Ram Labhaya, J.:— Income Tax Reference No. 1 and Civil Rules Nos. 83 and 84 of 1954 all arise from two assessments for the years 1945-1946 and 1946-1947 of Messrs Senairam Doongarmall, who are petitioners in all the three cases. This order shall dispose of all the three cases.

2. The petitioners constituted a Hindu undivided family firm. The firm had several sources of income, including the Sewpur Tea Estate. The factory buildings, bungalows, staff and labourers' quarters of the Tea Estate were requisitioned by the military authorities under the Defence of India Rules in February, 1942. The Tea Garden or rather the land under tea cultivation was not requisitioned. The manufacture of tea however had to be suspended by reason of the occupation by the military of the factory buildings, bungalows, staff quarters etc. The assessees were entitled under the Defence of India Rules to compensation for occupation of the property requisitioned. This compensation was awarded on the basis of the claim made by the assessees. The two accounting years for the two assessment are 1944 and 1945. In regard to compensation for the year 1944 the claim which was accepted by the Government was as follows:

Price of crop that the assessee would have realised if its tea manufacturing business had continued without interruption ……. Rs. 2,74,698/- Less (being saving of plucking and manufacturing expenses and food and clothing concession to the employees and proceeds of export lights). .. Rs. 62,762/-. Rs. 2,11,936/-.

3. Another sum of Rs. 10,000/- was also allowed for repairs to coolie lines in addition to a sum of Rs. 144/- which represented the assessor's fee. The total receipt from the Government by way of compensation in the year 1944 came to Rs. 2,22,080/-.

4. Similarly the sum received in the year 1945 amounted to Rs. 2,46,795/-. This included a sum of Rs. 15,231/- for repairs to building.

5. The assessment for the year 1945-1946 was under Sextion 23(4) of the Income-tax Act. The net assessable income from the Sewpur Tea Estate was estimated at Rs. 46,832/-. The Income-tax Officer deducted from the total sum of Rs. 2,22,080/- a sum of Rs. 1,05,000/- as admissible expenditure. The net profit was calculated at Rs. 1,17,080/-. He found 40 per cent, of this sum amounting to Rs. 46,832/- representing the non-agricultural part of the income as assessable.

6. The assessment for 1946-1947 was made under S. 23(3) by another Income-tax Officer. The total receipt in the accounting year so far as this Estate was concerned was Rs. 2,46,794/-. Excluding a sum of Rs. 15,231/- he treated the balance of Rs. 2,31,563/- as income taxable under the provisions of Income-tax Act (after deduction of admissible expenses). In his view no agricultural, manufacturing or selling process had been gone through.

7. The appellate Assistant Commissioner upheld the assessment for the year 1946-1947, set aside the assesment for the year 1945-1946 and directed the Income-tax Officer to make a fresh assessment. The orders of the Assistant Commissioner in both the cases were appealed from. These appeals were heard by the Calcutta Bench of the Tribunal. The two members were agreed that the receipts from the Government were of the nature of revenue and contained an element of income. The judicial Member estimated compensation for use and occupation of lands by the Government at 20 per cent, of the total receipts in both the years. He also stated the other alternative if his view of the estimate of net income did not prevail. The alternative was to assess 40 per cent, of the net receipts in both the years.

8. The accountant Member held that the assessee was liable to pay tax at 40 per cent, of his receipts from the Government in both the years, after deduction of sums paid for repairs of the buildings and also of the expenses incurred by the assessee in tending the bushes etc. The expenditure in tending the bushes etc., was etsimated at Rs. 1,05,000/- for the year 1945-1946. An estimate of the expenditure according to him was to be made also for the assessment year 1946-1947. The expenditure for the year Page: 2031946-1947 which had not been determined then was directed to be estimated.

9. There was thus a difference of opinion between the two Members. The orders of the two Members were passed on 19-6-1952. These orders were communicated to the assessees. It would appear that the orders of the two members deal only with the receipts from the Government for occupation of a part of the Tea Estate. The orders are altogether silent in regard to items of income from the other sources.

10. The copies of the two judgments were served on the assessees on 30-10-1952 under Sextion 33(4) of the Income-tax Act. In consequence the Commissioner of Income-tax filed a petition under Sextion 66(2) of the Income-tax Act asking for a reference of a question of law to the High Court. The petitioners also filed an application under Section 35 of the Income-tax Act for rectification of certain incorrect statements of facts in the two judgments. The petition of the Commissioner for a reference and of the assessees under S. 35 were heard on 12-1-1955. It was then discovered that as there was difference of opinion between the two Members, the case had to be heard by a third Member. The copies of judgments were found to have been sent to the assessees by inadvertence. The applications were therefore rejected as premature.

11. The case was referred to a third Member under Section 5-A(7) of the Income-tax Act. The third Member who heard the case was the President of the Tribunal. He agreed with the accountant Member that the sums paid specifically for building repairs had to be deducted from the receipts of the assessees from the Government and the balance alone could be heated as trading receipts. Without specifically saying that the expenses claimed by the assessees for tending the bushes etc., could be allowed or not, he expressed his full agreement with the accountant Member.

12. He also observed that he was not quite sure whether the assessees were entitled to the benefit of Rr. 23 and 24, Income-tax Rules, but he refrained from expressing any definite opinion. The order of the President was passed on 14-4-1953. On 26-5-1953 the two appeals for the assessment years in question were partially allowed by the original Tribunal in accordance with the opinion of the majority.

13. The view that prevailed was that the assessees were entitled to charge against compensation expenses incurred by them in maintaining the assets including the tea plants in such a condition that the business could be resumed as soon as the property was derequisitioned. All expenses which the appellants had incurred for the maintenance of the tea garden were therefore found deductible out of the receipts for the two years and 40 per cent, of the balance alone was declared assessable. The cases were to go down for final disposal on the lines indicated in the order of the accountant Member with whom the President agreed.

14. On the application of the assessees the Tribunal has referred the two following questions of law for the decision of this court:

(1) Whether the sums of Rs. 2,12,080/- and Rs. 2,31,563/- paid by the Government to the assessee in 1945 and 1946 respectively (exclusive of the sums paid specifically for building repairs) were revenue receipts in the hands of the assessee comprising any element of income?

(2) If so, whether the whole of the said sums less the expenses incurred by the assessee in tending the tea bushes constituted agricultural income in his hands exempt from tax under the Indian Income-tax Act, 1922?

15. The receipts from the Government in both the accounting periods on account of compensation due to the assessees were for use of the requisitioned property. These receipts included items of Rs. 10,000/- and Rs. 15,231/- for repairs to buildings which remained in the occupation of the Government. These two items have been treated as compensation for damage to or deterioration of property. These items are not taxable. The dispute is with regard to the receipts alter deducting these two items for the two years.

16. According to the statement of facts on which the questions have to be answered, the claim of the assessees for compensation was accepted by the Government for both the years. The assessees estimated the total yield on the assumption that no part of their property had been requisitioned and deducted from the total amount of the expenditure they would have incurred for plucking, collecting the crop and manufacturing tea. The balance was claimed as compensation.

17. Apart from the damage to property for which separate sums were allowed, the claim for compensation was decided on the basis proposed by the assessees. They claimed to be placed in the same position in which they would have been if there was no requisition. The gross receipt was estimated. The expenditure which would have been incurred to earn that gross receipt was deducted and the balance represented the compensation which they got. No manufacture of tea was possible. It was in fact not manufactured. The business of manufacture had to be suspended temporarily. But the Government paid compensation for the use of the property requisitioned.

18. In point of fact what the assessees got was compensation for use of their property by the Government, though in assessing compensation Government adopted the principle proposed by the assessees in order that they should be placed in exactly the same position in which they would have been if there had been no requisitioning. There was no suggestion from the assessees that any part of the claim they made on account of compensation (apart from the sums allowed for damage to property) was on account of sterilisation, permanent or temporary, of their capital assets constituted by tea bushes.

19. At that stage no claim was made for loss permanent or temporary, in the productive capacity of the bushes in the tea garden which was not requisitioned. The Government did not give anything by way of compensation for any deterioration is the productive capacity of the tea plants. The assessees themselves did not claim any compensation on that account. They had the possession of the tea garden. They had no difficulty in looking after and tending their bushes or tea plants. They have claimed huge sums by way of expenditure for this purpose.

20. But quite apart from these facts, all that we have to see is whether any part of the receipts represents a receipt for loss of capital and for this we have the claim made by the assessees and the decision of the Government incorporated in the statement of facts supplied to us. That statement leaves no room for doubt that no parts of the receipts of Rs. 2,22,080/- and Rs. 2,31,563/- were in lieu of any loss or damage to the capital assets of the assessees. These sums cannot therefore be regarded as capital receipts wholly or in part.

21. On the other hand the facts of the case indicate in no uncertain manner that they constitute revenue receipts. They are in the nature of income. These sums were paid to the assessees for use of their property. Whatever the method for computation Page: 204of compensation may have been, the compensation was for use of the property. There is no getting away from this fact. The business of the assessees no doubt was discontinued. It follows that the receipts could not be receipts from business which had been suspended. It was property and its use by the Government that yielded the disputed sums for the two years. If business discontinued, the property remained.

22. Earnings from the property would be as much income as earnings from business. In determining the nature of the receipts we are concerned more with the quality of payment than with the principle on which compensation was estimated. In — ‘Commissioner of Income-tax and Excess Profits Tax v. Shamsher Printing Works’, AIR 1954 Bom 137 (A) Chagla, C.J referred to the observations of Lord Buckmaster at p. 463 in — ‘Glenboig Union Fireclay Co. Ltd. v. Commrs. of Inland Revenue’, (1928) 12 Tax Cas 427 (B). The observations were to the following effect:

“But there is no relation between the measure that it used for the purpose of calculating a particular result and the quality of the figure that is arrived at by the means of the application of that test”.

23. He applied the test laid down by Lord Buckmaster to the facts of the case before him. The same test if applied to the facts of the present case, does not assist the assessees at all. The property was requisitioned under the law. The assessees had no volition in the matter. The law provided for compensation for the period that they were deprived of the use of the property. The payment was for use of the property and it would not have been distinguishable from the payment that a landlord received from his tenant if the assessee had given the property to the Government for use voluntarily. There was legal compulsion in the act of the requisition. But even that would not alter the situation.

24. The legal right of the assessees was to be compensated for the deprivation of the use of the property which later on was derequisitioned. If therefore the principle on which compensation was determined is left out of account, it would be obvious that the payment was for use of the property and it could not be regarded as payment on account of any damage done to any capital asset. The payment does not sound in damages.

25. On facts the decision in AIR 1954 Bom 137 (A) is distinguishable. The assessee in that case was a dealer in paper, articles of stationery etc. The premises in which he carried on business were requisitioned. The assessee claimed Rs. 8,10,300 as compensation. A sum of Rs. 93,106/- was ultimately awarded to him. Out of this amount, a sum of Rs. 61,129 was treated as revenue receipt by the taxing authorities. The Government had also paid compensation to the assessee for use of the building requisitioned by way of rent.

26. That part of the compensation was treated as revenue receipt and was taxed. There was no dispute about it. The item in dispute was received by the assessee as covering loss of business. He had continued his business in other premises and claimed loss by reason of disturbance in his business. It was found that the Government did not take over the business of the assessees. He himself continued to carry it on and his claim in regard to the disputed item was based on injury done to that business, and however that injury might have been assessed, and whatever, test might have been applied to determine what the damages were, the payment which was actually received, was damages and not income arising out of the business or in the course of the business.

27. In the case before us the business was suspended and payment for use of the requisitioned property was made, though amount of compensation was determined on the basis of what the assessees would have earned if their property had not been requisitioned. There was no question of any damage to or loss in business. The principle of the decision goes to support the view which has prevailed with the majority of the Members of the Appellate Tribunal. The payments in this case in both the years cannot be treated as damages.

28. The case is covered by the decision in — ‘H.P Bannerji v. Commissioner of Income-tax, B. and O.’, AIR 1951 Pat 565 (C). This is a Division Bench decision of the Patna High Court. My Lord the Chief Justice (then judge of the Patna High Court) was a party to this decision. In this case the assessee was carrying on several business activities. He purchased about thirteen bighas of land for setting up a market. This plot was requisitioned by the military authorities under the Defence of India Rules.

29. The question was whether a certain sum paid to the assessee by the military authorities as compensation for the use of the land was taxable. It was held that the amount of compensation received by the assessee was really a profit derived from the land and was therefore taxable. I am in respectful agreement with the view taken in this case.

30. Mr. Ghose, the learned counsel for the assessees tried to distinguish the case on the ground that in this case the entire plot was requisitioned and the requisition was not followed by a suspension of any business as in the present case. The distinction pointed out however is without a difference. The principle remains unaltered. Here also some property was requisitioned and compensation was paid for its use. It was thus income derived from property.

31. When assessing compensation for use of the property the fact that business had to be suspended was taken into consideration. But that would not alter the nature of the payment. It surely has added to the amount of compensation which the assessees have been receiving from year to year. But that fact does not alter the nature of the receipt which is income for use of a capital asset.

32. Ramaswami, J. who delivered the judgment observed referring to the decision in (1928) 12 Tax Cas 427 (B) that

“in the present case the facts are manifestly different and it is impossible to hold that on account of requisition made by the military authorities the capital asset’ of the assessee has been ‘sterilised’, to borrow the language used in the decision of the House of Lords.”

33. Mr. Ghose has also relied on — ‘Commr. of Income-tax, Bengal v. Shaw Wallace and Co.’, AIR 1932 PC 138 (D). That decision is of no assistance to him. In that case the agencies of the assessees were terminated. There was a complete cessation of the agency business. Compensation was paid for the cessation. The receipts could not possibly be regarded as receipts from the agency business as the business had terminated. They could be regarded as income derived from property. It was therefore held that the sum received by the respondent (assessee) was not taxable income under S. 6(iv) (business) because it was not the produce, nor the result, of carrying on the agencies of the oil companies in the year in which they were received; nor under S. 6(vi) (other sources) for the same reason.

34. Mr. Ghose has also relied on some observation of Sir George Lowndes bearing on the import Page: 205of the expression ‘income’. Sir George Lowndes observed that

“the object of the Indian Act is to tax ‘income’, a term which it does not define. It is expanded, no doubt, into ‘income, profits and gains’, but the expansion is more a matter of words than of substance. Income, their Lordships think, in this Act, connotes a periodical monetary return ‘coming in’ with some sort of regularity, or expected regularity, from definite sources. The source is not necessarily one which is expected to be continuously productive, but it must be one whose object is the production of a definite return excluding anything in the nature of a mere windfall.

35. Thus income has been likened pictorially to the fruit of a tree, or the crop of a field. It is essentially the produce of something, which is often loosely spoken of as ‘capital’.”

36. The learned counsel urges that the expression ‘income’ connotes a periodical monetary return coming in which some sort of regularity are expected regularity from definite sources. He argues that the receipts in this case do not satisfy the requirements of the test laid down and therefore do not fall within the scope of the expression income.

37. The decision in ‘Shaw, Wallace's case (D)’ was followed in substance by Lord Russell of Killowen in — ‘Gopal Saran Narain v. Commr. of Income-Tax, B. and O.’, AIR 1935 PC 143 (E) Lord Russell adopted the general definition given in that case but with an important amplification which was in these words:

“The word ‘income’ is not limited by the words ‘profits’ and ‘gain’. Anything which can properly be described as income, is taxable under the Act unless expressly exempted.”

38. This amplification considerably enlarges the scope of the expression ‘income’. Anything which can be properly described as income would be taxable under the Act unless the receipt falls within the scope of some statutory exemption.

39. In — ‘Kamakshya Narain Singh v. Commissioner of Income-tax, B. and O.’, AIR 1943 PC 153 (F) Lord Wright referred to both the decisions and observed as follows:

“It is not in their Lordships' opinion correct to regard as an essential element in any of these or like definitions a reference to the analogy of fruit, or increase or sowing or reaping or periodical harvests. Lord Cairns (loc. cit) used these expressions because he was distinguishing mineral leases from agricultural leases. Sir George Lowndes (loc. cit) speaks of ‘income’ being likened pictorially to the fruit of a tree or the crop of a field. But it is clear that such picturesque similia cannot be used to limit the true character of income in general, and particularly when it is constituted by mining rent or royalties.”

‘Income’ was defined by him as

“not necessarily the recurrent return from a definite source though it has generally that character. Income again may consist of a series of separate receipts as it generally does in the case of professional earnings. The multiplicity of forms which income may assume is beyond enumeration.”

40. The decision in AIR 1943 PC 153 (F) is a complete answer to the argument of Mr. Ghose. It was not necessary in view of the latest pronouncements of their Lordships of the Privy Council that income should necessarily be a recurrent return from a definite source. It could consist of a series of separate receipts. Here in this case the property of the assessees was requisitioned in 1942 and the receipts of compensation recurred for several years. Even the element of recurrence is not wholly wanting.

41. Their Lordships of the Supreme Court referred to the decision in ‘Shaw Wallace's case (D)’ in — ‘Raghuvanshi Mills Ltd. v. Commr. of Income-tax Bombay City’, AIR 1953 SC 41 (G) and did not regard the rule laid down by their Lordships of the Privy Council as one of general application. Bose J. who delivered the judgment of the court observed as follows:

“It is true the Judicial Committee attempted a narrower definition in — AIR 1932 PC 138 (D) by limiting income to ‘a periodical monetary return coming in with some sort of regularity, or expected regularity, from definite sources’ but, in our opinion, those remarks must be read with reference to the particular facts of that case.”

42. In fact the view expressed in ‘Shaw Wallace's case (D)’ has been considerably modified by the later decision in AIR 1943 PC 153 (F). The conception of ‘income’ as described in ‘Shaw Wallace's case (D)’ has changed considerably by subsequent amplification. The connotation of the expression is widened. It is not possible in this case to describe the receipts either as solatium or as windfalls. The decision in ‘Shaw Wallace's case (D)’ is not at all helpful to the assessees here.

43. In — ‘Commr. of Income-tax, B. and O. v. Prayag Kumari Debi’, AIR 1939 Pat 662 (SB) (H) the assessee was awarded damages to the extent of Rs. 22 lacs for wrongful detention of her assets. In the accounting year in that case a sum of Rs. 62,500 was adjusted towards damages due under the decree in accordance with the terms of the compromise between the parties. It was held that the amount in question was received by the assessee as damages for wrongful detention of moveable properties of the assessee. There is nothing in common between that case and the case before us. In that case a certain sum was allowed as damages for wrongful detention of assets. The damages were allowed against a person who was guilty of wrongful detention which amounted in law to a tort.

44. There was a wrongful Act leading to an injury and damages were allowed. In the present case the Government in requisitioning the property acted under the provisions of the law and therefore incurred the legal liability for payment of compensation. The two cases are poles apart.

45. It is not possible to hold that the receipts represent loss of profits in business. The business had definitely been discontinued or suspended. No business was being done. No income was being made from business. The receipts therefore do not represent loss of business. There can be therefore no doubt that the receipts referred to in question No. 1 are revenue receipts in the hands of the assessees and are taxable subject to deductions of legitimate expenditure. The question is answered in the affirmative.

46. The second question is whether the total receipts of the two years after deduction of expenses of the assessee in tending the bushes constituted agricultural income, and was therefore exempt from tax under the Indian Income-tax Act. Both the judicial and the accountant Member agreed that 40 per cent, of the net receipts would at feast be assessable to income-tax though for different reasons. The judicial Member thought that all that was to be seen under Section 2(1)(a) of the Income-tax Act was that the landlord used the land for agricultural purposes and if a tenant by taking such land on lease made a different use, the landlord was not responsible and it could not be said that the rent derived by him from such land is not agricultural income.

47. His conclusion was that even in that event 40 per cent, would be assessable under Rr. 23 and 24, Income-tax Rules. The accountant Member also came to the same conclusion. The reason be gave in support of the conclusion was that the assessees must be deemed to have notionally buried on the business of tea planters. They actually were carrying on some processes in the tea garden itself which were possible in spite of the occupation of some part of the estate by the military. He however was not quite sure and agreed with the judicial Member to the assessment of 40 per cent, only as was being done in former years. Since there was no difference on this point the question was not dealt with by the President in his order.

48. The expression ‘agricultural income’ has been defined in Sextion 2(1) of the Income-tax Act. ‘Agricultural income’ means

(a) any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land-revenue in the taxable territories or subject to a local rate etc;

(b) any income derived from such land by agriculture etc.

49. It is not necessary to reproduce the whole of the definition. Shortly stated, in order that income should be treated as agricultural it should satisfy three conditions—(1) the rent or revenue should be derived from land; (2) land must be used for agricultural purposes and (3) land must be one assessed to land revenue in taxable territories or subject to local rate collected by the Government.

50. The land requisitioned was never used for agricultural purposes. It was used for the manufacture of tea before it was requisitioned. Compensation has been allowed for the use of the land requisitioned. This could not have been used for agriculture not was in fact used for agricultural purposes during the period of military occupation. Compensation that was given thus could not be described as rent or revenue from land which was being used for agricultural purposes.

51. The essential requirement of the definition of ‘agricultural income’ is that rent or revenue should be derived from land which is used for agricultural purposes. Its actual use for agricultural purposes is absolutely essential. In 1943-1944 the assessees received a sum of Rs. 60,000/- from the military authorities as compensation. They were assessed to income-tax on 40 per cent, of the amount. The balance of 60 per cent, was assessed to agricultural income-tax in the State of Assam. The assessees obtained a reference to this court. The contention raised was that no part of the compensation received was agricultural income.

52. It was found that no part really was assessable to tax under the Assam Agricultural Income-tax Act, as compensation could not be regarded as having been received as rent or revenue from land used for agricultural purposes. The assessees are now putting forward a contention diametrically opposed to the one then raised. They now contend even 40 per cent, is not assessable under the Income-tax Act as the entire receipts constituted agricultural income.

53. The view of the judicial Member that income may be treated as agricultural in part where the land is agricultural even though the tenant uses it for non-agricultural purposes, is not correct. It necessary that the land should be actually used for agricultural purposes before rent or revenue derived from it can be treated as agricultural income.

54. It was held in — ‘Commr. of Income-tax, Bengal v. Calcutta Agency Ltd.’, AIR 1951 SC 108 (I) that it is not enough that lands are leased for agricultural purposes if in fact agricultural operations do not take place. If lands leased for cultivation should happen to be used for housing or accommodating refugees the rent would cease to be agricultural income.

55. In — ‘Bijay Chand Mahtab Bahadur, In re’, 1940-8 ITR 378 (Cal) (J) it was emphasized that the user of the land for agricultural purposes must be in the year of accrual or income under dispute, not anywhere before or alter.

56. In — ‘Vishweshwar Singh… v. Commr. Of Income Tax…Opposite Party.’, AIR 1954 Pat 580 (K) Ramaswami, J. laid down that

“in order to find out whether the income of the assesee is agricultural income, the test is not to find out the purpose of the lease but the test is actual use of me land for agricultural purpose.” In his view as the land was not actually used for agricultural purposes the income was not exempt from being taxed under the Income-tax Act. In this case the position is very simple. The land or property was not taken for agricultural purposes. It was taken under the law for non-agricultural purposes and it was used for non-agricultural purposes. In this state of facts it was held by this court in — ‘Messrs Senairam Doongarmall…Applicant; v. The State Of Assam’, AIR 1953 Assam 65 (L) that the receipt in question did not constitute agricultural income.

57. The decision answers the second question completely so far as this court is concerned. No part of the compensation received could be treated as agricultural income according to that decision. Unfortunately that decision was not available to the Tribunal when the judicial Member and the accountant Member dealt with these cases. The decision of this court was given some two months after the Tribunal was called upon to decide this question. The view of the accountant Member that appellant should be assumed to have notionally carried on the business of a tea planter also is not consistent with the view which prevailed in AIR 1953 Assam 65 (L). Whatever the basis on which compensation was computed, the receipts lack the attributes of agricultural income.

58. We find no force in the contention raised on behalf of the assessees and the answer to the second question therefore must be in the negative.

59. The Tribunal communicated its first order dated 19-6-1952 to the parties on 22-12-1952. The Commissioner applied to the Tribunal for a reference of the question whether the Tribunal was right in holding that only 40 per cent, of the receipts were assessable. As there was difference of opinion at that stage. The application for reference was rejected as premature. In August 1952 this court found that assessees' receipts from Government by way of compensation were not agricultural income. The third Member also expressed doubts as to the applicability of Rules 23 and 24.

60. This strengthened the case for a demand for reference. It does not appear why after the final decision of the case in May, 1953 the Commissioner did not apply for a reference of the question whether the Tribunal was right in leaving unassessed the balance of 60 per cent. The only live question therefore is whether 40 per cent, of the receipts found assessable is exempt from assessment to tax under the Income-tax Act though in the view we have taken no distinction could be made between the two parts of the receipts in question.

61. The petition giving rise to Rule 83 of 1954 is under Sextion 66(2) of the Income-tax Act. The prayer was that the Appellate Tribunal, Calcutta Bench be directed to draw up a statement of the case and refer to this court for decision questions of law stated in para. 18 of the petition. In para. 18 the petitioners raised no less than nine questions. The learned counsel has pressed for a requisition for one question Page: 207only. He contended that according to the judicial member the total receipts of the two years could not be regarded as capital receipts. In his view the argument that some part of the receipts represented compensation for loss, sterilisation or deterioration of capital assets had some force.

62. The accountant Member did not share this opinion. There was thus difference of opinion on this point and this was not referred to the third Member. There was in consequence no majority judgment nor was the reference to this court complete. The contention though plausible is not sound. The judicial Member no doubt noticed the contention that the plants bearing tea leaves had been damaged and had deteriorated during the period of occupation by the military and the compensation allowed to the assessees should be held to include compensation for such deterioration and damage to the plants.

63. He thought there was some force in the contention. But in the absence of adequate data he estimated compensation attributable to use and occupation of the land at 20 per cent, of the sum of Rs. 2,22,080/- (1944-1945). When dealing with the question whether the entire receipts were exempt from taxation under the Income Tax Act as rent or revenue received from land used for agricultural purposes, he came to the conclusion that 40 per cent, of the net receipts amounting to Rs. 46,832/- (1945-1946) would be assessable.

64. The accountant Member was in favour of the adoption of the second alternative. There was thus virtually no difference of opinion on this point between the two members and any reference of the question whether any part of the receipts could be treated as capital receipts on the ground that the tea bushes deteriorated during military occupation, was not necessary. In any case this question is covered by the first question which has been referred to this court by referrence No. 1 of 1954.

65. It was open to the assessees to show that some part of the receipts could not be regarded as revenue receipts. While dealing with the question we have come to the conclusion that there is no material to support the contention that any part of the compensation was for deterioration or the temporary fall in the productive capacity of the tea bushes. The basis on which compensation was claimed was ascertained by the taxing authorities.

66. It has been incorporated in the statement of the case sent to this court. The claim of the assessees themselves shows that no claim was made for any deterioration in the leaf bearing capacity of the bushes. The answer to the 1st question in reference No. 1 of 1954 covers this contention. No order calling for a statement of the case under S. 66(2) is necessary or called for. This petition therefore must fail. It is dismissed and the Rule discharged.

67. Rule No. 84 of 1954 arises out of a petition under Article 226 of the Constitution of India. Writs in the nature of mandamus and certiorari have been applied for. The contention raised in this case is that the orders dated 19-6-1952 and 26-5-1953 of the Tribunal did not deal with and dispose of some questions specifically taken in the grounds of appeal and urged at the hearing. The findings of the appellate Assistant Commissioner in regard to deductible expenditure in relation to siding shop, actual trade expenses such as salaries, wages, feeding of employees, travelling and motor car expenses and his estimate of profits from Hessian bags account were specifically challenged in the ground of appeal. These grounds were pressed at the hearing. No decision at all has been given. It is urged that there has been no proper disposal of the case on these points.

68. The order of the Tribunal deals only with the assessability of receipts from the tea estate. That estate represented merely a part of the business activity of the petitioners.

69. The Appellate Assistant Commissioner dealt with all the points on which orders of the Appellate Tribunal are silent. He agreed with the income Tax Officer in respect of the income from the siding shop. The Assistant Commissioner stated that the assessees had preferred not to file any balance sheet in spite of repeated requests. No capital or personal account was maintained crediting profits year after year and debiting the drawings for personal expenses.

70. This he regarded as strange and presumed that the assessees must have found it to their advantage not to file any balance sheet. He further found that sales and purchases were not all supported by memos or vouchers. The sales were lacking in details and no quantitative account was maintained. The gross profit disclosed was abnormally low in his opinion. He therefore estimated the profit at 7½ per cent, on the total sales of rupees eight lakhs.

71. This came to Rs. 60,000/-. The assessees had disclosed a profit of Rs. 33,193/-. To this he added Rs. 26,807/- to make it Rs. 60,000. This figure was added to the profits disclosed by the assessees on estimate.

72. Another sum of Rs. 4,000/- which represented staff boarding expenses was disallowed by the Income Tax Officer. This item of expenditure was disallowed in the absence of proof and in view of the fact that the claim was excessive. A sum of Rs. 353/- claimed on account of charity was also disallowed. The total amount came to Rs. 31,160/-. The Assistant Commissioner agreed completely with the finding of the Income Tax Officer on this item.

73. Regarding the estimate of profits in the Hessian bags account the Income Tax Officer found that the figure of sales came to Rs. 88,650/- Instead of profit the assessees showed loss to the tune of Rs. 3,372/-. There were no sale memos, or purchase vouchers. The sales were found to be lacking in details. There was no balance sheet. He did not accept the accounts as correct and complete. The gross profit was estimated at 10 per cent, on estimated sales of rupees one lakh.

74. The findings of the Income Tax Officer under this head was also agreed to by the Assistant Commissioner. The amount added to the taxable income came to Rs. 31,160/- plus Rs. 13,372/- totalling Rs. 44,532/-. The findings of the Assistant Commissioner were challenged in appeal. The judgments do not at all deal with the points. The affidavit of an employee of the assessees is to the effect that these points were pressed at the hearing. He affirmed this on information received from Mr. Sarma, the chartered accountant.

75. The chartered accountant has not put in any affidavit. The employee of the firm has no personal knowledge. The Income Tax Officer who has affirmed the affidavit in opposition also has no personal knowledge. He refers to the statement of the case sent to this court in Reference No. 1 of 1954 and argues inferentially that these questions were not passed. All that the statement of the case may show is that the inclusion of a question of law based on the omission of the Tribunal to deal expressly with the points raised in the memo of appeal was not pressed.

76. It has been contended that it was open to the assessees at this stage to urge that the failure of the Tribunal to dispose of the points raised was an illegality which vitiated the judgment and that the question arising from the omission e.g its effect was a question of law. The assessees did not press for Page: 208its inclusion, in the reference, and agree to the reference as made. The inference drawn is that there was no intention to press these points.’

77. The first question is whether the grounds of attack in regard to the three items in question in this case were pressed before the Tribunal when the case was heard by the judicial and accountant Members. They produced separate judgments which are completely silent in regard to these points. It has been urged on behalf of the assessees that the points were argued and pressed at the hearing and for this statement of fact reliance is placed on the affidavit in support of the petition.

78. As stated above this affidavit is from an employee of the firm of the assessees. He on his own showing was not present at the hearing. A chartered accountant represented the firm. No affidavit from him has been put in. The important statement in the affidavit to the effect that questions not dealt with in the orders were pressed was on the strength of information received from Mr. Sharma, the chartered accountant.

79. The firm has not produced any writing from Mr. Sharma to the effect that the points were pressed. The affidavit of an employee in these circumstances does not fulfil the requirements of the rules. It is worse than useless having been signed by a person who has got no personal knowledge of the facts stated. His information is derivative. The person who could swear to the facts on which the petition, rests, has preferred not to put in the affidavit. We are thus left with an allegation not supported by a proper affidavit that the findings of the Assistant Commissioner in regard to three items in dispute were questioned.

80. The affidavit in opposition from the Income Tax Officer also is not from personal knowledge and is clearly useless. In these circumstances the normal presumption of law has to be raised. The presumption is that if a point is raised in the grounds of appeal but the judgment is silent on it, it shall be deemed not to have been pressed. The omission to give any directions on the points amounts to an implied rejection of the contentions. Where a judgment does not refer to a plea raised in the pleadings it will be assumed that ground was definitely given up in the absence of an affidavit to the contrary. — ‘Abdul Kassim v. Thakar Ram Jabbu Ram’, AIR 1923 Lah 124 (M).

81. Similarly whenever the judgment of the lower appellate court makes no reference to certain points it must be assumed that the matters were not brought to the notice of the court but were given up. — ‘Kirpa Ram v. Chand Bahadur’, AIR 1927 Lah 125 (N).

82. On 2-1-1953 the assessees petitioned to the Appellate Tribunal for rectification of mistakes in the orders of both the members under S. 35. In para. 2(g) of this petition it was pleaded that certain add back & additions by the Income-tax Officer covered by the grounds of appeal to the Tribunal appear to have been omitted from consideration in the Tribunal's order to the prejudice of the assessees. The items to which reference was made were not specifically mentioned. It is possible that the reference was to the items about which objection is now being taken by the present petition under Article 226.

83. On 21-4-1953 the assessees applied to the Tribunal for a further hearing after the opinion of the third Member on points referred to him was received. Several reasons were given in support of the prayer. In this petition it was stated in paras. (5) and (6) that

“the grounds of appeal before the Tribunal have been made so as to cover relief on all points in the 45-46 and 46-47 assessment cases and were accordingly argued by your petitioner's representative. The reference made by your honour to the third Judge as well as the two judgments delivered on 19-6-52 covers only the principles of taxation of the Shewpur compensation money leaving all other points undetermined without any reference thereto.” Apart from this, other points were raised and it was urged that the points involved in the case were varied, many and complicated and that the case therefore was fit for a further hearing. The decision in — ‘Jan Mohamad v. Commr. of Income-tax, U.P and V.P Lucknow’, AIR 1953 All 119 (O), was referred to in support of the request for a further hearing. Another application was put in on 17-7-1953 on grounds stated in the previous two petitions. As a result of these petitions the petitioner succeeded in obtaining a hearing on 18-8-1953.

84. The order purports to dispose of the petition under S. 35 by which a rectification of some mistakes and omissions was sought. The mistakes and omissions pointed out in the application included the omissions now complained of. The Tribunal observed that it was explained during the hearing of this application that there were really no mistakes but the applicant wanted the Tribunal to make it clear to the Income-tax Officer to work out the income on the lines laid down in detail by the order of the accountant Member dated 19-6-1952 which re-presents the majority decision of the Tribunal in this case. To satisfy the petitioner the final order was clarified in the following terms:

“The Income-tax Officer is bound to and is hereby directed specifically to give effect to the decision of the Accountant Member representing the majority decision for determining the assessable income of the applicant. This decision was that all expenses which the appellant incurred for the maintenance of his Tea Gardens and the use of the estate must, first, be deducted out of Rs. 2,12,080/- before the income of the estate could really be determined for income-tax purposes. The income actually to be assessed to income-tax is to be 40 per cent, of the above noted amount as contemplated by R. 24.” With the above remarks, this application, is rejected.”

85. It appears from the order that the omissions on which it is argued that there has been no proper final disposal of the cases, were not urged at this stage even though a fresh hearing was obtained on the basis of the application dated 21st April. The hearing having been granted all conceivable omissions could have been placed before the Tribunal.

86. The order though it does not expressly so state, implies that what the assessees pressed for at that time was merely a clarification of the majority order, which they succeeded in obtaining.

87. Our attention has been drawn to the decision in AIR 1953 All 119 (O). In this case it was held that the third Member to whom the case may be referred under S. 5A(7) could decide only the point referred to him. He could not formulate any point on which he could base his decision. Moreover after the decision by the third Member of the point or points raised to him the case should go back to the original Tribunal because the third Member had not been given any right to decide the appeal.

88. In that case as the case did not go back to the original tribunal, it was held that the case had never been properly disposed of by the Tribunal. That difficulty has not arisen in this case as after the decision by the third Member on points referred to him, the case came back to the original Tribunal and the final order was passed by it. Malik, C.J dealing with the point before him observed as follows:

“In our view, the case with the opinion of the third Member should go back to the Tribunal for final decision. The Tribunal, when finally disposing Page: 209of the appeal, may, no doubt, allow other points to be raised before it, if they consider it proper.”

89. The question whether an assessee is entitled to a further hearing after the case conies back from the third Member did not arise in that case, nor was it decided. The learned judge did not hold that an assessee is entitled to a further hearing when the case comes back to the original Tribunal after the reference has been answered by the third Member. He merely observed that when disposing of the appeal the Tribunal had power to allow the assessee to raise other points it the Tribunal thought it proper. The discretion in the Tribunal to hear on further points was conceded. But no right in the assessee was recognized.

90. Section 33(4) in terms lays down that

“the Appellate Tribunal may, after giving both pasties to the appeal an opportunity of being heard, pass such orders thereon as it things fit and shah communicate any such orders to the assessee and to the Commissioner.”

91. It does not lay down that the assessee should be heard again on points on which he has been heard already. Even if he is considered entitled to a hearing after the reference, it will be limited to the points which can be considered to arise at that stage. All that the Tribunal has to do at that stage is to consider what the majority verdict in the circumstances is and to give effect to that verdict. The assessees before us are not now complaining that the majority verdict has not been given effect to. They are complaining about the omissions which crept into the two orders dated 19-6-52 of the accountant and the judicial Members.

92. No failure of justice is therefore attributable to the omissions on the part of the Tribunal to hear the assessees before final disposal of the case. The assessees got a hearing after the final disposal of the case and presumably pressed merely for a clarification of the order. The assessees also did not press for any question of law arising from the alleged omissions of the Tribunal to be included in ??? reference.

93. In regard to the three items, books of the assessees were rejected as they had produced no balance sheet. Sales and purchases were not supported by memos or vouchers. The transactions were lacking in details. There was no quantitative account. The gross profits shown were abnormally low. In one case instead of profits some loss was shown. The facts on the basis of which account books were rejected do not appeal to have been challenged, and therefore the rejection of the account books was not something which could be easily assailed.

94. When the books of accounts were rejected on the ground that there were inaccurate or incomplete expenses and profits, both had to be estimated. There is no material before us for holding that in estimating deductible expenses and profits any failure or miscarriage of justice has occurred; nor can we say that the conclusions arrived at by the Income Tax Officer and the Assistant Commissioner were vitiated by any illegality. No case thus is made out for a writ of mandamus directing the reopening of the cases.

95. It must not be lost sight of that a mandamus cannot be claimed as of right, nor need such a writ issue for every omission or irregularity even when it cannot be shown to have affected the jurisdiction or the merits of the case. The granting of relief by way of extraordinary, writs is discretionary. The writ of mandamus is not a writ of right and the court cannot be oblivious to the facts of the case. — Kshirode Chandra v. District Magistrate Howra, 59 Cal WN 373 (P).

96. The petitioners have not succeeded in making out a case for any extraordinary writs and even this petition must tail. It must however be observed that the omissions complained of have exposed orders of the Tribunal to just criticism. The orders ought to be complete and it should not be necessary in a mandamus petition or in a petition under Section 66(2) of the income Tax Act to presume what happened at the hearing.

97. If a point is argued it should be dealt with and disposed of in express terms however weak the argument or baseless the contention. If a point raised in the ground appeal is not pressed at the hearing, the fact itself should be stated. The Tribunal being the final authority on facts it is desirable that its views on facts should be stated comprehensively to cover all points in controversy. Omissions in the order can give rise to questions of law.

98. The assessee should know on what basis any contention raised has been rejected. The order should embody a complete picture of what happens at the hearing. With these observations we dismiss the petition and discharge the Rule.

99. The Commissioner of Income-tax will re-cover his costs in the reference and Civil Rule No. 83 of 1934. Hearing fee Rs. 250/-

Sarjoo Prosad, C.J:— The two points under reference are: ….

“(1) Whether the sums of Rs. 2,12,080 and Rs. 2,31,563/- paid by the Government to the assessee in 1945 and 1946 respectively (exclusive of the sums paid specifically for building repairs) were revenue receipts in the hands of the assessee comprising any element of income?

(2) If so, whether the whole of the said sums less the expenses incurred by the assessee in tending the tea bushes constituted agricultural income in his hands exempt from tax under the Indian Income-law Act, 1922.”

100. On the first point, the assessee contends that the sum paid represented damage or compensation for temporary sterilisation of capital asset and did not represent any income or loss of profit. It is further argued that even it represented loss of profit, it was not taxable as such because it was not a revenue receipt. These contentions of Mr. Ghose, the learned counsel for the assessee gain a colour of plausibility from the decision in AIR 1954 Bom 137 (A). It appears to me, however, that the terms compensation or damage are used in a comprehensive sense; and I see no reason to cut down their import unless in a given context it is so required.

101. For instance, I may examine their implications in three different contexts: (i) where the amount paid represents damages or compensation for the loss, suffered by a person on account of loss of income from any business which he was prevented from carrying on; in such a case compensation or damage so paid may be regarded as a revenue receipt; (ii) where the amount paid represents loss suffered by a person on account of injury or damage caused to his capital asset or even on account of a partial sterilisation thereof: damage so awarded may well be regarded as capital receipt; (iii) where the amount is paid by way of damage technically so-called for ‘wrongful injury’ to person and property as in the case of tort: the amount so paid may be treated a as casual payment and not a revenue receipt.

102. Whether a particular payment is capital or revenue receipt or something entirely different must necessarily depend upon the facts and circumstances of each case. The above Bombay decision, on which Mr. Ghose relies, might well fall under the Page: 210second category, though the material facts are not sufficiently disclosed in the judgment itself. The assessee in the case was a Printing Press which carried on business on certain premises. As a result of requisition by the Collector of Bombay of the premises in question, the printing business had to be closed and presumably the machinery of the Press itself had to be removed.

103. I make this presumption because the counsel for the assessee in that case relied upon the analogy and the principle of the decision of the House of Lords in (1928) 12 Tax Case 427 (B) and contended that prevention from carrying on business in the circumstances amounted to sterilisation of capital asset. I quite agree that necessarily there is

“no relation between the measure that is used for the purpose of calculating a particular result and the quality of the figure that is arrived at by means of the application of that test.”

104. In other words, the ‘quality’ of the payment is not in every case co-related to the basis on which the amount is determined; but the rule is not invariable and absolute. There may be and in fact there are cases where the ‘quality’ of the figure determining the amount of compensation is intimately related to the data on which the figure is based. In such cases, the data of calculation cannot be altogether ignored in determining the ‘quality’ of the payment.

105. I venture to think that the dictum of Lord Buck-master in the above quotation did not rule out such possibilities. In the present case, the facts indicate in no uncertain manner that the payments made to the assessee constituted revenue receipt and were in the nature of income. In the Bombay case, Chagla, C.J observed thus:

“Even assuming that the compensation paid constitutes loss of profit, what has been done by the requisitioning authorities is to capitalise the profit which may be lost by the business over a period of time, and it is difficult to see how capitalised profits can constitute revenue receipt.”

106. There is no case of any capitalised profits here. On the contrary, in this case the compensation appears to be in respect of recurring profits from year to year during the period of requisition. Therefore, even if the payments are regarded as loss of profit from business, there is no reason why they should not be treated as income or revenue receipt. The instant case is covered by the principle of our decision in AIR 1951 Pat 565 (C).

107. On the second question, I have little to add to what has been already observed by my learned brother. In a manner the question appears to have been impliedly answered by this Court in AIR 1953 Assam 65 (L). The decision in that case was delivered in August 1953; and yet it is somewhat incomprehensible that the Department did not consider it necessary to press for any reference on the point of applicability of Rr. 23 and 24, which left unassessed the balance of the 60 per cent, income.

108. As it is, the point had sufficient importance of ??? own to justify a claim for reference. In deed the President of the Tribunal had also expressed doubts as to the applicability of those rules. Any loss of revenue on that account may be justly regretted; but this is a matter with which we are not at present concerned and which we cannot finally answer. It was open to the Department to apply for a reference on the point, but it having failed to do so, the matter has to rest where it is.

109. The two questions under reference, in my opinion, must be therefore answered against the assessee.

110. I must concede that I was strongly inclined to allow Civil Rule 84 of 1954 which is a petition under Article 226 of the Constitution based on the complaint that the Tribunal did not dispose of certain questions specifically raised in the grounds of appeal and urged at the hearing.

111. The points relate to some deductions claimed by the assessee on account of actual trade expenses, in the shape of salaries, wages etc. of employees and the estimate of profits from hessian bags account. The taxing officers dealt with those points and rejected the Claim of the assessee, but the judgment of the Tribunal is silent thereon, it is rightly urged that the Tribunal had the right to review the decision of the taxing officers both on facts and law and as such it being the final Court of appeal, it was incumbent on the Tribunal to consider and decide those points alter giving a proper hearing to the assessee; and its failure to do so constituted a clear omission to exercise jurisdiction duly vested in it by law.

112. It is also suggested that the Tribunal appears to have lost sight of those contentions probably because its attention was preoccupied with the point of difference between its members; and even when the difference was set at rest by me third member, the Tribunal attached no importance to those other points despit the prayers of the assessee. These contentions have both force and justification. In an earlier judgment, I had occasion to discourage the practice of making references to the High Court without fully deciding all the points raised in the case.

113. I need hardly impress upon the Tribunal that the law cast upon it the obligation, as the final court of facts, of discussing and determining those points specifically, even it its decision ultimately turned against the assessee. The assessee should have the satisfaction that the Tribunal has given him not only a fair and impartial hearing on all the material questions raised, but that it has also determined those questions in its judgment after an independent consideration of the evidence and the materials on record.

114. It is well known that it is not enough to say that justice has been done, but that it should be made to appear also that it is so. The wholesome maxim though off-repeated is often ignored. I have, however, persuaded myself not to interfere in this case predominantly for two reasons. Firstly, the affidavit filed by the assessee in support of his allegation that the points were specifically argued before the Tribunal is not a proper affidavit, at all, and cannot be entertained.

115. The affidavit is merely derivation or hearsay. Secondly, it is not a fit case in which the ends of justice would call for interference by a high prerogative writ. The books of accounts of the assessee appear to have been rejected by the taxing officers for good and substantial reasons. The estimate made by those officers was not seriously questioned before the Tribunal and in effect the decision of the Tribunal shows that these estimates were adopted. In substance, it comes to this that the Tribunal also did not see its way to accept the books of accounts of the assessee. That being so, it is obvious that the deductions claimed on the basis of the entries in those books also could find no support from the Tribunal. In the circumstances, I have agreed to adopt the order proposed by my learned brother in rejecting the application.

116. The Department is entitled to the cost of the reference and in Civil Rule No. 83 of 1954: healing fee Rs. 250/-.

117. Questions answered.