Horace Owen Compton Beasley, Kt., C.J.
1. At the request of the petitioner the Commissioner of Income-tax has referred the following question of law to the High Court, vis.:
Whether the income from the fisheries is exempt from the assessment from income-tax on the grounds that they are not so assessable under the terms of the sanad granted to the Zamindar of Seithur and of Sections 1 and 4 of the Madras Regulation XXV of 1802 and on the ground that the said income is agricultural income especially in view of the definition of rent in Section 3(11)(b) of the Madras Estates Land Act.
2. The facts of the case are that in the assessment made on the petitioner for 1929-1930 a sum of Rs. 6,956 was included. This was income derived by the petitioner from the lease of the right to fish in a number of tanks and connected supply channels in the Zamindari the water in which is used for agricultural purposes. Excepting the right to fish, the lessees have no other rights whatsoever in the water of the tanks and channels nor have they any right over the bed of the tanks and channels. The land on which the tanks are and through which the channels run is agricultural land and assessed to land revenue in British India. It will be seen from the question referred to us that exemption is claimed for the income on two grounds, but Mr. S. Srinivasa Aiyangar for the petitioner stated that he was not prepared to argue that the income was exempt for the former reason stated in the question because he was unable to argue that there was any real difference between the Madras Regulation XXV of 1802 and the Bengal Regulations which were relied upon for a claim to exemption of Zamindari income, a claim which was negatived by a Full Bench of the Calcutta High Court in Emperor v. Probhat Chandra Barua I.L.R. (1927) 54 C. 863 On appeal to the Privy Council this decision was affirmed in Probhat Chandra Barua v. King-Emperor . Mr. S. Srinivasa Aiyangar accordingly directed his argument to the latter ground for exemption raised in the question referred. It would appear that even this question is determined by the decision of the Privy Council in Probhat Chandra Barua v. King-Emperor . One of the questions submitted for the decision of the Calcutta High Court in Emperor v. Probhat Chandra Barua I.L.R. (1927) 54 C. 863 was whether jalkars or rents received from fisheries was agricultural income and therefore exempted from assessment to income-tax by Section 4(3)(viii) of the Act. It was held by the Calcutta High Court that that income was not agricultural income as defined by Section 2 (1) so as to exempt from tax under Section 4(3)(viii) and that decision, as already stated, was affirmed by the Privy Council. But that point does not appear to have been seriously argued because Lord Russell of Killowen in delivering the judgment of their Lordships' Board says at p. 448:
Question 1 was but faintly argued before the Board. As to it their Lordships need only say that they have not been furnished either with materials or reasons which would justify them in suggesting that any of the 10 4 specified items could properly be described as agricultural income within the definition of agricultural income contained in Section 2(1) of the Indian Income-tax Act, 1922. Their Lordships accordingly agree with the negative answer which has been given to Question 1.
3. It is not clear what the fisheries were from which the income in that case was derived by the Zamindar, whether fishery rights were over streams running through the Zamin-dari property or rivers or whether the right to fish was, as in this case, in tanks and channels used for-irrigation purposes. All that we know is that it was income derived from fisheries and we are left in doubt as to whether the Privy Council had under consideration the same facts as there are here with regard to fishery rights.
4. The question for our determination here is whether this is agricultural income. Agricultural income is defined in Section 2 of the Act as
(a) any rent or revenue derived from land which is used for agricultural purposes and is either assessed to land revenue in British India or subject to a local rate assessed and collected by officers of Government as such.
5. We are not concerned with any other definition of agricultural income appearing in this section as it is conceded by the petitioner that, if this income is not income as defined in Section 2(1)(a), it is assessable to income-tax. It is argued that land includes the water standing on it and that, as the land surrounding the tanks and through which the channels run is agricultural land or land used for agricultural purposes and the water is used for agricultural purposes, namely, to irrigate the land used for agriculture, the income 'from the fisheries is income derived from agriculture. It is not suggested by the petitioner that the beds of the tanks and channels are ever used for agricultural purposes. In fact we do not gather that the tanks or the channels are ever dry although I do not for one moment think that that question is of any importance in view of the before-mentioned admission by the petitioner. No authority in support of this argument has been referred to and there does not appear to be any case in which income from fishery rights has been held to be agricultural income. But there are decisions to the contrary. In Emperor v. Probhat Chandra Barua I.L.R. (1924) 51 C. 504 it was held by Rankin and Page, JJ., that income from fisheries, that is to say, income derived from the rental of fisheries, is not agricultural income or income derived from land used for agricultural purposes. At page 524 Rankin, J., says:
It remains to consider the Assessee's claim to exemption as a claim to come within the provisions of Section 2 of the Act. In my opinion, income derived from a fishery is not 'rent or revenue derived from land which is used for agricultural purposes'. Learned Counsel for the Assessee has suggested that land used for agricultural purposes becomes at certain seasons flooded, and that in bhils and dobas thus formed over such land there may be rights of fishing of some value. Any such case will require careful consideration on its own facts. If the argument is that the income in such a case is 'derived from land which is used for agricultural purposes 'although it is not derived from any such use, it may be observed that the decision in the mela case Umed Rasul Shaha Fakir v. Anath Bandhu Chaudhuri I.L.R. (1901) 28 C. 637 is some authority the other way.
6. Again in the Full Bench case reported in Emperor v. Probhat Chandra Barua I.L.R. (1927) 54 C. 863 it was decided by the Calcutta High Court that such income is not agricultural income. It was also so held in Maharajadhiraj of Darbhanga v. Commissioner of Income-taxi by Dawson Miller, C.J., and Mullick, J. At page 485 Dawson Miller, C.J., says:
The popular conception of agriculture, even if it should include the rearing of live stock and poultry fed on the produce of the land and requiring in certain cases cultivation of the land for grazing purposes, or otherwise, seems hardly wide enough to include the rearing of fish in rivers or tanks
and
Nor does it seem reasonable to hold that income derived from fishing over land covered by water and which is not used for any agricultural purpose is income derived from agriculture. Fish are not the produce of the land. Their natural element is the water and their cultivation and welfare depend in no sense upon agriculture. It may be that in certain cases the jalkar rights include the right to cultivate the soil of the tank when dry but the facts of this case do not show that the income sought to be exempted from tax was other than that derived from the right to catch fish.
7. I am unable to agree with Mr. Srinivasa Aiyangar's contention that this is revenue derived from land which is used for agricultural purposes. The fact that some of the water in the tanks or channels is used for agricultural purposes does not make this income revenue derived from land which is used for agricultural purposes. The land upon which the water is is not being used for agricultural purposes and whilst the water is there cannot be used for agricultural purposes and there is no evidence here to show that the land is ever or has ever been used for agricultural purposes; nor do I think that any assistance to the petitioner is to be derived from the use of the word 'revenue' in sub-section (a) to Section 2(1). It is argued that, as both 'rent' and 'revenue' are used in that Sub-section, 'revenue' means something different from the rent derived by the landowner from land used for agricultural purposes and must be taken to include all other sources of income derivable in different ways to that by which the rent is derived, that is to say, to include all income which is got from anything of value which may be upon land used for agricultural purposes. It is even contended that, if valuable stones are to be found on the surface of land being used for agricultural purposes, the income derived from the sale of them would be agricultural income. I think that the petitioner's argument must extend to that length and I cannot agree with it.
8. With regard to another argument put forward, namely, that as the term 'rent' in Section 3(11)(b) of the Madras Estates Land Act includes rent from fisheries this must be taken to be agricultural income, it seems to me that that provision of the Act cannot assist the petitioner because it only extends the procedure prescribed in the said Act for the recovery of arrears of land rent to the recovery of sums payable by a ryot on account of fishery rents. I agree with the observations of Dawson Miller, C.J., in Maharajadhiraj of Darbhanga v. Commissioner of Income-tax I.L.R. (1924) 3 Pat. 470 in dealing with a similar argument based upon Section 193 of the Bengal Tenancy Act that so far from helping the petitioner the provision only emphasises the difference between the revenue derived from land let for agricultural purposes and that derived from fisheries and the other sources of income mentioned in the section.
9. In my view, the question referred to us must be answered in the negative. Costs Rs. 250 to the Commissioner of Income-tax.
Anantakrishna Aiyar, J.
10. Under Section 66(2) of the Indian Income-tax Act (XI of 1922) the Commissioner of Income-tax, Madras, has referred for the decision of the High Court the following question:
Whether the income from the fisheries is exempt from the assessment from income-tax on the grounds that they are not so assessable under the terms of the sanad granted to the Zamindar of Seithur and of Sections 1 and 4 of the Madras Regulation XXV of 1802 and on the ground that the said income is agricultural income especially in view of the definition of rent in Section 3(11)(b) of the Madras Estates Land Act.
11. The assessee is the Zamindar of Seithur, tracing his title to 'the Zamindari to a sanad issued to his predecessors, by the Government under the Madras Permanent Settlement Regulation (XXV of 1802). In calculating the peishkush fixed on the Zamindari, income from fisheries also seems to have been taken into account. During the year of assessment, the assessee derived an income of Rs. 6,956 by leasing out the right to fish in a number of tanks and connected supply channels in the Zamindari, the water in which is used for agricultural purposes. Exemption was claimed by the assessee on two grounds:
1. That the income from fisheries was included in the assets of the Zamindari for fixing peishkush payable by the Zamindar to the Government, and that he could not be required to pay income-tax on any of the items of income included in the assets of the Zamindari with reference to which peishkush was fixed - since it would be a case of double taxation, which, it was contended, would be illegal; and
2. That income derived by leasing the right to fish in the tanks and connected supply channels in the Zamindari is agricultural income, and as such is exempted under Section 4(3)(viii) of the Act.
12. After the decision of the Privy Council in the case reported in Probhat Chandra Barua v. King-Emperor the first contention is not tenable. With reference to a similar contention based on substantially (for the present purpose) similar provisions of the Bengal Permanent Settlement Regulation (I of 1793), the Privy Council held that 'while the Regulations contain assurances against any claim to an increase of the jama, based on an increase of the Zamindari income, they contain no promise that a Zamindar shall in respect of the income which he derives from his Zamindari be exempt from liability to any future general scheme of property taxation, or that the income of the Zamindari shall not be subjected with other incomes to any future general taxation of incomes'.
13. Their Lordships agreed with the view expressed by Ghose, J., in the following passage in his judgment:
There was no promise or engagement of any description whatsoever by which the Government of the day surrendered their right to levy a general tax upon incomes of all persons irrespective of the fact whether they are Zamindars with whom the Permanent Settlement was concluded or not.
14. In these circumstances, the first contention raised on behalf, of the assessee should be disallowed.
15. I may state that Mr. S. Srinivasa Aiyangar, the learned advocate who appeared for the assessee, did not really seriously argue this point, having regard to the recent Privy Council case mentioned above, which settled the controversy on a point on which there was difference of opinion among various learned Judges of the several High Courts in India. As the Privy Council remarked in the course of the judgment in the above case, as many as 13 learned Judges of the High Courts in India had occasion to consider this question, five being of the opinion which was finally accepted by the Privy Council, while eight were of a different opinion. The question being now concluded by the decision of the Privy Council, it must be held that the inclusion of income from fisheries in the assets of the Zamindari in fixing the peishkush is by itself no ground for claiming exemption from assessment under the Indian Income-tax Act.
16. The second contention which was in fact the only point that was really argued before us was based on the provision of Sections 2 and 3 of the Indian Income-tax Act. It was argued that income derived by leasing the right to fish in the tanks and connected supply channels in the Zamindari is 'agricultural income' within the meaning of Section 2(1) of the Act. If it is 'agricultural income' then under Section 4(3)(viii) the act would not apply to such income. The only question therefore is whether such income is 'agricultural income'. Section 4(1) enacts:
Save as hereinafter provided, this Act shall apply to all income, profits or gains, as described or comprised in Section 6, from whatever source derived.
17. Sub-section (3) constitutes an exception, and any person claiming the benefit of an exception should strictly prove that his case comes within the exception. Agricultural income is defined in Section 2 of the Act as follows:
2. In this Act, unless there is anything repugnant in the subject or context,
(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 British India or subject to a local rate assessed and collected by officers of Government as such;
(b) any income derived from such land by.
(i) agriculture, or
(ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market, or
(iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in Sub-clause (ii);
(c) any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator, or the receiver of Yent-in-kind, of any land with respect to which, or the produce of which, any operation mentioned in Sub-clauses (ii) and (iii) of clause (b) is carried on:
Provided that the building is on or in the immediate vicinity of the land, and is a building which the receiver of the rent or revenue or the cultivator or the receiver of the rent-in-kind by reason of his connection with the land, requires as a dwelling-house or as a store-house, or other out-buildings.
18. It was admitted by the learned advocate for the assessee that the present case does not come under clause (b) - his contention being that the present case comes under Clause (1)(a) of Section 2. It will be noticed that though the words used are 'any rent or revenue', (the word 'revenue' being a word of wider import than the word 'rent'), the same must be 'derived from land which is used for agricultural purposes'. Could it be said that 'fishery rent' is 'derived from land which is used for agricultural purposes'. In clause (b) the expression 'derived from such land' occurs, and the light (if any) thrown by clause (b) does not enable me to say that fishery rent is 'derived from land which is used for agricultural purposes'. The lease granted to the lessees in the present case - Exhibit A - empowers the lessees to fish in the tanks and supply channels; and excepting the right to fish, the lessees have no other rights whatsoever in the water of the tanks and channels, nor over the bed of the tanks or the channels. It is therefore prima facie difficult to say that such income is derived from land which is used for agricultural purposes. The water of the tanks and connected supply channels is undoubtedly used for agricultural purposes, and I am prepared to assume for the purpose of argument that tanks and supply channels are lands used for agricultural purposes in a wide sense though no crops are raised - ordinarily, at any rate - on the site of tanks and supply channels. But the question is - is fishery income 'derived from land which is used for agricultural purposes'? Right of fishery may be an interest in immoveable property, but that is not the question that I have to decide here.
19. The Zamindar may derive income by allowing the land to be used for various purposes which would not be agricultural He may make money by allowing a mela to be held on the land, and it has been held that, income thus derived would not be agricultural income within the meaning of the Income-tax Act. See Umed Rasul Shaha Fakir v. Anath Bandhu Chaudhuri I.L.R. (1901) 28 Cal. 637. He may let the land for shooting; he may similarly make money by allowing quarrying on the land; he may allow boating on the waters of the tanks and levy fees for the same; he may allow a ferry to be established across the tank, which may enable the public to travel from one side to the other in a convenient way, and levy fees therefor; there may be springs in the tank, and even after supplying water necessary for the customary cultivation of wet lands under the Ayacut of the tank, he may sell the surplus water of the tank to a neighbouring village, town or municipality, for consumption by the people thereof, or let the water to the lands of the neighbouring village which otherwise may have no right to the said water, and receive money for the same. Other instances might be imagined. Could it be said that such incomes are rent or revenue derived from land which is used for agricultural purposes. The word 'agriculture,' even in its widest import, has received some sort of definite and restricted meaning, and I find it difficult to bring fishery under the heading 'agriculture' even in its widest sense as ordinarily understood.
20. The provisions in Section 2 of the Income-tax Act exempting incomes derived from certain buildings only on such lands from assessment under the Income-tax Act would also seem to support the respondent's contention.
21. The definition of 'rent' in the Madras Estates Land Act was referred to, but I do not think that any real benefit is derived by reference to the Estates Land Act in this case. In the first place, the two Acts (The Indian Income-tax Act and the Madras Estates Land Act) were passed by two different Legislatures, and it cannot, ordinarily, be that the expression 'agricultural income' should have one meaning in one Presidency and another meaning in another, seeing that the Indian Income-tax Act extends to the whole of British India. Further, the definition of 'rent' in the Madras Estates Land Act is only for the purposes of that Act and to enable the special remedies provided for by that Act being available to realise rent as defined therein. I do not therefore consider that the provisions of the Estates Land Act that were referred to really help me in the decision of the exact question before me.
22. Before the Privy Council, a similar question as the one raised before us seems to have been raised. Among the ten items included in the assessment in the case before the Privy Council, the first item referred to 'jalkar or rents received from fisheries,' and the first question referred to the Full Bench in that case was whether the ten sources of income specified were agricultural incomes and therefore exempt from assessment to income-tax under Section 4(3)(viii) of the Act. Their Lordships of the Privy Council noticed that matter at page 448 in Probhat Chandra Barua v. King-Emperor
Question 1 was but faintly argued before the Board. As to it their Lordships need only say that they have not been furnished either with materials or reasons which would justify them in suggesting that any of the 10 specified items could properly be described as agricultural income, within the definition of agricultural income contained in Section 2(1) of the Indian Income-tax Act, 1922. Their Lordships accordingly agree with the negative answer which has been given to Question 1.
23. No decision directly deciding this question in favour of the assessee was cited to us by the learned advocate for the assessee. On the other hand, some decisions of Indian Courts were cited to us by the learned advocate who appeared for the Commissioner of Income-tax as supporting the contention of the Crown. I have already noticed the decision in Umed Rasul Shaha Fakir v. Anath Bandhu Chaudhuri I.L.R. (1901) 28 Cal. 637 - the mela case. At page 639 the learned Judges Rampini and Gupta, JJ., observed as follows :
It would seem to us that the profits of a mela cannot be regarded as incomes derived from agriculture. The land on which the mela is held is no doubt land used for purposes of agriculture when it is not being used for the purposes of the mela, but when it is being used for the purposes of the mela, it is not being used for agricultural purposes, and therefore the profits of the niela are not incomes, which would be exempt from income-tax under Section 5 of Act II of 1886.
24. In Emperor v. Probhat Chandra Barua I.L.R. (1924) 51 Cal. 504 it was held that income derived from fisheries, and from sthaliat (i.e., land used for stacking timber) is not 'agricultural income' or 'income derived from land which is used for agricultural purposes' within the meaning of Sections 2 and 4 of the Income-tax Act (XI of 1922). The question is discussed by Rankin, J. (as he then was) at page 524 :
It remains to consider the Assessee's claim to exemption as a claim to come within the provisions of S2 of the Act. In my opinion, income derived from a fishery is not 'rent or revenue derived from land which is used for agricultural purposes. Learned Counsel for the Assessee has suggested that land used for agricultural purposes becomes at certain seasons flooded, and that in bhils and dobas thus formed over such land there may be rights of fishing of some value. Any such case will require careful consideration on its own facts. If the argument is that the income in such a case is 'derived from land which is used for agricultural purposes' although it is not derived from any such use, it may be observed that the decision in the mela case - [Umed Rasul Shaha Fakir v. Anath Bandhu Chaudhuri I.L.R. (1901) 28 Cal. 637] is some authority the other way. From the papers in the present case I do not collect that this is the special case made by the Assessee, who claims to own extensive fisheries called jalkar mehals, which are leased out, in consideration of the payment of rent called jalkar rent. In my opinion, 'fishery' is not 'agriculture' nor an 'agricultural purpose,' and income derived from fisheries is not exempt as such even when the fisheries are comprised in a permanently settled, estate.
25. Similarly Page, J. (as he then was) remarked at page 528 as follows :
I agree with the view expressed by the Commissioner that income derived from fisheries cannot reasonably be regarded as income derived from agriculture, however wide the, meaning may be, which is attributed to the word agriculture. It is, I think, unnecessary to dilate upon the subject and, in my opinion, income derived from fisheries is not within any of the exemptions set out in Section 4 of the Income-tax Act.
26. The Patna High Court had to consider this question in the case reported in Maharajadhiraj of Darbhanga v. Commissioner of Income-tax I.L.R. (1924) 3 Pat. 470, where they held that 'rent derived from jalkar (fisheries), hats (markets) and ghatlagi (moorings and ferries) is not income derived from agriculture'. Sir Dawson Miller, C.J., discussed this question at page 486. Reference was made to the Oxford Dictionary, among others, to understand the meaning of the word 'agriculture'. This is what the learned Chief Justice stated at page 485:
It was urged, however, that fisheries were, or might be in certain cases, as where the fishing is from tanks, so intimately connected with the pursuit of agriculture that they should be included under that designation. The popular conception of agriculture, even if it should include the rearing of live stock and poultry fed on the produce of the land and requiring in certain cases cultivation of the land for grazing purposes, or otherwise, seems hardly wide enough to include the rearing of fish in rivers or tanks. Agricultural income is defined in Clause (2) of the Income-tax Acts of 1918 and 1922. The definition includes rent or revenue derived from land used for agricultural purposes as well as income derived from agriculture and from the sale of agricultural produce. The definition does not carry the case any further. The question is whether the rent paid for the fishing rights, or for the markets, ferries or moorings is income derived from agriculture. In my opinion it is not. The fact that the Bengal Tenancy Act by Section 193 applies the procedure provided by the Act for the recovery of arrears of rent to suits for recovery of anything payable in respect of fishery rights and the like is of no assistance to the petitioner. It rather emphasises than otherwise the difference between revenue derived from land let for agricultural purposes and that derived from fisheries and the other sources of income mentioned in the section. Nor does it seem reasonable to hold that income derived from fishing over land covered by water and which is not used for any agricultural purpose is income derived from agriculture. Fish are not the produce of the land. Their natural element is the water and their cultivation and welfare depend in no sense upon agriculture. It may be that in certain cases the jalkar rights include the right to cultivate the soil of the tank when dry but the facts of this case do not show that the income sought to be exempted from tax was other than that derived from the right to catch fish. In my opinion the question whether the income derived from jalkar, hats, and ghatlagi is agricultural income and so exempt from income-tax should be answered in the negative.
27. Reference was made by the learned advocate for the assessee to Halsbury's Laws of England, Volume 14, page 572; but I do not think that that really solves the question before us. Right to fishery may be an interest on the immoveable property, but that does not, in my opinion, lead to the conclusion that income from leasing the right to catch fish in a tank is agricultural income within the meaning of the Income-tax Act.
28. For the above reasons, I am of opinion, that the assessee's second contention also should be overruled.
29. It follows that the income of Rs. 6,956 derived by the assessee from the lease of the right to fish in the tanks and connected supply channels in the Zamindari was properly included in the assessment made under the Income-tax Act, and I agree with my Lord that the question should be answered in the negative.
Cornish, J.
30. I am of the same opinion. I do not think it makes any difference whether the money paid to the Zamindar for the fishing rights in his tanks is called rent or revenue. It might be described by either word. The test of its exemption from income-tax is whether it is 'agricultural income' as defined by the Act. One of the purposes for which the tanks are used is irrigation, which is undoubtedly an agricultural purpose. But the money sought to be taxed is received for the right of catching fish, and there is ample authority that the use of a tank as a fishery is not a use of land for agricultural purposes : Probhat Chandra Barua v. King-Emperor , Emperor v. Probhat Chandra Barua I.L.R. (1924) 51 Cal. 504 and Maharajadhiraj of Darbhanga v. Commissioner of Income-tax I.L.R. (1924) 3 Pat. 470. In those cases, it is true, the tanks do not appear to have been used for any other purpose than a fishery. And in the Patna case, Sir Dawson Miller, C.J., suggests that it might make a difference if the fishing, rights included a right to cultivate the bed of the tank when dry. The argument here is that if the land is used for an agricultural purpose, any source of income from it is agricultural income. This supposes that agricultural income means income derived from agricultural land. But, the definition clause in Section 2(1)(a) shows that the income intended is the income derived as rent or revenue from the use of the land for agricultural purposes. If this be so, the income derived from the use of the land for some purpose which is not agricultural is not 'agricultural income'.