- (1.)THE question referred for our opinion is:
"Whether, on the facts and in the circumstances of the case, the Malikana receipts constituted agricultural income within the meaning of section 2(1) of the Indian Income-tax Act, 1922, and were therefore exempt from tax under section 4(3) (viii) of the said Act?"

(2.)THE facts as found by the Income-tax Appellate Tribunal in its appellate judgment and as given in the statement of the case show that the assessee was receiving a sum of Rs. 8,947 as Malikana in respect of an estate of 133 villages, which had belonged to her predecessor-in-interest. The only point that arose was whether this amount, received as Malikana, was agricultural income, and, consequently, exempt from the applicability of the Income-tax Act.
In the appellate order, quotations from various settlement report have been reproduced to show the circumstances under which this Malikana dues became payable. The reference made first is to a settlement report of the district of Manipuri for Fasli year 1280 equivalent to 1872 A. D. In this settlement report it was said:

"A protracted enquiry ensuing during the progress of settlement operations made by Mr. Edmonston resulted in the Raja being stripped of the management of upwards 200 villages which had from old times been regarded as part of the territorial possessions of the family. The compensation given to him in recognition of his talukdari rights was a fixed percentage on the assets of each village."

(3.)IT is principally on the basis of this settlement report that it has been urged by learned counsel for the assessee before us that it should be held that this Malikana amount received by the assessee really represents rent or revenue derived from land under section 2(1) (a) of the Income-tax Act and should be held to be agricultural income. It is true that this settlement report indicates that all that was done at the time was to deprive the Raja of the management of his village. He was not divested of his proprietary rights in the villages. But the last sentence indicates that, though the proprietor or talukdari rights of his were recognised, it was held that the would be paid compensation in recognition of those rights. That compensation was to be calculated at a fixed percentage on the assets of each village. In these circumstances, Malikana amounts payable to the assessee have to be held to represent compensation being given under this engagement by the Government in recognition of the talukdari rights of the assessee, but cannot be held to be receipt by the assessee of actual land revenue or rents. Under this report, what the assessee receives is compensation calculated at a percentage on the assets of the village and not a portion of the assets of the village itself.