# Kun.jilal and Another v. The State of Madhya Pradesh. Ghulam Hasan]

- **Citation:** [1955] 1 S.C.R. 876
- **Court:** Supreme Court of India
- **Decided:** 1952-03-28
- **Bench:** Mehr Chand Mahajan C.J, Ghulam Hasan, Bhagwati, Venkatarama Ayyar Jj
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/kun-jilal-and-another-v-the-state-of-madhya-pradesh-ghulam-hasan-1212
- **Pages:** 11

## Headnote

Indian Income-tax Act (XI of 1922), ss. 2(1), 4(3) (viii), 59 and
rule 24-Agricultural Income,
Meaning of-Growing and manu·
facturing tea company's dividend, Nature of-Dividend how arises
·-Distinction bettveen shareholder and partner-Difference between
company and firm-Decided cases on English Tax Uw, Use of.
Agricultural income as defined ins. 2(1) of the Indian Incometax Act, 1922, signifies
income
proximately
derived from direct
association with land by a ·person who actually tills the · land
01
-
-
-
...
•
S.C:.R.
SUPREME COURT REPORTS
877
r
gets it cultivated by others.
Agricultural income
income
which
can be
ultimately or
indirectly
connection with agricultural operations.
does not mean
traced to have
Even though a tea company growing and manufacturing tea
gets
an exemption of 60 per
cent. of the profits as agricultural
income in accordance with rule 24 framed under s. 59 of the Act,
it must be held that the dividend of such company is
not derived
;
I
by the shareholder owing to his direct connection with the land
in which tea is grown and such dividend is not agricultural income
within the meaning of s. 2 (1) of the Act and hence is not exempted
from income-tax under s. 4(3) (viii) of the Act.
..
•
The dividend of a shareholder is the outcome of his right to
participate in the profits of the company
arising
out of the contractual relation between
the company and the shareholder and
this right exists independently of any declaration of the dividend
though until such declaration the enjoyment of the profits is postponed.
The shareholder by purchase of the share does not acquire any
interest in the assets of the company till after
the
company is
wound up.
The position of a shareholder of a company
is altogether different from that of a partner of a firm.
A company is
a juristic entity distinct from the shareholders but the firm is a
collective name or an alias for all the partners.
Decisions based on the peculiarities
of
Income-tax
law
of
England are hardly safe guides for determining the true meaning
of the term "agricultural income" under the Indian
Income-tax
Act, 1922.
Chiranjit Lal ChowdhU1·i v. The Union of India
[1950] S.C.R.
869) followed.
Commissioners of Inland Revenue v. Forest (1924) 8 T.C. 704,
Borland's Trustee v. Steel
Bmthers & Co. Ltd. L.R. [1901] 1 Ch.
279, Commissioner of Income-tax, Bihar and Orissa v. Raja Bahadur
Kamakshya
Narayan Singh and Others
[1948] 16 I.T.R.
325,
Premier
Construction Co. Ltd. v.
Commissioner of
Income-tax,
.Bombay City [1948] 16 I.T.R. 380 and Maharajkumar Gopal Saran
Narain Singh v. Commissioner of
Income-tax, Bihar and Orissa
[1935] 3 I. T.R. 237 referred to .
CrvrL
APPELLATE
No. 104 of 1953.
JuRrsorcnoN :
Civil
Appeal
Appeal from the Judgment and Order dated the
28th day of March, 1952, of the High Court of Judicature
at
Bombay in Income-tax
Reference No. 39 of 1951
arising out of the Order dated the 23rd day of
April,
1951, of the Income-tax Appellate Tribunal in Incometax Appeal No. 5228 of 1950-51.
1954
Bacha F. Guzd«r
Y.
Commissioner •f
Income-tax,
Bamba . .v.
1954
Bacha F. Guzdar
v.
Commissioner of
lncome·tax,
Bombay.
Ghulam Hasan j.
878
SUPREME COURT REPORTS
[1955]
/amshedji Kanga,
(R. /. Kolah,
M. M. Jhaveri
and Rajinder Narain, with him) for the appellant.
M. C. Setalvad, Attorney-General for India, ( G. N.
Joshi, with him) for the respondent.
1954. October 28. The Judgment of the
Court was
delivered by
GHULAM
HASAN J.-This appeal raises an interesting point of law under the Indian Income-tax Act.
The question referred by the Tribunal to the High
Court of Judicature at Bombay was stated thus :
"Whether 60% of the
dividend
amounting
to
Rs. 2,750---received by the assessee from the two Tea
companies is agricultural income and as
such exempt
under section 4(3) (viii) of the
Act."
Chagla C.J. and Tendolkar J., who heard the reference, answered the question in the
negative. by
two
separate but concurring
judgments dated
March 28,
1952.
The facts lie within a narrow compa

## Text

1954
Kun.jilal and
Another
v.
The State of
Madhya Pradesh.
Ghulam Hasan].
1954
October 28.
876
SUPREME COURT REPORTS
[1955]
to the contention raised on behalf of the appellants.
That sub-section reads :
"403 (2) .-A person
acquitted or convicted of any
offence may be afterwards tried for any distinct offence
for which a separate
charge
might have
been made
against him on the former trial under section 235, subsection (I)."
The appellants were not tried again for the same
offence as contemplated under section 403(1) but for a
distinct offence as contemplated by sub-section (2).
It
is true that in order to
sustain the
charge
under
sections 332 and 392, Indian Penal Code, the Court had
to consider whether the seizure was legal and was made
by a public servant in the discharge of his duty but
once that was found against the appellants the further
question to be
determined was as to whether they
committed the offence of robbing the Head Constable of
the goods lawfully seized and whether they voluntarily
caused hurt to him while he was acting in the discharge
of his duties
as a public servant. Upon both these
points the finding of the Courts below is concurrent.
We hold that there is no substance in this contention.
We accordingly dismiss the appeal.
Appeal dismissed.
BACHA F. GUZDAR
v.
COMMISSIONER OF INCOME-TAX, BOMBAY.
[MEHR CHAND MAHAJAN C.J., S. R. D~s,
GHULAM HASAN, BHAGWATI and
VENKATARAMA AYYAR JJ.J
Indian Income-tax Act (XI of 1922), ss. 2(1), 4(3) (viii), 59 and
rule 24-Agricultural Income,
Meaning of-Growing and manu·
facturing tea company's dividend, Nature of-Dividend how arises
·-Distinction bettveen shareholder and partner-Difference between
company and firm-Decided cases on English Tax Uw, Use of.
Agricultural income as defined ins. 2(1) of the Indian Incometax Act, 1922, signifies
income
proximately
derived from direct
association with land by a ·person who actually tills the · land
01
-
-
-
...
•
S.C:.R.
SUPREME COURT REPORTS
877
r
gets it cultivated by others.
Agricultural income
income
which
can be
ultimately or
indirectly
connection with agricultural operations.
does not mean
traced to have
Even though a tea company growing and manufacturing tea
gets
an exemption of 60 per
cent. of the profits as agricultural
income in accordance with rule 24 framed under s. 59 of the Act,
it must be held that the dividend of such company is
not derived
;
I
by the shareholder owing to his direct connection with the land
in which tea is grown and such dividend is not agricultural income
within the meaning of s. 2 (1) of the Act and hence is not exempted
from income-tax under s. 4(3) (viii) of the Act.
..
•
The dividend of a shareholder is the outcome of his right to
participate in the profits of the company
arising
out of the contractual relation between
the company and the shareholder and
this right exists independently of any declaration of the dividend
though until such declaration the enjoyment of the profits is postponed.
The shareholder by purchase of the share does not acquire any
interest in the assets of the company till after
the
company is
wound up.
The position of a shareholder of a company
is altogether different from that of a partner of a firm.
A company is
a juristic entity distinct from the shareholders but the firm is a
collective name or an alias for all the partners.
Decisions based on the peculiarities
of
Income-tax
law
of
England are hardly safe guides for determining the true meaning
of the term "agricultural income" under the Indian
Income-tax
Act, 1922.
Chiranjit Lal ChowdhU1·i v. The Union of India
[1950] S.C.R.
869) followed.
Commissioners of Inland Revenue v. Forest (1924) 8 T.C. 704,
Borland's Trustee v. Steel
Bmthers & Co. Ltd. L.R. [1901] 1 Ch.
279, Commissioner of Income-tax, Bihar and Orissa v. Raja Bahadur
Kamakshya
Narayan Singh and Others
[1948] 16 I.T.R.
325,
Premier
Construction Co. Ltd. v.
Commissioner of
Income-tax,
.Bombay City [1948] 16 I.T.R. 380 and Maharajkumar Gopal Saran
Narain Singh v. Commissioner of
Income-tax, Bihar and Orissa
[1935] 3 I. T.R. 237 referred to .
CrvrL
APPELLATE
No. 104 of 1953.
JuRrsorcnoN :
Civil
Appeal
Appeal from the Judgment and Order dated the
28th day of March, 1952, of the High Court of Judicature
at
Bombay in Income-tax
Reference No. 39 of 1951
arising out of the Order dated the 23rd day of
April,
1951, of the Income-tax Appellate Tribunal in Incometax Appeal No. 5228 of 1950-51.
1954
Bacha F. Guzd«r
Y.
Commissioner •f
Income-tax,
Bamba . .v.
1954
Bacha F. Guzdar
v.
Commissioner of
lncome·tax,
Bombay.
Ghulam Hasan j.
878
SUPREME COURT REPORTS
[1955]
/amshedji Kanga,
(R. /. Kolah,
M. M. Jhaveri
and Rajinder Narain, with him) for the appellant.
M. C. Setalvad, Attorney-General for India, ( G. N.
Joshi, with him) for the respondent.
1954. October 28. The Judgment of the
Court was
delivered by
GHULAM
HASAN J.-This appeal raises an interesting point of law under the Indian Income-tax Act.
The question referred by the Tribunal to the High
Court of Judicature at Bombay was stated thus :
"Whether 60% of the
dividend
amounting
to
Rs. 2,750---received by the assessee from the two Tea
companies is agricultural income and as
such exempt
under section 4(3) (viii) of the
Act."
Chagla C.J. and Tendolkar J., who heard the reference, answered the question in the
negative. by
two
separate but concurring
judgments dated
March 28,
1952.
The facts lie within a narrow compass. The appellant, Mrs.
Bacha F. Guzdar, was, in the
accounting
year 1949-50,
a
shareholder in two
Tea compa111es,
Patrakola Tea
Company
Ltd., and
Bishnauth Tea
Company Ltd., and received from the aforesaid companies dividends aggregating to
Rs. 2,750. The two
-companies carried on business of growing and manufacturing tea.
By rule 24 of the Indian
Income-tax
Rules, 1922, made in exercise of the powers
conferred
by section
59
of
the
Indian
Income-tax
Act, it
is provided that "income derived from
the sale
of tea
.grown and manufactured by the seller in the taxable
territories shall be
computed
as if it
were
income
derived from business and 40% of such income shall
be deemed to be income,
profits and • gains, liable to
tax." It is common ground that 40%. of the income
-0f the Tea companies was taxed as income from the
manufacture and sale of tea and 60% of such income
was exempt from tax as agricultural income. According
to the appellant, the dividend income received by her
in respect of the shares held by her in the said Tea
<:ompanies is to the extent of 60% agricultural income
in her hands and therefore pro tanto exempt from tax
while the
Revenue contends that dividend
income is
..
•
•
i
S.C.R.
SUPREME COURT REPORTS
~9
"'!"
not agricultural income and therefore the whole of the
income is liable to tax. The
Income-tax
Officer and,
on appeal, the Appellate Assistant
Commissioner both
concurred in holding the whole of the said income to
be liable to tax. The Income-tax Appellate
Tribunal
confirmed the view that the dividend income could not
i
be treated as agricultural income in the hands of the
shareholder and decided in favour of the
Revenue, but
agreed that its order gave rise to a question of law and
formulated the same as set out above and referred it
to the High Court. The High Court upheld the order
of the Tribunal but granted
leave to appeal to this
Court.
The question, we comprehend, is capable of an easy
solution and can best be answered by reference to the
material provisions
of the
Income-tax Act.
Under
section 2(1) 'agricultural income' means:
"(a) any rent or revenue derived from land which
is used for agricultural purposes, and is either assessed
to land-revenue in
the taxable territories or subject to
a local rate assessed
and collected by officers of the
Government as such ;
(b) ....................... ' ' .......... .
(i) ............... .
\~9 . ' .. ' .......... .
(111) ..........•.....
(c) .......................... "
Sub-section ( 15) of section 2 defines "total income"
as total amount of income, profits and gains, referred
to in
sub-section ( 1)
of section 4 computed in the
manner laid down in this Act,
Section 3 authorises
income-tax to be charged upon a person in respect of
the total income of the previous year.
Section 4 lays
down
that the total income of any previous year of
any person to be charged must include all income,
profits and gains, from whatever source derived
and
defines the scope of its application for purposes of tax.
Sub-section (3)
of the same section
enacts
c;ertain
exemptions upon the chargeability of the income and
clause (iii) includes agricultural income in the category
of exemptions.
Section 6 mentions the various heads
of income, profits and gains,
chargeable to income-tax
1954
Bacha F. Guzdar
v.
Commissioner of
I ncomt-tax,
Bombay.
Ghulam Hasan :J.
1954
Bacha F. Gut:dar
v.
CommissioTUr of
lnromeMtax,
Bombay.
GhuJam Hasan ].
880
SUPREME COURT REPORTS
[1955]
including in that category
clause
( v) 'income
from
other
sources.'
It is common
ground
that
dividend
falls under this category.
In order, however, that dividend may be held to be
agricultural income it will be
incumbent
upon the
appellant to show that, within the terms of the definition, it is rem or revenue derived from land which is
used for
agricultural
purposes.
Mr. Kolah,
for the
appellant, contends
that it is revenue
derived
from
land because 60% of the profits of the company out of
which
dividends are payable are referable to the pursuit
of agricultural
operations
on the part of the
company.
it is true
that
the agricultural
process
renders 60% of the profits exempt
from tax in the
hands of the company from land which is used for
agricultural purposes but can it be said that when such
company decides to _distribute its profits to the shareholders and declares the dividends to be allocated to
them, such dividends in the hands of the shareholders
also partake of the character of revenue derived from
land which is used for. agricultural purposes ? Such a
position if accepted would extend the scope of the
vital
words 'revenue
derived
from
land'
beyond
its
legitimate limits. Agricultural income as defined
in the Act is obviously intended to refer to the revenue
received by direct association with the
land
which is
used
for agricultural
purposes
and not by indirectly
extending it to cases where that revenue or part therecf changes hands either by way of
distribution of
dividends or otherwise. In fact and truth dividend
is derived from the investment made in the shares of
the company and the foundation of it rests on the
contractual relations between the
company and
the
shareholder.
Dividend is
not
derived
by a shareholder by his direct relationship with the land. There
can be no
doubt that
the initial source which has
produced the revenue is
land used for agricultural purposes but to give to the words 'revenue derived from
land' the unrestricted meaning, apart from its
direct
association or relation with the land, would be quite
unwarranted.
For example, the
proposition
that
a
creditor advancing money on interest to an agriculturist
..
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\
S.C.R.
SUPREME COURT REPORTS
881
and receiving interest out of the produce of the lands
in the hands of the agriculturist can claim exemption
of tax upon the
ground that it is agricultural income
within the meaning of section 4, sub-section (3) (viii), is
hardly statable. The policy of the Act as gathered from
the various sub-clauses of section 2(1) appears to be to
exempt agricultural income from the purview of Incometax Act. The object appears
to be not to subject to
tax either the actual tiller of the soil or any other person
getting land cultivated
by others for deriving benefit
therefrom, but to say that the benefit intended to be
conferred upon this class of persons
should extend to
those into whosoever hands that revenue falls, however
remote the receiver of such revenue may be, is hardly
warranted.
It was argued by Mr. Kolah on the
strength of
an observation made by Lord Anderson in
Commissioners of Inland Revenue v. Forrest (1), that an investor
buys in the first place a
share of the assets of the
industrial concern
proportionate to the
number
of
shares he has purchased an<l also buys the right to
participate in any profits which the company may m::ike
in the future.
That a shareholder acquires a right
to
participate in the profits of the company
may
be
readily conceded but it is not possible to accept the
contention that the shareholder acquires any
interest
in the assets of the company. The use of the
word
'assets' in the passage quoted above cannot be exploited
to warrant the inference that a shareholder, on investing money in the purchase of shares, becomes entitled
to the assets of the company and has any share in the
property of the company. A shareholder has got no
interest in the property of the company though he has
undoubtedly a right to participate in the profits if and
when the company decides to divide them. The interest
of a shareholder vis-a-vis the company was explained in
the case of Chiranjitlal Chowdhuri v. The Union of India
and Others(2). That judgment negatives the position
taken up on behalf of the appellant that a shareholder
has got a right
in the
property of the company.
It is true that the shareholders of the company have
(r) [1924] 8 T. C. 704, 710.
(2) [1950] S. C. R. 869, 904.
1954
Bacha F. Guz:dar
v.
Commissioner of
Income-tax,
Bombay.
Ghulam Hasan J.
1954
Bacha F. Gui:.dar
v.
Commissioner of
Income-tax~
BomOtg.
Ghulam Hll.fanJ.
882
SUPREME COURT REPORTS
[1955}
the sole determining
voice
m
administering
the
affairs of the company and are entitled, as
provided
by the Articles of Association, to declare that dividends
should be distributed out of the profits of the company
to the shareholders
but the interest of the shareholder
either individually or collectively does not amount to
more than a right to participate in the profits of the
company.
The
company is a juristic
person
and is.
distinct from
the
shareholders. It is the
company
which owns the
property and
not the shareholders.
The dividend is a share of the profits
declared by the
company as liable to be distributed among the
shareholders.
Reliance
is placed on behalf of the appellant
on a passage in Buckley's
Companies
Act, 12th Ed.,
page 894, where the etymological meaning of, dividend
is given as dividendum, the total divisible sum but in
its ordinary sense it means the sum paid and received as
the quotient forming
the share of the
divisible sum
payable to the recipient.
This
statement
does
not
justify the contention that shareholders are
owners of
a divisible sum or that they are owners of the property
of the company. The proper approach to the solution
of the question is to concentrate on the plain words of
the definition of agricultural income which connects in
no uncertain language revenue with
the
land
from
which it directly springs and a stray observation in a
case which has no bearing upon the present
question
does not advance the solution of the question.
There
is nothing in the
Indian law to warrant the
assumption that a
shareholder
who buys shares buys any
interest in tlle property of the company
which is a
juristic person entirely
distinct from the shareholders.
The true position of a shareholder
is that on
buying
shares an investor becomes entitled
to participate in
the profits of the company in which he holds the shares
if and when the
company
declares,
subject
to the
Articles of Association, that the profits or any portion
thereof should
be distributed
by
way
of
dividends
among the shareholders.
He has undoubtedly a further
right to participate in the assets of the company which
rvould be left over after winding up but not in the assets
as a whole as Lord Anderson puts it.
I
..
•
••
S.C.R.
SUPREME COURT REPORTS
883
The
High Court expressed the
view that until a
dividend is declared there is no right in a shareholder
to participate in the profits and according to them the
declaration of dividend by the company is the effective
source of the
dividend which is subject to tax. This
statement of the law we are unable to accept.
Indeed
the learned
Attorney-General
conceded that he was
not prepared to subscribe to that
propos1t1on.
The
declaration of dividend is certainly not the source of
the profit. The right
to participation in the
profits
exists independently of any
declaration
by
the
company with the
only difference that the enjoyment of
profits is postponed until dividends are declared.
It was argued that the position of shareholders in a
company is analogous to that of partners inter se. This
analogy is wholly inaccurate. Partnership is merely an
association of persons for carrying on the business of
partnership and in law the firm name is a compendious
method of describing the partners.
Such is, however,
not the case of a company
which stands as a separate
juristic entity
distinct
from
the
shareholders.
In
Halsbury's
Laws of
England, Volume
6 (3rd
Ed.),
page 234, the law regarding the attributes of shares is
thus stated :
"A share is a right to a specified amount of the
share capital of a company
carrying
with it certain
rights
and liabilities while the company is a
going
concern and in its winding up. The shares or other
interest
of any member in a company
are personal
estate transferable in
the
manner
provided by its
articles, and are not of the nature of real estate."
In Borland's Trustee v. Steel Brother/ & Co. Ltd. (1),
Farwell J. held
that "a share in a company
connot
properly be likened to a sum of money settled
upon
and subject to executory limitations to
arise
in the
future; it is rather to be regarded as the interest of
the
shareholder in the company, measured, for
the
purposes of liability and dividend, by a sum of money
......................... " It was suggested that the
dividend arises out of the profits accruing from land
and is impressed with the same character as the profits
(1) L. R. [1901] I Ch. 279.
1954
Bacha F. Guzdar
v.
Commissioner of
lnconu-tax,
Bomhqy.
Ghulam Hasan J.
1954
Bacha F. Guzdar
v.
Commissionn nf
lncorru-tax,
Bombqy.
Chulam Hasan J.
884
SUPREME COURT REPORTS
fl9551
and that it does
not change its character
merely
because of the incident that it reaches the hands of the
shareholder. This argument runs counter to the definition of
agricultural
income
which - emphasizes the
necessity of the recipient
of
income having
a direct
and an immediate rather than an indirect and
remote
relation
with land. To accept
this
argument
will
be tantamount to saying that the
creditor
recovering
interest on money
debt
due from
the
agriculturist
who pays out of the produce of the land
is equally
entitled to the exemption.
In fairness to Mr. Kolah it
must, however, be stated that the contention was not
so broadly put but there is no reason why one should
stop at a particular stage and not pursue the analogy
to its logical limits.
English decisions resting
upon the
peculiarities of
the English
Income-tax law can hardly be a safe guide
in determining
upon
the
language of the
Indian
Income-tax
Act the true meaning of the words 'agricultural income.' A few cases of the
Privy
Council
decided with reference to the provisions of the
Indian
Income-tax
Act,
howeyer, deserve
notice_
The first
-case, viz., Commissioner of Income-tax, Bihar and Orissfl
v. Raja
Bahadur
Kamakshya
Narayan
Singh
and
Others( 1 ), dealt with the
question whether interest on
.arrears of rent
payable. in respect
of land used for
agricultural purposes is agricultural income . and therefore exempt from income-tax.
It was held that it was
neither rent nor revenue derived
from land within tl1e
meaning of section 2(1) of the Income-tax Act. Lord
Uthwatt who delivered the judgment
of the
Privy
Council used the following piquant language in coming
to that conclusion :
"The word 'derived' is not a term of art. Its use
in the definition indeed demands an enquiry into the
genealogy of the product.
But the enquiry should stop
as soon as the effective source is discovered.
In the
_genealogical tree of the interest land indeed appears in
the second degree, but the
immediate and
effective
~ource is rent,
which has
suffered
the accident of
(1) [1948] 16 I. T. R. 325.
••
•
.. ,
-
S.C.R.
SUPREME COURT REPORTS
885
non-payment.
And
rent is
not land
within
the
meaning of the definition."
The second case, viz., Premier
Construction Co Ltd.
v. Commissioner of Income-tax, Bombay City('), dealt
with the nature of the commission of a managing agent
of the company a part of whose income was agricultural
income. The assessee claimed exemption from tax on
the ground that his remuneration at 10 per cent. of the
profits was calculated with reference to the income of
the company part of which was agricultural income. It
was held that
the assessee
received no
agricultural
income as defined
by the
Act but that he received a
remuneration
under .a contract
for
personal
service
·calculated on the amount of profits earned
by the
employer, payable n.ot in specie out of any item of such
profits, but out of any moneys of the employer available for the purpose, and that the remuneration therefore was not agricultural income and was not exempt
from
tax. Sir John
Beaumont
in the
above case
·observed :,
"In their Lordships' view
the principle
to
be
derived from a consideration of the terms of the Incometax Act and the authorities referred to is that where an
.asses see receives income, not itself of a character to fall
within the definition of agricultural income contained
in the Act, such income does not assume the character
of agricultural income by
reason of the source
from
which it is derived,
or the
method by which it is
-calculated."
In the third case, viz., Maharajkumar Gopal Saran
Narain Singh v. Commissioner of Income-tax, Bihar and
Orissa(2), an annual payment for life to the assessee was
not held to be agricultural income and therefore not
·exempt from tax where the
annuity
arose out of a
transfer made by the assessee of a portion of his estate
for discharging his debts and for obtaining an adequate
income for his life it being held that it was not rent or
revenue derived from land but money paid under a
-contract imposing personal liability on the convenantor
the discharge of which was secured by a charge on
(1) [1948] 16 I. T. R. 380
(2) [1935] 3 I. T. R. 237.
1951
Bacha F. Guzdar
v.
Commissioner of
Income-tax,
Bombay.
Ghu/am Hasan].
1954
.J!acha F. Gut:dar
v.
Commissioner of
lnco~-tax,
Bombqy.
G!mlam H(JjarJ J.
886
SUPREME COURT REPORTS
[1955T
land. But reliance was placed
upon another judgment
of the Privy Council in the same volume at page 305
in Commissioner of Income-tax, Bihar and Orissa v.
Sir Kameshwar Singh('). That was a case of a usufructuary mortgagee the profits received
by
whom were
exempt from income-tax en
the ground
that they
were agricultural income in his hands. Lord Macmillan,
after referring to certain sections of the Act, observed
that "the result of those sections is to exclude agricultural income altogether from
the scope of the Act
howsoever or by
whomsoever it
may
be received."
These observations must be held to be confined to the
facts of that particular
case
which was
a case
of
usufructuary
m()rtgagee
who
had
received
profits
directly from the land. The obvious implication of the
words used by Lord Macmillan was
that
whosoever
receives profit from
the land directly is entitled to the
exemption.
Reference was also made to some English decisions
but they have no bearing upon the present case as they
were founded on the English Income-tax law and the
provisions of the particular statute.
The learned Attorney-General also contended that
the conclusion that dividend is not agricultural income
also follows from the provisions of section
16, subsection (2) and the proviso to the Act. According to
him, this
section compels the assessee to show in his
return the whole dividend including the portion which
is excluded on the ground of agricultural income. We
do not consider it necessary to express
any opinion
upon this
contention as our conclusion reached as a
result of the foregoing discussion is sufficient to dispose
of the appeal. We accordingly dismiss the appeal with
costs.
Appeal dismissed.
(t) [1935] 3 I. T. R. 305.
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