Dawson Miller, C.J:— Two questions arise for determination in this case which comes before us upon a case stated by the Commissioner of Income-tax under section 66, sub-section (3) of the Indian Income-tax Act, 1922.

The first point, in the order in which they are dealt with in the case stated by the Commissioner, is whether the annual value of a guest-house standing in the compound of the assessee at Darbhanga is exempt from income-tax under the provisions of the Act on the ground that it is “agricultural income” within the meaning of section 2, sub-section (1), clause (c), of the Act. If it falls within that section then it is exempt under section 4, sub-section (3), clause (viii) as being, agricultural income. Under section 2, sub-section, (1)(c), agricultural income for the purposes of the Act includes any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land (that is, agricultural land) provided that the building is on or in the immediate vicinity of the land and is a building which the receiver of rent or revenue by reason of his connection with the land requires as a dwelling-house or as a store-house or other out-building. The Commissioner has found the facts relating to the house in question from which it appears that the house stands in the same compound as the principal dwelling-house or palace of the Maharajadhiraj of Darbhanga at Darbhanga. It is used principally for accommodating European guests when they visit him. This, I apprehend, would include not only such guests as might arrive on social occasions but all such as had reason to visit the Maharajadhiraj officially or on business connected with his estate which is of vast dimensions. The Commissioner has taken the view that under section 2, sub-section (1)(c), of the Act such a house can only be exempt if and in so far as it does not exceed the necessary requirements of the assessee having regard to the position which he holds by reason of being a zamindar deriving his income from land. The view he has expressed is that if in fact he has other sources of income, then this is a matter to be taken into consideration, for income derived from such sources may make him a person of some importance and social position and therefore he may require a larger house than would be the case were he merely a zamindar. He has then considered whether it is necessary for him to have a guest house at all by reason of the fact that he is the zamindar of the Darbhanga Raj, and as I understand the findings the conclusion he comes to on that part of the case is that he does not require this guest house zamindar but merely because he is a person of great wealth and social position. It is perhaps not irrelevant to observe that the wealth and social position of the assessee arise from the fact that he is the proprietor of the Darbhanga Raj the largest zamindari in this province and perhaps one of the largest in India. The way the Commissioner puts the case is this:

“Now the assessee in this case does not derive his income exclusively from agriculture and indeed he has been exempted in respect of the valuation of a portion of his Calcutta house on the ground that house is partly required by him for business purposes. The case of the department then is that if this building called Chatra Bhawan is required by him, it is not required by him in his capacity as a zamindar or by reason of his connection with agriculture but really by virtue of the position which he holds as a person of great wealth and social position. It is submitted that the assessee has a considerable business in stocks and shares and this business is carried on by him largely from Darbhanga.”

From that it may be assumed, I think, that the finding of the Income-tax Commissioner was that the house was not required as a dwelling-house by the assessee within the meaning of section 2, sub-section (1)(c), of the Act, because his income was not derived exclusively from zamindari but also from other sources. In fact it appears from his statement of the case that the Commissioner would consider in each individual instance whether a dwelling-house owned and occupied by a landowner was in fact larger or more commodious than might be considered necessary for his requirements as a landowner, and if he should consider that it was, then he would assess a certain proportion of the annual value of his house to income-tax. That proportion would depend, according to the view taken by the Commissioner, upon the relation between the assessee's income derived from his estate and that derived from other sources, and would necessarily vary from time to time as his savings increased or diminished. It is not disputed that the building is owned and occupied by the assessee and as I understand the findings of the Commissioner it is conceded that the Maharajadhiraja of Darbhanga as the zamindar of a large Raj does require a dwelling-house in that locality by reason of is connection with land; and further it is not disputed, as I understand it, that the building is on or in the immediate vicinity of the land forming the Darbhanga Raj. It is also a matter of common knowledge that amongst persons of the religion to which the Maharajadhiraj a belongs it is not convenient to accommodate his guests within his own dwelling-house, and therefore for this purpose there is a separate house set apart near his principal dwelling-house for their accommodation and in this respect I consider that the matter must be approached: from the point of view that it makes no difference whether the guest-house is really a part of the main dwelling-house itself or is structurally unconnected with it. It is by no means unusual in this country especially in the case of large and even moderately large houses, to find a guest house attached thereto.

The question which we have to decide is not, in my opinion, purely one of fact. It has been argued on behalf of the Commissioner that this really is a question of fact of which he is the sole judge, but in dealing with the matter it seems to me that he has not properly construed the section, and has applied a test to this case which is not the proper test to be applied. If the Commissioner's view is to be accepted then he would be equally entitled to consider in each case whether a particular house owned by a zamindar, for which exemption from tax was claimed, was larger than was actually sufficient to supply his needs having regard to the fact that he was a zamindar. It would be for the Commissioner to say whether he was entitled to this or that extra room, whether he was entitled to have stables, for example to accommodate so many horses, and in each case if the question is to be regarded merely as one of fact the Commissioner would be the sole judge whether the house was or was not sufficient for the minimum requirements of the assessee. That to my mind is not the intention of the Act. I have referred to the terms of the section, and in my opinion the proper construction is this. Once it is shown that by reason of the assessee's connection with the land he requires a dwelling-house in that vicinity then we are not concerned to enquire whether the dwelling-house is more commodious than other persons in the same position would consider sufficient for their actual needs, a matter about which opinion might widely differ. The intention of the Act seems to me to have been that if by reason of his connection with the land the assessee does require a dwelling-house, and it is admitted in this case at all events no argument has been adduced, to the contrary that he does require a dwelling-house in Darbhanga, then the section is complied with in so far as the question of his requirements is concerned, and it is not open to the Commissioner to; consider whether the particular class of house is more or less than the actual requirements of a zamindar in his position according to some standard which may vary from time to time in the opinion of different Income-tax Commissioners. For these reasons I think that upon the facts found it must be held that a dwelling-house being required in this place, and the house in question being regarded as part and parcel of such a dwelling-house, and it being also admitted that the dwelling-house is required by reason of the connection of the assessee with the land, then the provisions of the section are complied with and the assessee, in my opinion, is exempt from tax.

The next point is one which has recently been the subject of a decision of a Full Bench of the Calcutta High Court. Stated shortly the point is whether what is called mutation fees, that is to say fees paid by the transferee of a non-transferable occupancy holding and fees paid by the transferee of a tenure, known as landlord's fees, under section 12 of the Bengal Tenancy Act are exempt as being included in the definition of agricultural income in section 2 of the Act. The definition there contained includes amongst agricultural income any rent or revenue derived from land which is used for agricultural purposes and is either assessed to land revenue in British India or subject to a local rate assessed and collected by officers of Government as such. It is not disputed here that the land in question comes within the description mentioned in that section. The contention is however that the fees derived from the sources which I have mentioned will not come under the description of tent or revenue derived from land. The contention on behalf of the Crown is that, at all events in the case of fees paid by the transferee of a non-transferable occupancy holding, these are not in any sense of the word rent or revenue derived from land they do not arise out of the creation of a new tenure in which case sometimes a premium or salami is paid in advance which may be taken to represent a consolidated sum of rent in addition to the annual rent payable, but it is said that the money is something in the nature of damages for a breach of contract or, as stated in the judgment of Mookerjee, J., in Birendra Kishor Manikya v. Secretary of State for India money paid in order to secure peace and therefore not to be regarded as revenue derived from land. The case to which I have just referred was the subject of consideration in the later case of Meher Bano Khanum v. Secretary of State for India. In that case the decision of Mookerjee, J., in the earlier case was overruled and it was held that salami or nazar paid by a tenant to a landlord for his recognition as a tenant of a non transferable holding is rent or revenue within the meaning of section 2(1)(a) of the Indian Income-tax Act and is therefore exempt from taxation. The real question I think for determination upon this part of the case is whether these fees paid by the tenants are to be regarded as income or revenue derived from land. Whether they be something in the nature of damages, although that clearly is not an appropriate term to use in this connection, or whether there is any breach of contract by the transferee, or whether they may be regarded as something paid for the purchase of peace, seems to me to be altogether beside the question. It may just as appropriately be said that rent itself, when it is in arrears, or when there is any dispute about the liability to pay it, may be paid to purchase peace, and so here it is undoubtedly a fact that, just as in the case of rent, the sum is payable by a tenant to his landlord solely by reason of their relationship as tenant and landlord of land and whether it has the effect of purchasing peace or not seems to me to be entirely immaterial to the question under consideration. It arises by reason of the tenant being given the use and occupation of the land which without it he could not acquire. The term ‘revenue’ as given in the Oxford Dictionary has been set out at length in the judgment of the Full Bench of the Calcutta High Court to which I have just referred. It is unnecessary to repeat it, but it seems to me that it clearly includes payments of this nature and according to the ordinary general use of the term I think also that it must include payments by the tenants of land owned by the landlord for the transfer to them of holdings or tenures, and I entirely agree with the conclusions arrived at by the majority of the Court in the, case of Meher Bano Khanum v. Secretary of State for India That this particular class of revenue is derived from land I do not think for a moment can seriously be disputed. These payments are so intimately connected with the ownership of land and are payable by the tenants in the same way as rent is payable that to my mind it is impossible to come to any other conclusion than that they are revenue derived from land.

For these reasons I think that upon both these points the assessee is entitled to exemption from tax.

This opinion may be forwarded to the Income-tax Commissioner for his guidance.

Ross, J.:— I agree.