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The reference was heard by the High Court and- the High Court held that actual cultivation of the land was not required and as human labour and skill were spent for the growth of the forest the income from the forest was agricultural income. It accordingly answered the above question in the affirmative. The Revenue obtained the requisite certificate of fitness for appeal to this Court and hence this appeal. The question that arises for consideration in this appeal is whether income derived from the sale of Sal and Piyasal trees in the forest owned by the assessee which was originally a forest of spontaneous growth "not grown by the aid of human skill and labour" but on which forestry operations described in the statement of case had been carried on by the assessee involving considerable amount of expenditure of human skill and labour is agricultural income within the meaning Of s. 2(1) and as such exempt from payment of tax under s. 4(3)(viii) of the Indian Income-tax Act. Section 2(1) of the Act defines agricultural income and states (so far as it is relevant for the purposes of this appeal):

(2) [1049] 17 I.T.R. 426, 438.

(3) [1948] 16 I.T.R. 330.

SUPREME COURT REPORTS agriculture only if the labour and skill of man has operated on the land to cause or aid the growth of certain products. All that is necessary is that the land should be actively exploited with a view to procuring growth or better growths from the soil but it does not seem to be also necessary that the exploitation should be by tillage."

The Court accordingly came to the conclusion that even though tillage was thus not essential, human labour and skill must be expended on the land itself and not merely on the growth from the land. When income is derived from the natural growths from the land, it is derived from land but not derived from land by the process of agriculture. It is derived from land by agriculture only when the land is subjected to the labour and skill of man, whether in the form of cultivation or otherwise, in order to produce or the improvement of the produce which yields the income. On the facts before them the learned Judges were of opinion that if forest of natural growth was taken over and then the land was regularly weeded and cleared, if it was supplied with moisture, necessary for the nourishment of the trees, by the cutting of channels across it and by the distribution of rain-water through them and if the land was dug, and sown with seeds whenever bare patches appeared and while all this was done, if elaborate subsidiary arrangements were also maintained for the protection of the trees and the tending of new shoots springing from the stumps of old trees cut down till they themselves grew into new trees, it might well be said that operations in forestry involving agricultural operations were carried on on the forest land and that income derived from the land was derived from agriculture. Sir Kameshwar Singh v. Commissioner of Income-tax, Bihar & Orissa (1) which is the subject-matter of C.A. Nos. 11 2 to II 7 of 1956 before us also was a case under the Indian Income-tax Act (XI of 1922). It was found by the Appellate Tribunal that the Sal and ebony trees which grew in the forest were conserved by allowing each a circle of 15 feet, that there was cutting down (1) [1954] 26 I.T.R. 121, of the trees and jungles which fell within that circle leaving sufficient space for growth and that forest conservancy staff was maintained to look after the forest. The Court construed the observations of the Privy Council in Raja Mustafa Ali Khan's case (1) to mean that " in order to show that an income is agricultural income within the meaning of the definition, it must be found that the land itself was cultivated and that there was some expenditure of skill and labour upon it." The Court held that even conceding that the two conditions laid down by the Privy Council in Raja Mustafa Ali Khan's case were to be read as alternative conditions, there was no material on which to hold that there was any expenditure of skill and labour upon the land and therefore the income from the sale of forest trees was not agricultural income.

test evolved by their Lordships. Due importance, therefore, has to be given to the absence of operations in forestry in Raja Mustafa Ali Khan's Case (1) when interpreting the test laid down therein."

Vikram Deo Varma v. Commissioner of Income-tax, 'Bihar & Orissa (2) is the last case of this series. The assessee derived income from extensive forest areas in the impartible estate of which he was proprietor. Over several decades the whole of the forest area had been subjected by hill tribes to a process of "podu" cultivation-setting fire to' the trees and cultivating the forest lands and raising crops thereon-so that it was impossible to say that there was any virgin forest left. Through a huge forest establishment considerable amount of human labour and skill was spent (i) in fostering the growth of trees and preserving them from destruction by men and cattle; (ii) in cultivation of the soil by felling and burning trees from time to time; (iii) in planned exploitation of trees by marking out the areas into blocks: (iv) in systematic cutting down of trees of Particular girth and at particular heights (v) in planting new trees where patches occur; and (vi) watering, pruning, dibbling and digging. The Tribunal had held that as there was no forest cultivation or tilling as such the income was not due to agricultural operations and therefore not exempt under s. 4(3)(viii) of the Indian Income Tax Act. In the course of the judgment the learned Judges referred to the observations of their Lordships of the Privy Council in Raja Mustafa Ali Khan's Case (1) but observed that their Lordships did not lay down what the measure of that cultivation should be or what the nature of skill and labour expended should be, in order to bring the operations within the meaning of the expression " agricultural purposes " as used in the definition section. The question to be determined in each case should, therefore, be whether the land out of which the rent or revenue was derived was used for " agricultural purposes." Unless the land was subject to some measure of cultivation or there was some expenditure of human skill and labour on it in order to (1) [1948] 16 I.T.R. 330.

If the term " agriculture " is thus understood as comprising within its scope the basic as well as subsequent operations in the process of agriculture and the raising on the land of products which have some utility either for consumption or for trade and commerce, it will be seen that the term "

agriculture " receives a wider interpretation both in regard to its operations as well as the results of the same'. Nevertheless there is present all throughout the basic idea that there must be at the bottom of it cultivation of land in the sense of tilling of the land, sowing of the seeds, planting, and similar work done on the land itself This basic conception is the essential sine qua non of any operation performed on the land constituting agricultural operation. If the basic operations are there, the rest of the operations found themselves upon the same. But if these basic operations are wanting the subsequent operations do not acquire the characteristic of agricultural operations. All these operations no doubt require the expenditure of human labour and skill but the human labour and skill spent in the performance of the basic operations only can be said to have been spent upon the land. The human labour and skill spent in the performance of subsequent operations cannot be said to have been spent on the land itself, though it may have the effect of preserving, fostering and regenerating the products of the land.