Law: Income Tax Act, 1922

Section: 2(1)(a)

Income-tax----Agricultural income-Requirements to be satisfi ed-Lease of coconut thopes for enjoyment of fruits--Possession of trees to be delivered to lessor at end of lease-Income from lease-Whether agricultural income--Indian Income-tax Act, 1922, S. 2(1)(a). Having regard to the definition of "agricultural income" in section 2(1)(a) in the Indian Income-tax Act, 1922, an income to be "agricultural income" should be derived from land and the land should be used for agricultural purposes. In other words, there should be a nexus between income, land and agricultural operations, by which is meant something done to the land by human or mechanical agency to produce out of the land any crop, tree, plantation or other produce or product. The immediate source of the income must be land of the description or character mentioned in the definition. Under the terms of a lease of certain coconut thopes, the assessee was allowed to enjoy the fruits of the coconut trees for a stipulated period on payment of a fixed annual sum. In some cases, there was a stipulation drat the lease did not include he land. At the end of the term, the assessee had to deliver possession of the trees to the lessor. The Appellate Tribunal was of the view that the income from the lease was agricultural income. On a reference to the High Court: Held, that the nexus between the income and the land was missing as the connection of the income was with the trees themselves without reference to the land or agricultural operation and, therefore, the sums in question were not agricultural income. [Case-law referred].  …