-..

•

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 comprehend­

ing them. We cannot, therefore, agree with the

learned Judges

of the High

Court that the maxim

contemporanea expositio could be invoked in constrn­

fag 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.oertifi-

cnte 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 Agricul­

tural 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

agricul­

tural 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

agricul­

ture". 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

defini­

tion 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

income­

tnx

law.,_ Mr. ;itra 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 pro­

clucr· 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 !r. 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 Com­

missioner 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 require­

ment is that the said process must have been

employed with the object of making the produce

marketable. It is, however, clear that the t;mploy­

ment 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

market­

able 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 produce­

cl.(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 in­

directly 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 grammati­

cal 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 agricultu­

ral 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 cons-

truing 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 agri-

cultural produce used by the appellant for its busi-

ness. 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 compu­

tation 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-in­

kind 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 appel­

I1u1t'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 in-

aommiaaioner 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 compu­

tation 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

agri­

cultural 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

under­

taking, 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.