TWELVE

CHAPTER income
cultural
2(1A)
of 2(1A), the expression "agricultural income" means:
ofssection
pefinition[Sec.
virtue
By orrevenue de derived from land which is situated in India and is used for
278. agricultural
a anyrentd
sessec. IAM)-see para278.1 ]
land
ncomederived from such by agricultural operations including processing of the
h an pr
lproduce, raised or received asrent-in-kind soas to renderit fit forthe market,
gricultural
such produce [sec. 2(1A)6)-see para 278.2];
ofs and
orsale
or me attributable
to a to
farm house subject
the
the conditions that the building is situated
used as a dwelling house,store house or
inor in
the immediate vicinity of
the
land and
is

to land revenueor a local rate or,

ut-building and land is assessed alternatively,
oLnlding is situated on or in the immediatevicinity of land which (thoughnot assesseda
outside the urban areas,ie, any area which
lapd revenueorthe
to local rate) is situated
rised within jurisdiction of a municipality or cantonment board having a

pulationof tenthousandor moreorin anyarea within such notified distance [up toeight
Pnetres-see Notification No.9477,dated January6, 1994]from the local limits of such
nicipality or cantonment board [sec. 2(1A) )-see para 278.3]
mur
tax. The reason of exemption of agricul-
Section 10(I) exempts agricultural incomefrom
(
Central taxation is that the Constitution
tural
income from gives exclusive power to make
taxes
ais with respect to on agricultural income to
the State Legislature. However in some
es
ase A2ricultural
income is taken into consideration to determinetax on
non-agricultura
income.

278.1 Rent or revenuederived from land [Sec. 2(1A)(a)] -

According to section 2(1A)X@), if
are satisfied, income derived from land can be termedas
the followingthree conditions
agricultural income"
or revenueshould be derived from land [seepara
a rent 278.1-1]:
one which is situated in India [see para and
&theland is 278.1-2];
c the land is used for agricultural purposes[seepara
278.1-3]
278.1-1 Rent or revenue derived from land - Rent is payment, in
money or in kind, by one
person
to another in
respect of grantof right to use land. Rent, whether received in cash or
kind, constitutes agricultural income if the other conditions regarding location and user of
land are satisfied. For this purpose, it is not necessary that the
recipient of rent or revenue
should be the owner of the
agricultural land. If rent is received by an original tenant from sub-
tenant under sub-lease or rent is received
by a mortgagee in possession of
agricultural land,
the receipt
may be "agricultural income", if the other two conditions are satisfied.
The word"revenue" used in the broadersenseof return, yield orincome,andnot in the
is
sense
ofland revenue-Durga Narain Singhv. "Revenue"coversincomee
than rent. Mutation fees exacted
CIT[1947]15ITR235(AL).
other from tenants upon their
succeedingto occupancy
holdings are revenue derived from land.
of a lease
Similarly, fees extracted for the grantof a renewal
are also revenuederived from land.

Kevenue can be said to be derived from land

only if land is effective and immediate source
ncome and not the indirect and secondarysourceof income.Where income is derived
Aurectly from land, it cannotbe said to be rent or revenuederived from land.
For instance,
Vdend paid by a company out of its agricultural income is not revenue
derived from land,
rective and immediate source of income is shareholding and not the
ar v. CIT
[1955]27 ITR 1 (SC). Likewise, Malikanaallowancepaid by the
land--Bacha F
Government
629
 Income
7 Every Para 6
1u691 74artificialjuridical
ITR 33 (SC) person-Itcoversnot only
but also all
CarporationBar
fresiduary artilicial
Council-Bur Councilof persons deities-Jogendra
with a NathNaskarv.
Pradesh v. juridical personality
CIT
and, theret ore,Uitar
classification
it such as a
preceding classifications. does not CIT[1983|143ITR
cover those 584(AlL). This
Assessee [Sec. 2(7)] falling within
anyof the
A.
Assensec means a person by
interest) is
payableunder the Act. The whom any tax
or any other sum of
First category -A term includes
the money (ie.,
firm:an association person (i.e., an following penalty or
ol individual; a persons
local authority ;and persons or body of Hindu undivided
every individuals, whether family; a
money (including interest artilicial juridical person) company; a
and by whom any tax incorporated or not ;a
whether any penalty) is or
proceeding under the Act payable under the Act any other sum of
Secondcategory- has been taken (irrespective of the fact
person in against him or
(whether or not he is liable respect of whom not).
for any any
a. cither for the tax, interest or proceeding under the Acthas
assessmentof the penalty). been taken
b. of the income amount of his income Proceeding may
be taken:
(orloss) of any or of the loss
C. of the other person in respect of sustained
by him; or
amount of refund due whom he is
to him or to
Third cutegory - Every such other
person.
assessable; or
person who is deemed
deemed to be an assessee to be an assessee. For
represpntative assessce is
Pourth category Every person who is
- by virtue of section instance, a
160(2).
provision of the Act. For deemed to be an
at source,or after instance, under section assessee in default
under any
201(1), any person who
deducting
Likewise, under section
fails to
pay such tax, is deemed does not deduct tax
to be an
218,if a to be an
assessee in default.
assesseein default. persondoes not pay advance
tax,then he shall be
deemed
Charge of income-tax
[Sec. 4]
5.The
following basic
principles are followed while
Income-tax is an annual tax on charging tax :
income.
Income of previousyear is
charged in the next
applicable for the assessment following assessment year at the tax
rates
year. This rule is,
para 2.21. however, subject to some
exceptions [see
Tax rates are fixed
by the annual Finance Act and
on the first day of not by the Income-tax Act. If,
April of the asesssment however,
the statute books,the year, the new Finance Bill has not been
provisions in force in the placed on
preceding assessment year or the
proposed in the Finance Bill before provisions
will apply until the new Parliament, whicheveris more beneficial to the
assessee,
provisions become effective [see para
Tax is charged on every person 8.1].

[seepara 3].
The tax is levied on the "totalincome"
[seepara 8]ofevery assessee computed in
with the
provisions of the Act. accordance
Total income is calculated in accordancewith the
provisions of the Income-tax Act asthey
stand on first day of April in
any assessmentyear. Accordingly, for arriving at total income
for the assessment year 2001-02, the income-tax
provisions as on April 1, 2001 will be
applicable-BadriPrasad v. CIT[1990]185 ITR 307 (Pat.), CITv. S.A.
464 (Ker.). Any amendment made with effect from Wahab[1990] 182 ITR
April 2, 2001 is wholly irrelevant for the
assessment year 2001-02. Likewise, the law
existing during the previous year 2000-01 hasno
relevancefor determining total income of the assessment
year 2001-02.
Income [Sec. 2(24)]
6. The definition of the term "income" in section 2(24) is inclusive and not exclusive.
Therefore, the term "income"not only includes those things which are included in section
2(24), but also includes such things which the term signifiesaccording to its andgeneral
natural meaning.