Raja Benoy Kumar Sahas Roy V/S C.I.T

Issue Raised:

• Whether the income arrived comes under the definition of "Agricultural Income" or not?

Petitioner: The Commissioner Of Income-Tax, West Bengal, Calcutta

Respondent: Raja Benoy Kumar Sahas Roy
Bench: Bhagwati, Natwarlal H.Aiyyar, T.L. Venkatarama, Kapur, J.L.
Citation: 1957 AIR 768 1958 SCR 101

Facts:

1. Respondent Raja Binoy Kumar Sahas Roy owned 6000 Acres of forest.
2. Forest including "Sal and Piyasal" trees.
3. Forest was grown naturally.
4. Raja Binoy Roy sold the trees and earned Income
5. The forest was in the spontaneous growth of 150 yrs.
6. As per the Respondent the income arrived from the cutting of those forest falls under Section 10(1) of Revenue Enhancement which is exempted from the tax.
7. The Income Taxation Officer rejected Respondent's plea for exemption and imposed tax on its income too.
8. As the Respondent wasn't satisfied therewith the decision then He went to Appellate Assistant Commissioner and Appellate Tribunal.
9. Appellate Assistant Commissioner and Appellate Tribunal both got agreed with the Income Taxation Officer's decision.
10. Then the case went after Hon'ble Calcutta's judicature.

Respondent's Contention:
Respondent said that he had hired staff for the precise operations like:

1. Pruning
2. Weeding
3. Felling
4. Clearing
5. Cutting of channels to assist the flow of rain water.
6. Protecting the trees against pests and other destructive elements
7. Sowing of seeds after digging of the soil in denuded areas.

Respondent is saying that he had performed Agricultural Operation on the land both including:

1. Primary Operation
2. Subsequent Operation

Decision of Tribunal:
Tribunal found that employment of human labour skill mentioned in (a) to (f) was necessary for the upkeep of the forest and clause (g) was performed on small fraction of area where the original growth is completely denuded.

Appellate Tribunal opined that income was generated from spontaneous land which is jungle and isn't consider under section 2(1) of the act.

Decision of High Court of Calcutta:
High Court mentioned the land which has spontaneous growth does not comes under the definition of Agricultural Land.

According to Income Tax Act,1961 A Section 2(1A) Agricultural Income is defined as:

1. Rent or Revenue
2. Agricultural situated in India
3. Agricultural Purpose
4. Income must be directly related to the land.

The court stated that income to be called agricultural income some basic operations must be conducted. Human skill and labour should be implied thereto part, not for any basic care like weeding or preservation of trees.

High Court said that for any cultural activity it is important that there should be basic operations like tilling of the land, sowing of the seeds, planting etc is necessary to establish an activity as an agricultural operation and mere subsequent activity like weeding, felling, cutting and guarding cannot be constituted as agricultural income.

High Court mentioned that the forests are 150 yrs. old so it is not possible that Respondent planted those trees.

High Court upheld the decision of the Appellate Assistant Commissioner and Appellate Tribunal.

Decision of the Hon'ble Supreme Court:

• Supreme Court stated that Agriculture means when both primary and subsequent operations should be performed on the land
• Supreme Courted further stated that only subsequent operations are performed on the land which isn't enough to think about it as Agricultural Income as Primary Operations are missing.
• Supreme Court agreed with the decision of the Appellate Assistant Commissioner, Appellate Tribunal and Hon'ble High Court.
• Supreme Court after applying the cost dismissed the Appeal and the decision gone in the favour of CIT.

Also Read:

• Summary Of Case Raja Benoy Sahas Roy v/s C.I.T