| Case ID |
e994b841-c733-4c09-9293-1303795435d6 |
| Body |
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| Case Number |
D-2741 of 1947 |
| Decision Date |
Jan 01, 1947 |
| Hearing Date |
Jan 01, 1947 |
| Decision |
The court held that the sum realized by the assessee on account of interest on arrears of rent of agricultural land was classified as 'agricultural income' under Section 2(1) of the Income-tax Act, thereby exempting it from tax under Section 4(3)(viii) of the Act. Furthermore, the court determined that the premium received for granting leases was a capital receipt, not assessable as income, confirming that these payments were not income under the Income-tax Act, as they did not constitute revenue but rather represented a capital transaction related to the property. |
| Summary |
In the landmark case of Mst. Sarju Bai vs. Commissioner of Income Tax, the Allahabad High Court addressed critical issues surrounding agricultural income and tax exemptions under the Income-tax Act. The primary focus was on whether interest on arrears of rent from agricultural land constituted agricultural income exempt from taxation. The court ruled in favor of the assessee, establishing that such interest was indeed derived from agricultural activities, thereby qualifying for tax exemption. Additionally, the court clarified the nature of premium payments associated with property leases, concluding they were capital receipts and not subject to income tax. This decision is significant for tax law practitioners and property owners, as it underscores the distinctions between capital and income receipts, influencing how agricultural income is treated under Indian tax law. Keywords: agricultural income, tax exemption, Income-tax Act, capital receipt, income tax law. |
| Court |
Allahabad High Court
|
| Entities Involved |
Not available
|
| Judges |
Braund, J.,
Pathak, J.
|
| Lawyers |
R.L. Sharma,
B.L. Gupta
|
| Petitioners |
Mst. Sarju Bai
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1947 SLD 36,
(1947) 15 ITR 137
|
| Other Citations |
Sri Ramchandra Dev v. CIT [1942] 10 ITR 141,
Srimati Lakshmi Daiji v. CIT [1944] 12 ITR 309,
Manager, Radhika Mohan Roy Wards Estate, In re [1940] 8 ITR 460,
Maharaja Bahadur Ram Vijay Prasad Singh v. Province of Bihar [1942] 10 ITR 446,
Commissioner of Taxation v. Kirk [1900] AC 588,
Raja Bahadur Kamakshya Narain Singh v. Commissioner of Income-tax [1943] 11 ITR 513
|
| Laws Involved |
Income-tax Act, 1961,
Indian Income-Tax Act, 1922
|
| Sections |
2(1A),
10(1),
4(3)(viii),
2(1),
4(3)(viii),
3
|