# ·~ Tlil DHa-TlJ Tt-. C'o.1 LtJ v. Comm111ioritr of Agrict1l:Ural Inum1~tax, Wt# Bt1'gal

- **Citation:** [1962] 3 S.C.R. 157
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Bench:** P. B. Gajendragadkar, K. SunnA RAo, M. Hidayatullah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/tlil-dha-tlj-tt-c-o-1-ltj-v-comm111ioritr-of-agrict1l-ural-inum1-tax-wt-bt1-gal-2317
- **Pages:** 15

## Headnote

Agricultural Income-Agricultural
produce used
for
asses~ee's "'!'n business and not sold in the market-If by itself
constitutes income-Market value-Mode of computation-Bengal
Agricultural Income-tax Act, 1944 (IV of 1944), s. 2(1)(b)(I),
Rule 4(2).
The appellant which carried on business of growing
m;tnufacturing and selling tea held a large tract of land o~
which qam!>oos, thatching grass and fuel ti!I!ber were grow!l
'1961
'l'he Sen{or El,ctric
Inspector
v.
Lax mi Narayan
Chopra·
Subba Rao J.
1961
Augml 18.
1981
·~
Tlil DHa-TlJ
Tt-. C'o.1 LtJ.
v.
Comm111ioritr of
Agrict1l:Ural
Inum1~tax,
Wt# Bt1'gal
Gajtn.Jragadkar J.
lGS
SUPREME COURT REPORTS
[l962]
by it by agricultural operations through its servants ... and
labourers and the same were utilised for the purpooea of ita tt:a
business and wrre not sold in the market or otherwise. In the
relevant assessment year the _1\gricultural Income-tax Officer
increased the appellant's return by a ccnain sum of money as
representing the market \•aJuc of it~ agricultura] income from
bamboos, thatching grass and fuel timber. The appellant
contended inltr alia that the agricultural produce in question
. -
did not ronstitute agrirultt:ral income under the
llengal
Agriculrural Income-tax Act becausr. the same had not been
sold or converted into money.
Hrld, that under cl.(!) of s.2(1)(b)
of the
Bengal
Agricultural Income-tax Act the agricultural produce utilised
by the asscssec for its O\\'fl business itself constituted income;
no sale v .. ·us contempiate<l thereunder anti it \\'as not required
that the agricultural produce should be sold and profit or gain
recei\'ed frotn such sale.
Alexander 'l'en11ant
'" Rol1ert Suir/air Smith, (1892)
A.C. 150, In re MiCklethwait, 11 Ex. 456 and Sir Kikabhai
Premclmnd '" Commi.Mioner nf lnMme-lax (Ceniral) Bombay,
(1954) S.C.R. 219, referred to.
('011uni8.tlone,· of /11con1e·ta:r v. Sltau·
lrallace & Co.,
( 1932) L.R. 59
I .A. 206, Captain Maharaj Kumar Gopal
.'?aran Flinglt v. Conzmiasio1zer of Inconie-ta.r~ JJiltar and (Jrisaa,
( 1935) L. R. G2 I.A. 207, not applicable.
Rule 4(2) framed under the Act deals with cases where
agricultural produce has been sold outside the market as well
as cases \vhere it has not heen sold at all an<l the income front
~uch agriculruraJ produce may hr computed in the mannrr
prescril~ed tl1rreunder.
Crnr. APPELLATE .Tum~nI<'TTO:> : Civil Appeal
Xo. :l8! of l!luO.
y
1
Appc·al from the judgmont and ordor d'ted
•
ScptcmbC'r 11, l!l5i, of the Calcutta High Court
in RcfcrC'nce No. I 02/l!l;i2.
S. Jlfitm, S. iV. 11luklierjee and B. N. Gho8h, for
Appellant.
R. B. J'al, Asoke Sen and P. K. Bose,
for
rc•Rponrlent.
1001. August 18. The Judgment of the Court
was delivered by
.-
GAJENDRAGADKAR, J.--This appeal by a.oertificnte arises out of a reference made to the IDgh COurt
,
.• ,
3 S.C.R.
StT.PREME COtJR1' REPORTS • 159
at Calcutta
under s.
63( l)
of th A
Bengal
Agricultural Income-tax Act IV of I ll44 (hereafter
0alled the Act).
The appellant, the Dooars Tett
Co., Ltd., is a public limited company and it carries
-0n business of growing, manufacturing and selling
tea. For the accounting year 1948 which corres·
ponds to the aesessment year 1949-50 a return was
submitted by the appellant in ·respect of its agri·
cultural income showing the said income at
Rs. 3,45, 702. The Agricultural Income-tax Officer,
however, did not accept the correctness of the said
return and increased the amount to Rs. 4,41,940.
This increased amount included a sum of Rs. 39,849
and it represented the market value 'of the
_appellant's agricultural income from . bamboos,
thatching grass and fuel timber. It is this amount
thus .added by the Agricultural Income-tax Officer
to the agricultural income of the appellant in the
relevant year that has given rise to the present
reference.
The facts leading to the reference are not in
dispute. The appellant holds a large tract of land
under lease from the local Government and it is
common-ground that in a part of the sa

## Text

- ..
•
3. S.C.R.
SUPREME· COURT REPORTS
157
of an enlarged meaning the same concept might
~ttract with · the march of time and with the
revolutionary·. changes brought ft bout in
social,
economic, political and scientific
·~ml other fields
of human activity. Indeed, unless a contrary
intention appears, an interpretation should be
given to the words used to take in new fact~ and
situations, if the words are capable of comprehending them.
We cannot, therefore, agree with the
learned Judges of the High Court that the maxim
contemporanea expositio could be invoked in constrnfag the word "telegraph line" in the Act.
For the' said reasons, we hold that the expres.
sion "telegraph line" is sufficiently comprehensive
t.o take in the wires used for the purpose of the
apparatus of the Post and Telegraph Wireless
Station.
In the result, we set aside the order of the
High Court and dismiss the petition filed by the first
respondent. The appeal is allowed, bnt, in tht•
eircumstances of the case, without costs.
Appeal allowed.
THE DOOARS TEA CO., LTD.
'V.
COMMISSIONER OF AGRICUL'TURAL
INCOME-TAX, WEST BENGAL
(P. B. GAJENDRAGADKAR, K. SunnA RAo
and M. HIDAYATULLAH, JJ.)
Agricultural Income-Agricultural
produce used
for
asses~ee's "'!'n business and not sold in the market-If by itself
constitutes income-Market value-Mode of computation-Bengal
Agricultural Income-tax Act, 1944 (IV of 1944), s. 2(1)(b)(I),
Rule 4(2).
The appellant which carried on business of growing
m;tnufacturing and selling tea held a large tract of land o~
which qam!>oos, thatching grass and fuel ti!I!ber were grow!l
'1961
'l'he Sen{or El,ctric
Inspector
v.
Lax mi Narayan
Chopra·
Subba Rao J.
1961
Augml 18.
1981
·~
Tlil DHa-TlJ
Tt-. C'o.1 LtJ.
v.
Comm111ioritr of
Agrict1l:Ural
Inum1~tax,
Wt# Bt1'gal
Gajtn.Jragadkar J.
lGS
SUPREME COURT REPORTS
[l962]
by it by agricultural operations through its servants ... and
labourers and the same were utilised for the purpooea of ita tt:a
business and wrre not sold in the market or otherwise. In the
relevant assessment year the _1\gricultural Income-tax Officer
increased the appellant's return by a ccnain sum of money as
representing the market \•aJuc of it~ agricultura] income from
bamboos, thatching grass and fuel timber. The appellant
contended inltr alia that the agricultural produce in question
. -
did not ronstitute agrirultt:ral income under the
llengal
Agriculrural Income-tax Act becausr. the same had not been
sold or converted into money.
Hrld, that under cl.(!) of s.2(1)(b)
of the
Bengal
Agricultural Income-tax Act the agricultural produce utilised
by the asscssec for its O\\'fl business itself constituted income;
no sale v .. ·us contempiate<l thereunder anti it \\'as not required
that the agricultural produce should be sold and profit or gain
recei\'ed frotn such sale.
Alexander 'l'en11ant
'" Rol1ert Suir/air Smith, (1892)
A.C. 150, In re MiCklethwait, 11 Ex. 456 and Sir Kikabhai
Premclmnd '" Commi.Mioner nf lnMme-lax (Ceniral) Bombay,
(1954) S.C.R. 219, referred to.
('011uni8.tlone,· of /11con1e·ta:r v. Sltau·
lrallace & Co.,
( 1932) L.R. 59
I .A. 206, Captain Maharaj Kumar Gopal
.'?aran Flinglt v. Conzmiasio1zer of Inconie-ta.r~ JJiltar and (Jrisaa,
( 1935) L. R. G2 I.A. 207, not applicable.
Rule 4(2) framed under the Act deals with cases where
agricultural produce has been sold outside the market as well
as cases \vhere it has not heen sold at all an<l the income front
~uch agriculruraJ produce may hr computed in the mannrr
prescril~ed tl1rreunder.
Crnr. APPELLATE .Tum~nI<'TTO:> : Civil Appeal
Xo. :l8! of l!luO.
y
1
Appc·al from the judgmont and ordor d'ted
•
ScptcmbC'r 11, l!l5i, of the Calcutta High Court
in RcfcrC'nce No. I 02/l!l;i2.
S. Jlfitm, S. iV. 11luklierjee and B. N. Gho8h, for
Appellant.
R. B. J'al, Asoke Sen and P. K. Bose,
for
rc•Rponrlent.
1001. August 18. The Judgment of the Court
was delivered by
.-
GAJENDRAGADKAR, J.--This appeal by a.oertificnte arises out of a reference made to the IDgh COurt
,
.• ,
3 S.C.R.
StT.PREME COtJR1' REPORTS • 159
at Calcutta
under s.
63( l)
of th A
Bengal
Agricultural Income-tax Act IV of I ll44 (hereafter
0alled the Act).
The appellant, the Dooars Tett
Co., Ltd., is a public limited company and it carries
-0n business of growing, manufacturing and selling
tea. For the accounting year 1948 which corres·
ponds to the aesessment year 1949-50 a return was
submitted by the appellant in ·respect of its agri·
cultural income showing the said income at
Rs. 3,45, 702. The Agricultural Income-tax Officer,
however, did not accept the correctness of the said
return and increased the amount to Rs. 4,41,940.
This increased amount included a sum of Rs. 39,849
and it represented the market value 'of the
_appellant's agricultural income from . bamboos,
thatching grass and fuel timber. It is this amount
thus .added by the Agricultural Income-tax Officer
to the agricultural income of the appellant in the
relevant year that has given rise to the present
reference.
The facts leading to the reference are not in
dispute. The appellant holds a large tract of land
under lease from the local Government and it is
common-ground that in a part of the said land it
grows bamboos, thatching grass and fuel timber.
During the relevant year it cut down some bamboos,
some thatching grass and fuel timber and used the
same for the purpose of its business. The bamboos,
the thatchiμg grass and fuel timber were grown by
the appellant on its land by agricultural operations
which were carried on by the servants and labourers
employed by the appellant. After they were grown
they were utilised by the appellant for the purpose
of its tea business and were not sold either in the
market or otherwise. It has been found that the
appellant has been utilising the bamboos, thatching
grass and fuel timber grown by it on its land in
this way every year .
..Before the tax authorities the .appellant -urged
th.at the agricultural produce in question, ·did not
iti;J
Tfte·Docar~
Tea Co., Ltd.
v.
Cqmmiaai.Oner uj
AgrieuUuritZ
lnconte•t"ax,
iv est Betiial
--
1961
'l'lu Jjooor.~
Tea Co., LtJ.
v.
Com1fti1Jsiont'T ('j
Agricultural
1 ncomt-tax,
lVut Btn{J<.zl
Gajmdragadkrzr J.
J (j() •
SUPRE~IE COURT REPORTS
(1962j
constitute agr;cultural income within the meaning
of the _.\ct because the same had not been sold.
The appellant's case was that agricultural produce
grown by it on its own land could not in law be
treated as its income unless it was converted into
its money cquival~nt or into something which ,ms
money's worth ; m other words, unless the said
produce was sold. The department, on the other
hand, has taken the view that the several varieties
of agricultural produce grown by the appellant on
itR land and utilisPd by it for its business were
themselves agricnltural income and the tax on the
said income cannot be <woidcd on the pica that the
8aid varieties had not been sold. This dispute went
up to the Tribunal ; but the Tribunal agreed with
the conelusiou of the t<ix authorities and held that
the produce in question constituted agricultural
incomt• of the appellant for the relevant year, and
so the addition of Rs. 39,849 made by the Agricultural Income-tax Officer in determining the total
agricultural income of the appellant for the
relevant year was affirmed.
It 'HI.I! also urged by the appellant in the
assessment proceedings that even if the produce in
question constituted t.hc appellant's agriculturiil
income its market value could nut be comput-0d in
monPy because no rule had been framed for the
computation of the market ,·alue of such income.
The appellant urged that r. •.l of the Rules framed
under the Act was inapplicable to the present
case. This contention has also been rejected by
the tax authoriticB as well as by the Trilmnal. In
tho rC'sult the agl"icultural income found to have
becu earned by the appellant for the relevant year
haii been duly taxed.
Feeling aggrieYed by the final order passed
by
the Tribunal in this matter the appellant
required the Tribunal to refer two questions for the
opinion of the High Court, and in due- course the
Tribunal made the reference as required. The two
.. I
-
•.
'
)
..
..
•
-
}
t
•
3 S.C.R.
SUPREME COURT REPORTS
161
questions referred for the opinion of the High
Court have been thus framed by the Tribunal :
( 1) Is bamboo, thatch, fuel, etc., grown
by assessee company and utilised for its own
benefits in its tea business, agricultural income
within the meaning of the Bengal Agricultural
Income-tax Act? ; and
(2) If the answer to question (1) be in
the affirmative, can such income be computed
under rule 4 of the rules framed under the
Act?
The High Court has amwercd both these questions
in the affirmative against the appellant. The
appellant then applied for and obtained a certificate
from the High Court under s.64(2) of the Act read
with Art. 135 of the Constitution. The High Court
has certified that the case is a fit case for appe:tl
to this Court because it was conceded by both the
parties before the High Court that this case had
been chosen by the assessec and the department as
a test case since all the tea companies are intcresterl
in the questions raised in the present reference. It
is with this certificate that the appellant has come
to this Court with its present appeal.
The answer to the first question would depend
upon the construction of the definition of agricultural income contained in s. 2(l)(b) of the Act.
The charging section is s.3. It provides that subject
to its two provisos agricultural income-tax shall be
charged for each financial year in accordance with
and subject to the provisions of the Act at t11e
rate or rates specified in the Schedule in respect of
the total agricultural income of the previous year
of every individual, Hindu undivided family,
company, firm or other association of individuals
and every Ruler of a Part B State. Section 7
pr(J)vides for the computation of tax and allowances
under the head "agricultural income from agriculture". Do the relevant and material words usea
1961
The Dooars
Tea Co., Ltd.
v.
Commissio,.er cj
Agrt·cuZtttrat
In<!om~·tax, West
Btrigal
Gafendragcdhr J,
1911
1"he Dooor11
Tt4 Co., l.td.
v.
C01nmia1iontr of
.-fgri,ulturul
lntO'Ml-Ta.r,
lfe1t Retigal
f_,'ujniiragadl.:ar J.
162
SbPREME COtJRT REi>oR'i'S
in thli definition of agricultural income by s. 2
reach the subject of tax ition in the present case?
That is the short question which falls for our
decision.
Section 2(l)(a) deafa with the agricultural
income consisting of rent or rcvenno derived from
Jami which is used for agricultural purposes and is
either assosscd to land rovenue in a State or subject
to local rate assesse<I or collected by officers of
the Government as such. We are not concerned
with this part of the definition. Section 2(1 )(b)
reads thus:
"any income derived from
such land
by~
(
(i) agriculture, or
(ii) the performance by a culti,•ator or
receiver of rent-in-kind of any process
ordinarily employerl by a cultivator or
receiver of rent-in-kind to render the produce
raised or received hv him fit to be taken to
market, or
·
(iii) the sale by a cultivator or rccl\iver of
rent-in-kind of the produce raised or received
hy him, in respect of which no process has
hecn performed other than :1 process of the
· nature described in item (ii)."
The r"spondont, th<' C:ommissiorwr of Agricn ltural
Income-tax, West Beugal,
eont<'uds
that the
agricultural producc
in tlw
preHcnt.
case falls
directly under s. 2(1 )(b)(i). It is income derived
from agricultural laud by agric:ulturc. It is not
disputed l.>y the appellant that in
the context
income ma v mean either cash or iuc:oml' in kind.
It is also· conceded l.>y the appellant that the
dictionary meaning of the word "income" includes
"produce of a farm"', and so if we were to construe
the relevant clause in the light of the dictionary
me~ning of the word "income" it would take in
agricultural produce with whirh we arc concerned
J
-
0
...
3 S.C.R. SUPREME COURT REPORTS
16ll
in the present case. It is, however, urged that
the word "income" necessarily denotes, and ;has
reference to, profit or gain, and profit or gain
cannot be made unless the produce is sold and
realises its value. No person
can trade with
himself and so if the agricultural produce is used
by the appellant for its own purposes there is no
element of sale involved in the transaction and
there can be no profit or gain which would justify
the imposition of tax on the said produce.
In support of this arg11men t
it has been
urged before us that the definition of agricultural
income prescribed by s. 2 of the Act is common
to all the
State enactments in respect of
agricultural income and is the same as the definition of agricultural income prescribed by s. 2(1)
of the Income-tax Act. The same definition has
been adopted by the Constitution under Art. 366( 1 ).
That being so, it is contended that in interpreting
the word "income" it would be relevant to rely
on the decisions under the Income-tax Act. In
Alexander Tennant v.
Robert Sinclair Smith (1)
Lord Halsbury has cited with approval Lord
Wensleydale's observation in In re Micklethu:ait (')
that "it is a well-established rule, that the subject
is not to be taxed without clear words for that
purpose ; and also that every Act of Parliament
must be read according to the natural construction
of its words". In that case it was held that the
benefit which the appellant assessee derived from
having rent-free house provided for him by the
Bank brought in nothing which can be reckoned
up as receipt or properly be described as income.
Mr. Mitra, for the appellant, contends that income
obviously and necessarily denotes the coming in of
profit or gain, and what is true about thehousc which
the assessee Alexander Tennant was allowed to use
is equally true about the agricultural land owned
by the appellant.
The appellant has received
(1) [1892] A.C. 150, 154.
( 2) II Ex. 456.
1961
The DotJars
Tm Co., Ltd.
v.
Comm#aiont.r of
Agricultural
Income-tax,
West Be'ngal
Ga;"endragadksr J.
lB6J
.,.....--
The Pooor.
Tea Co., Ltd.
y.
Oomntisliontr of
.-4gri~ltural
lft'Ot»e ~lax,
IVtat Btnglll
Cajtndragadk(l1" J.
164
SUPRE:ME COURT REPORTS
[1962)
no profit or gain from the agricultural produce
derived from its land, and so the said produoe
cannot be saicl to constitut<' its income under
s. 2(I)(b)(i).
The Mme argument is put in another form
on the authority of the decision of this Court in
Sir !{ ikabhai · l'remclum4 '"
Commi8.~ioner of
lncmne-ff1x (Oentml),
Bombay(').
In
that case
Bose .J., wllo spoke for the majority of the Court,
sta({)cl that it was well recognised that in revenue
cases regard must ho had to tfo, substanc<' of the
transaction ratht11· than its mere form, and ho
proceeded to observc that in tho ease before the
Court, clisregarcling tochnicalit.ics, it wa.s impossible
to get away from the fact tliat the business was
owned and run bv the assessec himself; and if
he was to be held
0 liablc for th<' tax "you reach
the poHition that a man is supposed to· be soiling
to himself ancl thereby making a profit out of
himself which on the face of it is not onlv absurd
but against nil canons of mercantile and
0 incometnx law.,_
Mr. ;\fitra suggests tliat in taxing
the agricultural produce utilised by th<' appellant
for its own purpose the respondent is really taxing
the appe llnnt on the basis that it has traded with
itself and mad1• profita on the agricultural proclucr· in q11estion.
Thi~ argument is hased on the assumption
that income a,.q definecl bys. 2(l)(h)(i) must always
be in the nature of profit or gain, and that
incvitabl.\• postulat<os a Hale transaction mado at
n, profit 01·
gain.
;\Tr. Mitra seeks
to derive
a.ssi,tanc(' for this argument from the provisions
of ss. •1 and 6 of the Income-tax Act where income,
profits and gains arc grouped together. What is
true about the denotation of the word "income"
und"r the Income-tax Act, savs !\fr. Mitra, must
be equally true about the denotation of the word
"income" under s. 2( I )(b J(i) of the Act.
( 11 [1954~ s.c.R. 219.
'
• •
•
·3 s:c.R.
SUPREME COURT REPORTS
165
.
In dealing with this argument it is necessary
to· bear in mind that the word "income" even
as it is used in the Income-tax Act has oftm
been
characterised
by judicial
decisions as
formidably wide and vague in its scope. It is a
word of elastic import and its extent and sweep
are not controlled or limited by tho use of the
words "profits and gains" in ss. 4 and 6.
As has
been observed by Sir George Lowndes in Commissioner of Income-tax v. Shaw Wallace & Co., (1 )
the object of Indian Income-tax is to tax income
a term which it does not define. It is expanded,
no doubt, into incomt>, profits and gains, but the
expansion is more a mattl'r of words than of
substance.
Similar is the observation of Lord
Rus~ell in Captain Maharaj Kumar Gopal Saran
Narain Singh v. Commissioner of
Income-tax,
Bihar and Orissa (2) where it has been observed
that "the word "income" is not limit-Od
bv the
words "profits" and "gains". Anything ~vhioh
can be properly describ'.'d as income is taxable
under the Act
unless expressly
exempted".
The diverse forms
which income may 11ssume
cannot exhaustively be enumerated, and so in
each ease the decision of the question as to whether
any particular receipt is
income or not must
depend upon the nature of the receipt and the
true scope and effect of the relevant taxing
provision. The receipt may he a11 income for the
purpose of taxation though it may not amount
to profit.
The case of Gopal S(iran Narain Singh (2)
itself is an illustration in point.
fn that rase the
assessee aged 47 had transferred an cstak worth
two crores of rupees for a relatively small annuity
of Rs. 2,40,000 for life. The said annuity could
not constitute or provide a profit or gain to the
assessee but all the same it was taxable as income.
Tbus the argument based on the emphasis on the use
of the words "profits and gains" in ss.4 and 6 of the
Income-tq.x Act cannot really assist the appellant
(I) (1932) L. R. 59 l·A· 206, 212.
(2) (1935) L.R. 62 I.A. 207.
1961
Tlu-Dooara
Tea Co., Ltd.
v.
Commiarioner of
AgrfruUural
lncome·tax
lt' est Bengal
Gajendragadkar J.
1961
Thi Dooara
Tea· Co~~ Ltd~~
v •.
Commisa,i.onrr of
Agricultural
Income-tax,
West I!_engal
Gajendragadkar J.
166
, · SUPREME COURT REPORTS
[1962)
'
in construing s. 2(l)(b)(i) of the Act with which we
are concerned. 'Vhat the word "income" denotes
. has to be determined in the context of the. said
section itself ..
Going back to s.2(l)(b) it refers to income
• derived fr.om land which means arising from land
and denotes income the immediate and effective
- source of which is land. Section 2( 1 )(b) consists of
-three clauses. Let-us first construe els. (iil and (iii).
Clause (ii) includes cases of income derived from
the performance of any process therein specified.
The process must be one which is usw11ly employed
by the cultivator or receiver of rent-in-kind ; it may
be_ simple manual process or- it may involve the
use and assistance of machinery. That is the first
requirement of this proviso. The second requirement is that the said process must have been
employed with the object of making the produce
marketable. It is, however, clear that the t;mployment of the process contemplated by the second
clause must not alter the character of the producr.
The produce must retain its original character and
the ouly change that may have been brought about
in the produce is to make it marketable. The said
change in the condition -of the· produce -is only
intended to make the produce a saleable commodity
in -the market. Thus cl. (ii) includes within the
categories of income, income· derived from the
employment of the process falling under that clause.
As we have just observed the object of employing
the requisite process is to make the produce marketable but in terms the clause docs not refer to sale
-and does not require that the income should 'be
obtained from sale as such though in a sense -it
contemplates the sale of the produce.
That takes us to cl. (iii). This clause in'
terms · and expressly
refers
to
the income
derived from sale. It refers to the sale price
realised either by the cultivator or the receiver. of
rent-in·kind by the sale of the produce in respect
t
3 S.C.R. SUPREME COURT REPORTS
161
of which
the
process
as
contemplated by
cl. (ii) has been performed.
It is significant
that the sale to which cl. (iii) refers must be the
sale of produce which has not been subject to any
process other than that contemplated by cl. (ii).
Thus it may be stated that reading els. (ii) and (iii)
together they contemplate the sale of the producecl.(ii) indirectly inasmuch as it refers to the process
employed for making the produce marketable
and cl. (iii) directly inasmuch as it refers to the
price realised by sale of produce which has been
subjected to the process contemplated by cl. (ii).
Therefore, it is clear that income derived from sale
of agricultural produce has been provided for by
els. (ii) and (iii) and prima f acie that would show
that cl. (i) which does not refer to salfl even indirectly cannot be intended to cover cases of income
derived from the sale of agricultural produce.
Considered in the light of els. (ii) and (iii) of
s.2( 1 )(b) what is the true scope and effect of the
income contemplated by cl. (i) ? In terms tho
clause takes m income derived from agricultural
land by agriculture ; and as we ha Ye already pointed
out giving the material words their plan grammatical meaning there is no doubt that agricultural
produce constitutes income under this clause. Is
there anything in the context which requires the
introduction of the concept of sale in interpreting
this clause as suggested by the appellant ? In our
opinion this question must be answered in the
negative. Not only is there no indication in tho
context which would justify the importing of tho
concept of sale in the relevant clause, but as we
have just indicated the indication provided by
els. (ii) and (iii) is all to the contrary. What thiR
elause seems clearly to have in view is agricultural
produce itself which has been used by the assessec
In the present case it is common-ground that thf,
appellant has utilii!Od for its business the agricultural produce in question and we feel no difficulty
in agreeing with the High Court when it held that
1961
The Dooors
Tea'G(}., lAtl.
v.
Commi.1sWner of
Agricultural
Income-tax,
West Bt.ngal
dajendragadka1 LI.
1961
Tht Do(}{tra
7'ea Co., l11t
v.
Co1n111i811ioiur of
Aqf'ioullurrtl
l110011u..fux.
11' ul Bniqal
. <Jajtnt:Wagadkur J,
168
Sl'PHE:\IE COl.R'l' HEPOR'T'S
trn82J
t.ho agricultural prricluce utilised by the appellant
for its lmsillC'8;; cu11stitut1·s inecimc 1111der "· 2(1 )(b)(i).
If the agricultural producc usc<l by the appellant
was not intended to be included within tho definition
of income umler s. 2( l)(b) we apprehend that tho
whole clause would have been verv differently
worded. Where income derived
fr~m sale was
internlcd to l)(' prescribed the Legislature has done
so in terms hy cl. (iii) of s. 2( I)( b ).
Where the
marketable condition of the produce r<'sulting from
the •·mployment of the Rpecified processes and
income <leriYed from the adoption of sueh procosse.s
was intended to be included in the income t.he
Legislature has <lone so by cl. (ii) ; and so those
two cnses having Leen specifically provided for by
the two respecti,•e clauses there would bn no justi·
fication for introducing the concept of sa.Jc in construing cl. (i) ofs. 2(1)(b). 'rhr words ins. 2(l)(b)(i)
are, iu our opinio11, wide, plain and mu1m biguous
and they ca11not lie construed to C'Xcludc agricultural produce used by the appellant for its business. In this co11ncdio11 we mav inciclcntallv refer
to th(' prm•isio11s of su L-cls. ( i ), {ii) a11<l (iii) of s. 7( I)
of the Act which pro\·idc for the computation of
tax am! :11lowa11ccs under the h<>ad "agricultural
incum<· from agriculture"'.
These three sub-clauses
in terms corrcspuncl to the three suL-clauscs of
s. 2(1)(b) ancl lend some support to the conclusion
that <'I. (i) i11 s.2(1 )(b) doc' 11ot require tlrntthc
agricultural prorluce should be solrl and profit or
gain received from such sale before it is included in
tho said clause.
Therefore, we do not tl1ink that
.\[r. Mitra is justified i11 contending that the answer
made by the High Court in referC'nee to question I
is \Vrong.
,
·-"
I '•
•
)
•
Tlw second question relates tu the computation of agricultural income for the purposes of
the Act.
l~ulc 4 with the constructio11 of which
_,,..
the second quc8tion is concerned reads thus :
..
I
>
'
•.
3 s.c.:R. 8UPREM&COURT·REPORTS
i6!l
"4. For the purposes . of the. Act the
market value · of any agricultural produce
shall, except in the case referred to in clause
(a) of the proviso to
sub· section (I) of
section 8, be determined in the following
manner, namel;y :-
( 1) if the agricultural · produce was sold
in the market, the market value. shall be deemed
to 'be the price for whicli such produce was sold ;
(2) if the agricultural produce has not
been sold in the market, the market value shall
be deemed to be-
( a) where such. produce is otdinarily sold
· in the market in its raw state, or after the
'• ·c:c·.performance of any piiocess ordinariiy em-
.'·
ployed by a cμltivator or receiver of rent-inkind to render it fit to be taken to market,
the value calculated according. to the average
:price at which such produce has been so sold
m the locality during the previous year in
res'pec~ of which the assessment is made ;
_ ... -,
. (b) where such produce is not ordinarily
sold in the market in the manner referred to
in sub-clause (a), the aggregate of-..
(i) the expense~ of cultivation ;
(ii) the land revenue 01· rent, paid for the
area in which it wasgrowh ; and
. (iii) such amount
as
the Agricultural
Income-tax Officer finds, having regard to all
the circumstances in each case, to represent
a reasonable rate of profit on the sale of
produce in guestion as agricultural produce."
it is clear that r. 4(1) cannot apply to tho appelI1u1t's cas.e for the agricultural produce ill question
Jui;s not been sold in the market but has been used
.._... by ·the appellant for its o,vn
bμsiμe13s.
Tho
ap~llant contends t!i;.t l'• '4(2) cannot 'also be in-
,yo~l)d" ·against it, and SG>e. the.i:o is no rule under
The.-UOOQfa
Tea Co,, Ltd.
v. "'
G'ommi~•.i_ontr.of
Agrtctlftilriit
I tic-Otlf<;ftu
. Jl'ii!fi~I
Gajen(lra,dad,kar J.
•
i70
SuPREME OOuRT REPORTS
[1962j
1961
which the agricultural income in question can be
T!.. Doo.,.•
computed, Incidentally the appellant suggested
T"" 0;:· Ltd.
that if its construction of r. 4(2) is right it inaommiaaioner of
directly supports its case as to the tnie scope and
.A..grieultural / ----.
Income-tax,·
effect of s. 2(l)(b)(i). The Legislature knew that
We8'B"'ilfLI
agricultural produce is not taxable unless it is sold,
Gojmd,.gaakar-.J.--. and so· it -has not made any rule for the computation of agricultural income alleged to have been
received by the assessee from agricultural produce
used by the assessee for its own purpose. On the
other hand, the respondent contends that r. 4(2)
. covers the present case, and if that is so, according
to the respondent, that would "incidentally support
his construction of s. 2(1 )(b )(i).
_The argument urged by the appellaJlt assumes
that the two rules are based on a .kiild of baeic
_dichotomy. Rule 1 deals with agricultural produce
sold in the market, andr. 2 with the agricultural
produce which -has been· sold but not in
the
market. In other words, according to the appellant, ·
both the rules assume that the agricultural produce
has in fact been sold, r. (1) deals with cases where
it has been sold in the market and r. (2) with cases
where it has been sold but not in the market. If
this argument is right then of course cases where
agricultural produce has not been sold would remain
outside the purview of both the rules ; but is this ·
argument right ? We have no hesitation in hold·
ing that it is not. In our opinion, r. (2) deals with
_ cases where agricultural produce has been sold
outside the market as well as cases where agricultural produce has not been sold at all. The
effect of reading the two sub-rules together is that
the cases of market sales arc covered by r. (1) and
all - other . cases are covered by r. (2). Rule (2)
is a residuary rule which applies to all cases not
-falling m1der r. (I). Therefo1·e, we must hold that
the answer given by the High Comt to question 2
·is also right. It is obvious that the rules framed
in exercise of the power conferred by s. 57 of the
38.C.R.
SUPREME COURT REPORTS
171
~
~~, i. • Act cannot legitimately be pressed into service for
the purpose of construing the relevant provisions
~
of the Act ; even so, incidentally it may be permis~
sible to observe that the construction of r. 4(2)
which we are inclined to adopt is consistent with
the respondent's case that s.2 (1 )(b)(i) includes
agricultural produce utilised by the appellant for
':!
its own business.
-
In the result the appeal fails and is dismissed
with costs.
Appeal dismissed.
1
SHRI AMBALAL M. SHAH AND ANOTHER
v.
HATRISINGH MANUFACTURING CO., LTD.
(K. N. WANCHOO, K. c. DAS GUPTA, J.C. SHAH
and RAGHUBAR DAYAL, JJ.)
Industrial Untkrtaking-lnvestigation into its affairs by
Central Government-Takinq over of manoqement by officer appoin·
ted by Government on the basis of report--Legality-lndust1·ies
(Development and Regulation) Act. 1961 (66 of 1961), ss. 16,
18 A(I)(b).
Being of the opinion that 1lhere had been a• substantial
fall in the volume of production in respect of cotton textiles
manufactured in the respondent company, an industrial undertaking, for which having regard to the economic CQnditions
•
prevailing there was no justification; the Central Government
,\ made an order under s.15 of the Industries (Development
and Regulation)
Act, 195 l,
appointing a committee of
three persons
for
the
purpose of making
a
full
and
complete investigation into the circumstances of the case.
After the committee madeits report, the Central Government
being of the opinion thereupon
that
the
company was
being managed in a manner highly detrimental to public
interest, made an order under s.
18 A of the Act authorising
the first appellant to take over the management of the whole· of
~-~he·· said
undertaking.
The
respondents
challenged the
- legality of the order on the ground, inter alia, that on the
proper construction of
s,18 A the Central Government hac'
the right to make the order under that section on the ground
1981
ThtiD-i
TeaC<u, Ltd.
••
Crmihiia':i.~lrM ~'.
Aur~ral'
Jniiome .. tax,
Wes!B<ngal
Gajerzitloagadkar J.
1961
A"!11Jat 21.