C.S.P.Singh, J. - (1.) The Tribunal has referred the following question of law for our opinion ; "Whether, on the facts and in the circumstances of the case, the amount of Rs. 67,337 received by the assessee as agricultural income is exempt in his hands under Section 2(1) of the Income-tax Act, 1961?"
(2.) The reference relates to the assessment year 1971-72, the relevant year being the financial year 1970-71. In this year, the assessee received an amount of Rs. 67,337 which was entered in the account books as agricultural income. The circumstances leading to this receipt are these. The assessee is a lawyer by profession, and also owns agricultural land. In 1950, he and his wife, Bhagirathi, took agricultural land in villages, Sandkhera and Berkhera Rajput in Kashipur Tahsil and Nainital District. The leases had been taken out from the zamindars, who owned the land, and were granted for agricultural purposes. The income which is claimed to be agricultural income had accrued from the land situate in village, Berkhera Rajput, the area of which was 385.89 acres. The assessee had obtained a permanent lease of this land from its zamindar, Raja Hari Chand Raj Singh, by a registered deed dated September 6, 1950, which was in favour of a firm, Gauri Shankar Agrawal & Co., of which the assessee and his wife were partners. The land which the assessee had taken was at that point of time being claimed by Bachan Singh and four others. These persons alleged that they were lessees of the land, and they had obtained lease from the Punjab Farmers' Association, which in turn obtained a lease in 1946 from the court of wards of the zamindar. The court of wards, however, had not formalised the lease by a written deed in favour of the Punjab Farmers' Association, as the estate of Raja Hari Chand Raj Singh was released from its custody. Thereafter one Kashi Nath, the agent of the Raja executed a lease. As a result of these conflicting claims to the land, protracted litigation between the assessee and Bachan Singh and others took place. It began by proceedings under Section 145 of the Cr.P.C. but the assessee did not succeed in that. He, thereafter instituted a suit under Section 180 of the U.P. Tenancy Act on 17th October, 1951, on Bachan Singh and four others, for possession of the land. The suit was dismissed on May 29, 1962, by the Assistant Collector. An appeal filed before the Assistant Commissioner succeeded and the suit for ejectment was decreed on 26th June, 1964, but that for damages was rejected. Bachan Singh and others then preferred a second appeal to the Board of Revenue, but that was dismissed on February 24, 1965. Thereafter Bachan Singh and others filed Writ Petition No. 928 of 1965 in this court and asked for a stay of the order of ejectment. Ex parte stay order was granted by this court on May 11, 1965, which was in the following terms: "We further order that during the pendency of this application execution of the decree for delivery of possession shall be stayed, but on condition that the applicant deposit Rs. 10,000 annually, beginning with April 1, 1965, in two instalments, each payable by the end of April, and October. If there is any default in payment of any instalment this order staying the execution of the decree shall stand cancelled. The deposited amount may be invested in Defence Savings Certificates. The amount together with the accruing income shall be paid to opposite parties Nos. 4 and 5 if the petition is dismissed and shall be refunded to the applicant if the petition is allowed and the decree is cancelled. Dt. 11-3-65. Sd. M.C.D. Sd. S.C.M."
(3.) This ex parte order was modified after hearing both the parties. The final order being: "I have heard learned counsel for the parties. During the pendency of the writ petition the petitioners shall be entitled to continue in possession of the property in dispute provided they deposit an amount of Rs. 30,000 annually with the judicial officer, Kashipur the payment to be made in two equal instalments, one instalment to be deposited on or before the seventh day of October and other on or before the seventh-day of April. The first deposits, however, may be made on or before November, 1965. The deposits may be made in the form of Defence Savings Certificates. In case of default in payment of any instalment, the respondents Nos. 4 and 5 shall be entitled to execute their decree and this order shall stand automatically vacated. In case the writ petition is allowed the amount deposited by the petitioners shall be returned to them, but if the petition is dismissed the amount so deposited shall be made over to the respondents Nos, 4 and 5. Dt. 19-7-65. Sd. R.S.P.";