GAJENDRAGADKAR - (1.) THIS appeal by a certificate arises out of a reference made to the High Court at Calcutta under S. 63(1) of the Bengal Agricultural Income-tax Act IV of 1944 (hereafter called the Act). The appellant, the Dooars Tea Co. Ltd., is a public limited company and it carries on business of growing, manufacturing and selling tea. For the accounting year 1948 which corresponds to the assessment year 1949-50 a return was submitted by the appellant in respect of its agricultural income showing the said income at Rs. 3,45,702. The Agricultural Income-tax Officer, however, did not accept the correctness of the said return and increased the amount to Rs. 4,41,940. THIS increased amount included a sum of Rs. 39,849 and it represented the market value of the appellant's agricultural income from bamboos, thatching grass and fuel timber. It is this amount thus added by the Agricultural Income-tax Officer to the agricultural income of the appellant in the relevant year that has given rise to the present reference.
(2.) THE facts leading to the reference are not in dispute. THE appellant holds a large tract of land under lease from the local Government and it is common ground that in a part of the said land it grows bamboos, thatching grass and fuel timber. During the relevant year it cut down some bamboos, some thatching grass and fuel timber and used the same for the purpose of its business. THE bamboos, the thatching grass and fuel timber were grown by the appellant on its land by agricultural operations which were carried on by the servants and labourers employed by the appellant. After they were grown they were utilised by the appellant for the purpose of its tea business and were not sold either in the market or otherwise. It has been found that the appellant has been utilising the bamboos, thatching grass and fuel timber grown by it on its land in this way every year. Before the tax authorities the appellant urged that the agricultural produce in question did not constitute agricultural income within the meaning of the Act because the same had not been sold. The appellant's case was that agricultural produce grown by it on its own land could not in law be treated as its income unless it was converted into its money equivalent or into something which was money's worth; in other words, unless the said produce was sold. The department, on the other hand, has taken the view that the several varieties of agricultural produce grown by the appellant on its land and utilised by it for its business were themselves agricultural income and the tax on the said income cannot be avoided in the plea that the said varieties had not been sold. This dispute went up to the Tribunal; but the Tribunal agreed with the conclusion of the tax authorities and held that the produce in question constituted agricultural income of the appellant for the relevant year, and so the addition of Rs. 39,849 made by the Agricultural Income-tax Officer in determining the total agricultural income of the appellant for the relevant year was affirmed. It was also urged by the appellant in the assessment proceedings that even if the produce in question constituted the appellants agricultural income its market value could not be computed in money because no rule had been framed for the computation of the market value of such income. The appellant urged that R. 4 of the Rules framed under the Act was inapplicable to the present case. This contention has also been rejected by the tax authorities as well as by the Tribunal. In the result the agricultural income found to have been earned by the appellant for the relevant year has been duly taxed.
(3.) FEELING aggrieved by the final order Passed by the Tribunal in this matter the appellant required the Tribunal to refer two questions for the opinion of the High Court and in due course the Tribunal made the reference as required. The two questions referred for the opinion of the High Court have been thus framed by the Tribunal: (1) Is bamboo, thatch, fuel, etc., grown by assessee company and utilised for its own benefits in its tea business, agricultural income within the meaning of the Bengal Agricultural Income-tax Act ; and 2. If the answer to question (1) be in the affirmative, can such income be computed under rule 4 of the rules framed under the Act? The High Court has answered both these questions in the affirmative against the appellant. The appellant then applied for and obtained a certificate from the High Court under S. 64(2) of the Act read with Art. 135 of the Constitution. The High Court has certified that the case is a fit case for appeal to this Court because it was conceded by both the parties before the High Court that this case had been chosen by the assessee and the department as a test case since all the tea companies are interested in the questions raised in the present reference. It is with this certificate that the appellant has come to this Court with its present appeal. The answer to the first question would depend upon the construction of the definition of agricultural income contained in S. 2(1) (b) of the Act. The charging section is S. 3. It provides that subject to its two provisos agricultural income-tax shall be charged for each financial year in accordance with and subject to the provisions of the Act at the rate or rates specified in the Schedule in respect of the total agricultural income of the previous year of every individual. Hindu undivided family, company, firm or other association of individuals and every Ruler of a Part B State. S. 7 provides for the computation of tax and allowances under the head "agricultural income from agriculture". Do the relevant and material words used in the definition of agricultural income by S. 2 reach the subject of taxation in the present case? That is the short question which falls for our decision.;