STATE OF MADRAS Vs. DAVERSHOLA TEA COMPANY PRIVATE LIMITED

JUDGEMENT

(1.) THESE are revisions by the Commissioner of Agricultural Income-tax. The assessee, the Davershola Tea Co. Ltd., leased out a plantation to the Madras Tea Estates Ltd. There were two separate leases, one covering the actual plantation and the other, the buildings, machinery, furniture, etc. For the two assessment years 1955-56 and 1956-57, the rental by way of lease of the plantation itself was Rs. 24,000. In respect of the buildings, machinery, furniture, etc., the rental stipulated in the lease was Rs. 89,999 for the first year and Rs. 95,000 for the second year. The Agricultural Income-tax Officer estimated the rental value of the buildings alone at Rs. 59,749 and Rs. 65,471 for the two years respectively. After making certain allowances, the net agricultural income in relation to the buildings alone was taken as Rs. 16,033 for the first year and Rs. 19,722 for the second year. Sixty per cent. of these amounts was brought to tax. THESE assessments were taken up in appeal to the Assistant Commissioner who confirmed the finding of the Agricultural Income-tax Officer.

(2.) IN the further appeal to the appeal to the Appellate Tribunal, it was contended that no part of the income covered by the second of the leases, that is, the lease in respect of the buildings, machinery and furniture, could be regarded as agricultural income. The Tribunal accepted the contention of the assessee. It purported to interpret section 2(a) (3) of the Agricultural INcome-tax Act and reached the conclusion that the owner of the buildings in question and that he would not come within the scope of the above provisions as, in the present case, he did not occupy the buildings. The Tribunal observed :

(3.) IT is quite clear from the wording of the above that this provision only supports to define what is agricultural income without reference to the person who is in receipt of such income. In a case like this, what has to be enquired first is whether the conditions required in the proviso are satisfied. The further condition that the building should be occupied by the cultivator is also satisfied. That being so, the next question is whether the income is derived from the building. Those parts of the section which relate to the occupation by the cultivator or the performance of the operations mentioned in sub-clauses (ii) and (iii) or the location of the building with respect to the land, described the nature of the building. When any building conforms to these requirements and any income is derived from such building, such income is defined to be agricultural income. The section does not purport to indicate whether it is the agricultural income of the cultivator or the receiver of the rent-in-kind who occupies it or the owner who may or may not occupy it. The definition section was not intended for that purpose nor do we find anything therein to suggest that the person by whom the income referred to is received is at all relevant for the purpose of determining the class of the income. In the present case, if the building conformed to the requirements of the section, it follows that the income derived from such building is agricultural income and we have to look elsewhere for the purpose of determining who is the person who is liable to the charge under section 3 of the Act in respect of that agricultural income.