Law:

Section:

Section 10(1) , read with section 2(1), of the Income-tax Act, 1961 [Corresponding to section 4(3)(viii), read with section 2(1) of the Indian Income-tax Act, 1922] - Agricultural income - Assessment year 1952-53 - Assessee was a jagirdar deriving income from his jagir lands - Under Jaipur District Boards Act, 1947 aforesaid lands were subject to a cess based on rent payable by tenants thereof - Admittedly, assessee had not paid any land revenue to State - Assessee claimed that income from jagir land was exempt from tax as it was agricultural income within definition of section 2(1) of Act of 1922 - Whether in view of fact that local rate or cess was collected in respect of assessee's lands by Government within meaning of section 2(1)(a) of 1922 Act, assessee was, therefore, entitled to claim exemption with respect to income from his jagirdari land under section 4(3)(viii) of 1922 Act - Held, yes FACTS The assessee was a jagirdar deriving income from his jagir lands, which were non-khalsa settled lands. It was admitted that the assessee did not pay any land revenue to the State. Under the Jaipur District Boards Act, 1947 (XXXIII of 1947) the lands were subject to a cess based on the rent payable by the tenants thereof. The assessee claimed that the income from jagir land was exempt from tax as it was agricultural income within the definition of section 2(1) of 1922 Act. The ITO held that the income derived from land was not agricultural income within the meaning of section 2(1) of 1922 Act, inasmuch as the income could not be said to be subject to a local rate assessed and collected by the officers of the Government as such. Consequently, the ITO declined to grant exemption and assessed the net income derived from the jagirdari land to tax. On appeal, the AAC held that the income in question was liable to exemption as it was agricultural income subject to a local rate assessed and collected by officers of the Government as such. On further appeal, the Tribunal found that the cess payable by the assessee was assessed and collected by officers of the Government as such within the meaning of section 2(1) of 1922 Act and in that view of the matter held that the…

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