee from the sale of the forest trees could not be agricultural income at all, as it was not derived from land by agriculture within the meaning of the definition of agricultural income given in the Indian Income-tax Act. This argument, however, does not take account of the fact that the entries in the Lists of the Seventh Schedule to the Constitution are heads of legislation which are to be interpreted in a liberal manner comprising within their scope all matters incidental thereto. They are not mutually exclusive. If the assessee plants on a vacant site trees with a view that they should grow into a forest, as, for example, casuarina plantations, and expends labour and skill for that purpose, the income from such trees would clearly be agricultural produce. It has to be remembered that even though this demarcation between agriculture and forestry was available in the Lists contained in the Seventh Schedule to the Government of India Act, 1935, no such demarcation existed in the Devolution Rules made under the Government of India Act, 1919, and in any event the definition of agricultural income with which we are concerned was incorporated in the Indian Income-tax Acts as early as 1886, if not earlier; vide section 5 of the Indian Income-tax Act, 1886 (II of 1886). It has also to be remembered that in spite of this demarcation between agriculture and forests in the Constitution, taxes on agricultural income are a separate head under entry 46 of List lI of the Seventh Schedule and would comprise within their scope even income from forestry operations provided it falls within the definition of
agricultural income which according to the definition given under Article 366 (1) means agricultural income as defined for the purpose of the enactments relating to Indian Income-tax.
The terms "agriculture" and "agricultural purpose" not having been defined in the Indian Income-tax Act, we must necessarily fall back upon the general sense in which they have been understood in common parlance. "Agriculture" in its root sense means ager, a field, and culture, cultivation, cultivation of a field which of course implies expenditure of human skill and labour upon land. The term has, however, acquired a wider significance and that is to be found in the various dictionary meanings ascribed to it. It may be permissible to look to the dictionary meaning of the term in the absence of any definition thereof in the relevant statutes. As was observed by Lord Coleridge in R. v. Peters ((1886) 16 Q B D 636, 641):
"I am quite aware that dictionaries are not to be taken as authoritative exponents of the meanings of words used in Acts of Parliament, but it is a well-known rule of Courts of law that words should be taken to be used in their ordinary sense, and we are therefore sent for instruction to these books.
Cozens-Hardy, M. R., also said in Camden (Marquis) v. Inland Revenue Commissioners ((1914) I K B 641, 647):
"It is for the Court to interpret the statute as best they can. In so doing the Court may no doubt assist themselves in the discharge of their duty by any literary help which they can find, including of course the consultation of standard authors and reference to well-known and authoritative dictionaries."
Turning, therefore, to the dictionary meaning of "agriculture" we find Webster's New International Dictionary describing it as "the art or science of cultivating the ground, including rearing and management of livestock, husbandry, farming, etc. and also including in its broad sense farming, horticulture, forestry, butter and cheese-making, etc." Murray's Oxford Dictionary describes it as "the science and art of cultivating the soil; including the allied pursuits of gathering in the crop and rearing livestock; tillage, husbandry, farming (in the widest sense)." In Bouvier's Law Dictionary quoting the Standard Dictionary "agriculture" is defined as "the cultivation of soil for food products or any other useful or valuable growths of the field or garden; tillage, husbandry; also, by extension, farming, including any industry practiced by cultivator of the soil in connection with such cultivation, as breeding and rearing of stock, dairying, etc. The science that treats of the cultivation of the soil."
In Corpus Juris the term "agriculture" has been understood to mean: "art or science of cultivating the ground, especially in fields or large quantities, including the preparation of the soil, the planting of seeds; the raising and harvesting of crops, and the rearing, feeding and management of livestock; tillage, husbandry and farming. In its general sense the word also includes gardening or horticulture."
Bhashyam Ayyangar, J., in Murugesa Chetti v. Chinnathambi Gounden and others ((1901) I L R 24 Mad. 421, 423) gave the following dictionary meanings of agriculture as called out from the Century Dictionary and Anderson's Dictionary of Law:
"The primary meaning of agriculture is the cultivation of the ground (The Century Dictionary') and in its general sense it is the cultivation of the ground for the purpose of procuring vegetables and fruits for the use of man and beast including gardening or horticulture and the raising or feeding of cattle and other stock (Anderson's `Dictionary of Law). Its less general and more ordinary signification is the cultivation with the plough and in large areas in order to raise food for man and beast (The Century Dictionary') or, in other words, that species of cultivation which is intended to raise grain and other field crops for man and beast. (Anderson's Dictionary of Law). Horticulture, which denotes the cultivation of garden or orchards, is a species of agriculture in its primary and more general sense."
Ramesam, J., in Panadai Pathan and another v. Ramasami Chetti and others ((1922) I L R 45 Mad. 710) referred to the following connotation of "agriculture":
"Wharton's Law Lexicon adopts the definition of agriculture in 8 Edw. VII, c. 36, as including `horticulture, forestry and the use of land for any purpose of husbandry, etc.' In 10 Edw. VII, c. 8, section 41, it was defined so as to include the use of land as `meadow or pasture land or orchard or osier or woodland, or for market gardens, nursery grounds or allotments, etc. In 1957 and 58 Vict. c. 30, section 22, the term `agricultural property' was defined so as to include agricultural land, pasture and woodland, etc."
These are the various meanings ascribed to the term "agriculture" in various dictionaries and it is significant to note that the term has been used both in the narrow sense of the cultivation of the field and the wider sense of comprising all activities in relation to the land including horticulture, forestry, breeding and rearing of livestock, dairying, butter and cheese making, husbandry, etc.
It was urged on behalf of the assessee that the Court should accept the wider significance of the term and include forestry operations also within its connotation even though they did not involve tilling of the land, sowing of seeds, planting, or similar work on the land. The argument was that tilling of the land, sowing of the seeds, planting or similar work on the land were no doubt agricultural operations and if they were part of the forestry operations carried on by the assessee the subsequent operations would certainly be a continuation of the same and would therefore acquire the characteristic of agricultural operations. But the absence of these basic operations would not necessarily make any difference to the character of the subsequent operations and would not divest them of their character of agricultural operations, so that if in a particular case one found that the forest was of spontaneous growth, even so if forestry operations were carried on in such forests for the purpose of furthering the growth of forest trees, these operations would also enjoy the character of agricultural operations. If breeding and rearing of livestock, dairying, butter and cheese-making etc., could be comprised within the term "agriculture", it was asked, why should these also be not classed as agricultural operations.
Considerable stress was laid on the fact that section 4 (3) (viii) of the Act enacted a provisions in regard to the exemption of "agricultural income" from assessment and it was contended that exemptions should be liberally construed. Reliance was placed on the observations of Viswanatha Sastri, J., in Commissioner of Income-tax, Madras, v. K. E. Sundara Mudaliar and others ((1950) 18 I T R 259, 271):
"Exemption from tax granted by a statute should be given full scope and amplitude and should not be whittled down by importing limitations not inserted by the Legislature."
Mookerjee, J., in Commissioner of Agricultural Income-tax, West Bengal v. Raja Jagadish Chandra Deo Dhabal Deb ((1949) 17 I T R 426, 438) also expressed himself similarly:
"and the present day view seems to be that where an exemption is conferred by statute, that clause has to be interpreted liberally and in favour of the assessee but must always be without any violence to the language used. The rule must be construed together with the exempting provisions, which must be regarded as paramount."
He also quoted a passage from Upper India Chamber of Commerce v. Commissioner of Income-tax, C. P. do U. P. ((1947) 15 I T R 263):
"It is needless to observe that, as in the present case, we are concerned with the interpretation of an exemption clause in a taxing statute, that clause must be, as far as possible, liberally construed and in favour of the assessee, provided no violence is done to the language used."
It was also pointed out that Taxes on agricultural income" formed a head of legislation specified in item 46 of List II of the Seventh Schedule to the Constitution and should be liberally construed, with the result that agriculture should be understood in the wider significance of the term and all agricultural income derived from agriculture or so understood should be included within the category. There was authority for the proposition that the expression "agricultural land" mentioned in Entry 21 of List II of the Seventh Schedule to the Government of India Act, 1935, should be interpreted in the wider significance as including lands which are used or are capable of being used for raising any valuable plants or trees or for any other purpose of husbandry. (See sarojinidevi v. Shri Krishna Anjanneya Subrahmanyam and others (L I R (1945) Mad. 61) and Megh Raj v. Allah Rakhia ((1942) F C R 53, 62).
While recognizing the force of the above expressions of opinion we cannot press them into service in favour of the assessee for the simple reason that "agricultural income" has been defined in the Constitution itself in Article 366 (1) to mean agricultural income as defined for the purposes of enactments relating to Indian income-tax and there is a definition of "agricultural income" to be found in section 2 (1) of the Indian Income-tax Act. We have therefore got to look to the terms of the definition itself and construe the same regardless of any other consideration, though, in so far as the terms "agriculture" and "agricultural purposes" are concerned, we feel free, in view of the same not having been defined in the Act itself, to consider the various meanings which have been ascribed to the same in the legal and other dictionaries.
We may also note here the dictionary meanings of the terms "Forestry" and "Cultivation." The Shorter Oxford Dictionary, Vol. I, page 735, gives the meaning of "forestry" as the "science and art of forming and cultivation forests, management of growing timber."
Webster's New International Dictionary, Vol. I, page 990, gives the following meaning of forestry:
"Science and art of farming, caring for, or cultivating forests; the management of growing timber."
Webster's New International Dictionary, Vol. I, page 643, while talking of cultivation, says that "to cultivate" means "(1) to prepare, or to prepare and use, for the raising of crops; to till; as, to cultivate the soil; to losen or break up the soil about (growing crop or plants) for the purpose of - killing weeds, etc., especially with a cultivator, as to cultivate the corn;
(2) to raise or foster the growth of, by tillage or by the labour and care; to produce by culture; as to cultivate roses; to cultivate oysters."
Whether the narrower or the wider sense of the term "agriculture" should be adopted in a particular case depends not only upon the provisions of the various statutes in which the same…
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