Sabyasachi Mukharji, J. - (1.) The assessee is a limited company engaged in growing and manufacturing tea. In the assessment year 1960-61, the corresponding previous year being the calendar year 1959, the assessee received a sum of Rs. 15,465 from Messrs. London Assurance for damage caused to green leaf forming part of the assessee's garden called " Bundook-mara Tea Estate " in the district of Cachar, Assam. Damage was caused by hail storm some time in May, 1959, and on the basis of the assessment it was found that 773 mds of green leaf had been lost by the assessee. There was an insurance policy. It appears from the said insurance policy that the insurance primarily covered the risks against fire, theft, pilferage and non-delivery, fresh water damage and also loss or damage occasioned by collision, breakage of bridges, derailment or accidents of a like nature whilst being conveyed by train or motor-truck. The said insurance policy contained a special clause called " Hail Clauses " which, inter alia, provided as follows : " In the event of any crop being damaged by hail the assured's garden manager shall forthwith summon two neighbouring planters who shall certify to the area so damaged (in acres) and furnish an estimate in (green leaf) of the season's loss consequent thereon, detailing fully their reasons for the conclusions arrived at..."
(2.) Under the policy the insurance company undertook the liability to pay 50 per cent. of such loss suffered. In fact in the instant case the amount actually received by the company roughly represents 50 per cent. of the total loss assessed in respect of the damaged green leaf by hail storm.
(3.) Before the Income-tax Officer it was contended by the assessee that this sum of Rs. 15,465 is exempt from taxation being agricultural income. The Income-tax Officer disallowed this claim and included this receipt in the total income of the assessee. It appears from the assessment order that the taxable income was computed at the rate of 40 per cent. of the total income as computed. The same has been done by applying the provisions of Rule 24 of the Indian Income-tax Rules, 1922.;