Fazl Ali, C.J:— The question of law which has to be answered in this reference is as follows:—

“Whether interest on arrears of rent is part of the assessee's agricultural-income within the meaning of section 2(1)(a) of the Indian Income-tax Act.”

The assessee concerned in this case was assessed to income-tax for the year 1941-1942 upon a total income of Rs. 12,905. This amount included a comparatively small sum of money which represented interest on rent from agricultural land. The assessee claimed that sum could not be taxed, as interest on rent was agricultural-income in the sense in which that expression is used in section 2(1)(a) of the Income-tax Act and was exempt from taxation under section 4(3)(viii). The claim, however, has been negatived and the question as formulated above has been referred to us at her instance by the income-tax Appellate Tribunal under section 66(1) of the Indian Income-tax Act.

Section 2(1) of the Income-tax Act with which we are concerned at present, includes within the definition of agricultural-income

(a) 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 the Crown as such.

It is not disputed that if interest on rent is agricultural-income within this definition it is exempt from taxation.

In Sri Sri Ramchandra Dev v. The Commissioner of Income-tax, Bihar and Orissa, it was held that interest on arrears of mustajiri rent forms part of the zamindar's agricultural-income and is, therefore, not taxable under the Income-tax Act, 1922. The mustajir is a farmer of rent or a person who acquires from the proprietor the right to collect rent from his tenants in lieu of a certain sum of money which he agrees to pay to the proprietor annually and which is called mustajiri rent. It is not disputed that the case of Sri Sri Ramchandra Dev is a direct authority for the proposition that interest on rent is agricultural-income. But we find that the Calcutta and the Madras High Courts have taken a different view and so the question has to be examined with the greatest possible care.

In re, Manager, Radhika Mohan Roy Wards Estate a Bench of the Calcutta High Court consisting of Derbyshire, C.J and Mukherjea, J. has held that interest on arrears of rent is not agricultural-income and therefore it is assessable to income-tax. The learned Chief Justice in the course of his judgment refers to several cases in which it has been held that interest on rent is not rent as defined by the Bengal Tenancy Act and he sums up the points of difference between rent and interest in these words:—

“Rent is always associated with land; it is a payment for the use of land. Interest, on the other hand, is associated with money; it is a payment for the use of money. In this case rent was payable to the landlord by the tenant by virtue of a contract of tenancy of land. The cause of action in respect of rent arises out of contract. On the other hand, the interest which is payable in respect of arrears arises out of a statutory provision of law which imposes a penalty upon the tenant for non-payment of his rent. Although both rent and interest on arrears of rent are payable by the tenant to the landlord, they are payable for different reasons. Rent is payable for the use of the land under contract. Interest is payable for the use of money withheld by the tenant, and it is payable not by reason of a contract but by reason of a statutory provision.”

Similarly, Mukherjea, J., who delivered a separate judgment, agreeing with the learned Chief Justice observed as follows:—

Rent is obviously an agricultural-income which the landlord makes by reason of his having a proprietary interest in the land which he lets out to the tenant and the tenant pays it as a part of the consideration for the use and occupation of the land which he enjoys. The source of the income is the landlord's superior interest in the agricultural-land and, consequently, it is an agricultural-income. The interest, however, which the tenant pays under section 67 is a sort of statutory recompense which is allowed to the landlord for being-deprived of the use of the money which is payable as rent by the tenant. The landlord does not derive the income by reason of his having parted with any part of his interest in the land, but because of default on the part of the tenant in paying the rent within the fixed period, which be could have invested in some profitable manner. The yield is not of the landlord's proprietary right in the land but of the debt which comes into existence as soon as there is default on the part of the tenant to pay the rent at the stipulated dates.”

In Al. Vr. V.P Pethaperumal Chettiar v. Commissioner of Income-tax, Madras the learned Chief Justice of the Madras High Court and another Judge came to the same conclusion as the Calcutta High Court and observed that interest on rent is not rent, nor can it be classified as revenue derived from land, its source being the tenant's default in the performance of his contract. The learned Chief Justice after citing with approval the decision of the Calcutta High Court, in Manager, Radhika Mohan Roy Wards Estate, In re, referred to two of the decisions of this Court in these words:—

“The Patna High Court followed this decision in Maharaja Bahadur Ram Ran Vijay Prasad Singh v. The Province of Bihar although in an earlier case, Sri Sri Ramchandra Dev v. The Commissioner of Income-tax, Bihar and Orissa, it expressed a contrary opinion. The earlier case was a reference under the Income-tax Act and the later case a reference under the Bihar Agricultural Income-tax Act, 1938, but we can see no reason for a distinction.”

It seems necessary to point out here that in referring to the decision of the Calcutta High Court in Manager, Radhika Mohan Roy Wards Estate, In re this Court never adopted the view taken in that case that interest on rent is not agricultural-income. That case was followed only in so far as it had decided that interest was not rent, but it was pointed out that in Bihar interest on rent may be revenue derived from land.

These decisions are no doubt entitled to very great respect but after a most careful consideration of the matter I have come to the conclusion that there is no reason for this Court to depart from the view which was expressed in Sri Sri Ramchandra Dev's case. That strictly speaking interest is not rent has been decided by the Calcutta High Court in several cases and those decisions have been followed in Maharaja Bahadur Ram Ran Vijay Prasad Singh v. The Province of Bihar by a Full Bench of this Court, of which I also was a member the fact, however, remains that once interest has accrued upon rent and becomes payable to the landlord along with such rent, one cannot very well sever it from the rent and treat it as a different kind of income. I think that the interest must are with the principal being an accretion to it and therefore if rent is agricultural-income, interest must also be agricultural-income. To dissect interest from rent and treat the latter as agricultural-income and the former as non-agricultural income would be not only illogical but contrary to all known principles. Evidently interest on rent is payable by a tenant by reason of his relation to the land and it is received by the landlord by reason of his rights as a landlord. The liability to pay rent and the liability to pay interest on rent are so closely connected with the land that it is difficult to say that while the former is the product of land and is derived from it, the latter is derived from another source. Income as was observed by the Privy Council in Commissioner of Income-tax, Bengal v. Shaw, Wallace and Company has been pictorially likened to the fruit of a tree or the crop of a field: and, if I may say so, the picture will not be a complete or a correct picture if we sever the rent which bears interest from the interest which accrues on or grows out of it and characterise them, as products of separate trees or crops of two different fields. The mere fact that rent is payable by contract and interest on arrears of rent is payable under a statutory provision does net, in my opinion, affect the nature or the source of the income, because interest would not be payable at all if no rent is payable. I also find considerable difficulty in accepting the view that while the source of rent is the land, the source of interest is the tenant's default in the payment of rent. Rent is often recovered by means of a suit and the suit is brought on account of the tenant's default in paying the rent at the proper time. Could it then be said that it is the default of the tenant and not the land which is the source of such rent? We have really to look to the essence of the matter and to dissociate interest from the principal and to say that they are derived from different sources seems to be like saying that the leaves and flowers of a plant are not traceable to the same origin. The points which, in my opinion, cannot be overlooked are (1) that as interest is a relative expression implying the existence of a principal, the interest and the principal cannot be two different kinds of income; (2) that if interest upon rent is income, it must be the same kind of income as rent because the person who pays and the person who receives these two amounts are the same two persons and payment in either case is ultimately referable to the land held by the tenant and cannot be dissociated from it. Evidently but for his connection with the land the tenant would make neither of these payments.

A reference to some of the important provisions of the Tenancy Acts which are administered in this province is sufficient to show that even though interest may not be included within the definition of rent it is treated as part of rent for all practical purposes. This was conceded by Mukherjea, J. in Radhika Mohan Roy Wards Estate when he made the following observations:—

“It cannot be disputed that for certain purposes an arrear of rent has been held to include interest due upon it under section 67, Bengal Tenancy Act, or damages awarded under section 68, Bengal Tenancy Act. [Vide Bengal Tenancy Act section 161(c)] and for the entire arrears including interest the tenure or holding itself may be sold. Then again in computing the amount claimed in a rent suit for purposes of an appeal under section 153, Bengal Tenancy Act, the interest or statutory damages claimed by the landlord might be taken into account: vide the observation of Sir George Rankin in Tarini Charan's case”

In the Bihar Tenancy Act rent is said to mean whatever is lawfully payable or deliverable in money or kind by a tenant to his landlord on account of the use or occupation of the land held by the tenant. Then follow these words:—

“In sections 53 to 63, both inclusive, sections 72 to 75, both inclusive. Chapter XIV and Schedule III of this Act “rent” includes also money recoverable under any enactment for the time being in force as if it was rent.”

Again in the Chota Nagpur Tenancy Act which is administered within the Chota Nagpur. Division of this province the definition of rent is wide enough to include anything which is recoverable under any enactment for the time being in force as if it was rent. Even assuming that the definition of rent as given in these Acts does not include interest, there are a number of provisions in both these Acts to show that once interest has accrued, if becomes part, of rent and is recoverable as if it was rent. The matter, however, need not be pursued because it must be conceded that for the purpose of construing the Income-tax Act we are not to draw upon the definition of rent in any of the Tenancy Acts but upon the accepted sense in which that term is used. The Oxford Dictionary defines rent as—

“The return or payment made by a tenant to the owner or landlord, at certain specified or customary times; for the use of lands or houses;”

‘Revenue’ is defined in Wharton's Law Lexicon as—

“Income, annual profit received from land or other funds.”

In Province Of Bihar v. Maharaja Pratap Udai Nath Sahi Deo* it was pointed out that the word ‘revenue’ as used in section 2(1)(a) of the Income-tax Act has the same meaning as income and it was not seriously disputed before us that is the meaning which must be given to that expression in deciding whether interest is taxable under the Income-tax Act or not. In fact both the parties before us have argued the case on the footing that interest is income and the whole controversy has turned on the question as to whether it is income derived from land. On this subject, however, I have said enough to show that I prefer the broader and more logical view which has been expressed in Sri Sri Ramchandra Dev's case.

In that case it was pointed out that the Income-tax authorities had always conceded in the past that interest on arrears of rent was not taxable. It appears that the Income-tax Manuals compiled from time to time in the course of nearly half a century extending from 1890 to 1940 have contained an express note to this effect and the Income-tax Act has been administered throughout the period upon that basis.

In this connection Mr. P.R Das, Counsel for the assessee strongly relies upon the following passage in the speech delivered by Lord Macnaghten in Pemsel's case.

“I cannot help reminding your Lordships in conclusion, that the Income-tax Act is not a statute which was passed once for all. It has expired, and been revived, and re-enacted over and over again; every revival and re-enactment is a new Act. It is impossible to suppose that on every occasion the Legislature can have been ignorant of the manner in which the tax was being administered by a department of the State under the guidance of their legal advisers especially when the practice was fully laid before Parliament in the correspondence to which I have referred (“Charities”, 1865).

It seems to me that an argument in favour of the respondent might have been founded on this view of the case. The point of course is not that a continuous practice following the legislation interprets the mind of the Legislature, but that when you find legislation following a continuous practice and repeating the very words on which that practice was founded, it may perhaps fairly be inferred that the Legislature in re-enacting the statute intended those words to be understood in their received meaning. And perhaps it might be argued that the inference grows stronger with each successive re-enactment.”

Though Lord Macnaghten did not ultimately base the judgment of the case he was dealing with upon this principle, yet the principle has been reiterated by eminent Judges on a number of occasions and it cannot be entirely overlooked. It was relied on by Sir Richard Garth in Burah's case and his view was approved by the Privy Council when the matter went before them. Also the following observations made by Sir Abdur Rahim in Board of Revenue, Madras v. Ramanadhan Chetty, which was a case under the Income-tax Act, are on the same lines.

“If we look at the history of this enactment the case sought to be made on behalf of the Crown appears to be still more untenable. The provisions of Act VII of 1918, so far as the present question is concerned, is practically in the same words as that of the Income-tax Act of 1886. There the word “income” used in the Act is defined as “income and profits accruing and arising or received in British India” and the present Act says that it shall apply to “all income if it accrues or arises or is received in British India”. Whether there is any difference intended at all between the phrase “accrues and arises” and the phrase “accrues or arises”, it could not reasonably be said that there has been any such change as to affect the question we are dealing with. Act VI. of 1886 was in force for more than thirty years before the present Income-tax Act was enacted, and the Advocate-General himself has informed us that at least before 1915 or 1916 when he was consulted with respect to certain cases of a nature similar to this, the general practice of the Revenue Department was not to assess income of businesses carried on outside British India but the proprietor or proprietors of which resided in British India. We are justified in assuming that the legislature was aware of this practice, and if with that knowledge they repeated in the new enactment the same words on which the practice of the Government was founded, it gives rise to the presumption that they did not want to assess such incomes. If the legislature intended to tax these incomes and it would have been a very substantial source of public revenue they could have easily said, as in the English Statute, that income accruing to a person in British India from any business wherever carried on is liable to be assessed.”

The position therefore is this that for nearly half a century the Income-tax department acting upon legal advice has proceeded on the footing that interest on rent from land is to be treated as agricultural-income and though the Income-tax Act has been revived and re-enacted from time to time this view was never taken exception to by the legislature. Would it in these circumstances be unreasonable to infer from this that the expression ‘rent’ or ‘revenue’ derived from land was used in the Act in a wide sense so as to cover interest on rent? The matter, however, need not be pursued because even apart from the principle enunciated in the cases to which I have referred my independent view is that interest upon rent is agricultural-income and exempt from taxation.

In my opinion, therefore, the question referred to us should be answered in the affirmative. The assessee will be entitled to the costs of this reference. Hearing fee Rs. 250. The Income-tax Tribunal will pay the amount of fees deposited with them to the assessee.

Manohar Lall, J.:— I have had the advantage of reading the judgment prepared by my lord, the Chief Justice. I entirely agree with the reasons and the conclusions arrived at by my lord, and it is unnecessary for me to express same conclusions in words of my own. I only desire to observe that in the case of Ramchandra, Dev, I never adopted the view taken by the Calcutta High Court in Radhika Mohan Roy Wards Estate that interest on rent is not agricultural-income. I followed that case only in so far as it decided that interest was not rent but distinctly pointed cut that in Bihar interest on rent may be revenue derived from land.

Beevor, J.:— The question referred to us is

“Whether interest on arrears of rent is part of the assessee's agricultural-income within the meaning of section 2(1)(a) of the Indian Income-tax Act?”

There is no dispute that the rent in question is agricultural income and it is not contended that the interest in question is not income.

section 2(1)(a) of the Indian Income-tax Act includes in the definition of 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 rent assessed, and collected by officers of the Crown as such”.

Substantially the same question as that now before us was answered in the affirmative by a Division Bench of this Court in Ramchandra Dev v. Commissioner of Income-tax, Bihar and Orissa. The judgment in that case was delivered by Harries, C.J who gave three reasons for his conclusion: first that the income-tax authorities had always conceded that interest on arrears of rent payable by a raiyat is agricultural income and not taxable; secondly-that the decision of a Special Bench of the Madras High Court in Rajah Inugenti Rajagopala Venkata Narasimha Rayanim Bahadur Varu v. The Commissioner of Income-tax, Madras supported this view though the point was not directly decided by that Special Bench; and thirdly that he saw no reason why interest on mustajiri rent should be regarded differently from interest on rent payable by a raiyat. In that case there was no discussion of the question whether interest was rent, and the entire judgment proceeded on the assumption that interest on arrears of rent could not be regarded as rent. This is shown by the last sentence in the first paragraph on page 468 of the report: “Even assuming that interest on arrears of rent cannot be regarded as rent under the Bengal Tenancy Act, yet that does not decide the question whether it is agricultural-income as that term is defined in the Indian Income-tax Act.” The statement appearing later in the judgment at page 469 “no distinction can be drawn between the two” clearly refers not to any distinction between interest and rent, but between interest on mustajiri rent and interest on raiyati rent.

The Calcutta High Court, however, in Radhika Mohan Roy Wards Estate held that interest on arrears of rent payable under section 67, Bengal Tenancy Act, is not agricultural income and, therefore, assessable to income-tax. Separate judgments were delivered by Derbyshire, C.J and B.K Mukherjea, J. The former held that interest is not rent, that the cause of action in respect of rent arises out of contract while the interest payable in respect of arrears arises out of a provision of law which imposes a penalty upon the tenant for non-payment of his rent. Mukherjea, J. agreed that interest was not rent. He pointed out that the source of the income from rent is the landlord's superior interest in the agricultural-land. In dealing with interest he stated as follows:—

“The interest, however, which the tenant pays under section 67 is a sort of statutory recompense which is allowed to the landlord for being deprived of the use of the money which is payable as rent by the tenant. The landlord does not derive the income by reason of his having parted with any part of his interest in the land, but because of default on the part of the tenant in paying the rent within the fixed period, which he could have invested in some profitable manner. The yield is not of the landlord's proprietary right in the land but of the debt which comes into existence as soon as there is default on the part of the tenant to pay the rent at the stipulated dates.”

In Kumar Deba Prasad Garga v. Commissioner of Income-tax, Bengali, the Calcutta High Court followed the previous decision. In this case no further reasons for holding that such interest was not agricultural income were given, but reliance was placed on the fact that a Full Bench of this Court in Ram Ran Vijay Prasad Singh had followed the above decision in Radhika Mohan Roy Wards Estate. A reference to the judgment of Harries, C.J at page 507 of the report in that Full Bench decision shows that the case in Radhika Mohan Roy Wards Estate was relied on for the proposition that interest is not rent and not for the proposition that such interest is not agricultural-income.

The decision in Radhika Mohan Roy Wards Estate has also been followed by the Madras High Court in Al. Vr. V.P Pethaperulal Chettiar v. Commissioner of Income-tax, Madras. It was there held that such interest is not rent and that its source is the tenant's default in the performance of his contract. Dealing with the decisions of this Court it was stated with reference to the case in Radhika Mohan Roy Wards Estate:

“The Patna High Court followed this decision in Maharaja Bahadur Ram Ran Vijay Prasad Singh v. The Province of Bihar although in an earlier case, Sri Ramachandra Dev v. The Commissioner of Income-tax, Bihar and Orissa, it expressed a contrary opinion”.

I have already shown the limited extent to which this Court relied on the case in Radhika Mohan Roy Wards Estate and have pointed out that there is no conflict between the two decisions of this Court on the question whether interest is rent.

I must confess that I find great difficulty in recognising a default as a separate source of income independent of the obligation in respect of which the default is made, and independent of the contract or other transaction which created such obligation. In the course of argument before us learned Standing Counsel for the Income-fax Department was asked

“What is the landlord's cause of action in a suit for rent”,

His reply was

“the tenant's default in payment”

and I do not see that he could have answered otherwise. I find it difficult to believe that an act which forms the cause of action for a suit to realise one kind of income can itself be the source of another kind of income.

The word “source” in this connection appears to be taken in the judgment of the Judicial Committee of the Privy Council in the Commissioner of Income-tax, Bengal v. Shaw, Wallace and Company, delivered by Sir George Lowndes wherein he stated with reference to the Indian Income-tax Act:—

“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.”

I think it is difficult to recognise a default in payment as coming within this description.

Under the Indian Income-tax Act it is income which is taxed and not the person (vide section 6 of the Act and the question put by Lord Macmillan during the argument in Commissioner of Income-tax, Bihar and Orissa v. Maharajadhiraj of Darbhanga and the answer given by Dunne K.C, Even in the case of income from property it appears that some transaction between two parties is essential before any income is created. Even the owner of a gold mine obtains no income from it unless he disposes of the gold therefrom to others.

It is probably futile to search for an exhaustive definition of “source” in connection with income. It appears to me, however, that in tracing the source of any item of income it is essential to have regard to the nexus which unites the recipient with the opposite-party in the business or transaction whereby that income is created. This does not necessarily imply that such nexus alone will infallibly indicate the source though in practice I think that in many cases the elucidation of such nexus will quickly disclose the connection or link of connection between a given item of income and a particular source. Thus in Shaw Wallace's case a payment made as solatium for cessation of business was held not to be income arising from business. This would clearly follow from the fact that the nexus between the recipient and the payer of the solatium was not, in the transaction which produced the solatium, the relationship of businessman and client, though they had stood in such relationship to each other in previous transactions.

As it is income and not the person that is taxed, the character of the recipient is irrelevant, as was held by the Judicial Committee of the Privy Council in Commissioner of Income-tax, Bihar and Orissa v. Maharajadhiraj of Darbhanga. In that case the respondent was, by means of a transaction embodied in two indentures, placed in possession of certain properties and was solely entitled to sue for rents which were admittedly within the description given in section 2(1)(a) of the Indian Income-tax Act. In the judgment delivered by Lord Macmillan at the foot of page 221 of the report it is stated: “The appellant concedes that if the respondent were not a money-lender and if the transaction in virtue of which he receives the rents had not been a transaction entered into in the course of his money-lending business, he would have been entitled to invoke the statutory exemption of agricultural income; but the appellant submits that the fact that the respondent carries on a money-lending business and receives the rents as the result of a transaction entered into in the course of that business makes all the difference.” The appellant's contention failed in that case, which, therefore, shows that the transaction to be considered in determining the source of any item of income is the transaction which creates that income and not any transaction which merely decides which of one or more persons shall receive the income.

In Commissioner of Income-tax v. Captain Maharaj Kumar Gopal Saran Narayan Singh a Full Bench of this Court had to consider a transaction in which the assessee executed a deed whereby he transferred his whole interest in his estate in favour of B, the consideration for the transfer being the payment by the transferee of the assessee's debts amounting to a considerable sum, the further payment of the expenses of his daughter's marriage and an annual payment of Rs. 2,40,000 during the life of the assessee. After holding that the annuity payable to the assessee was income and not capital, the Full Bench held that in the absence of any provision in the deed that the annual payment was to be made out of the income of the estate the income was not “agricultural” within the meaning of section 4 of the Indian Income-tax Act, 1922. It was pointed out in the judgment of Courtney Terrell, C.J, page 678, that although there were terms to the effect that the assessee should have a charge on the property transferred, “the contract of this collateral security does not affect the absolute right of the assessee to receive the annuity whether the land transferred does or does not produce the annual sum sufficiently to enable the lady to pay it”. Similar remarks were made by Khaja Mohammad Noor and Varma, JJ. in their judgments at the end of page 679 and at page 688, respectively. It is clear, therefore, that in that case the transaction between the assessee and his transferee actually created the income which it was sought to tax and did not merely determine by whom such income should be received. The decision of the Full Bench was confirmed by the Privy Council on appeal.

The recent decision of the Judicial Committee of the Privy Council in Habibvlla v. Commissioner of Income-tax, Bengal further illustrates this point. In that case the appellant by the terms of a scheme of administration received a fixed monthly remuneration as mutwalli of a wakf estate, the income of which was agricultural-income. His remuneration, the amount of which did not depend either on the nature of the properties or the assets which constituted the wakf estate, or on the amount of the income derived therefrom by the estate, was held not to be agricultural-income within the meaning of section 2, sub-clause (1) of the Indian Income-tax Act. Here again it is clear that the transaction between the appellant mutwalli and the other parties to the scheme of administration actually created the income which it was sought to tax and did not merely decide by whom that income should be received.

In order that any income may be agricultural-income within the meaning of section 2(1) of the Indian Income-tax Act I think it is clear that

“land which is used for agricultural purposes and is either assessed to land revenue in British India or subject to a local rent assessed and collected by officers of the Crown as such”

or some interest therein must be essentially involved in the transaction or business by which such income is created. It is not sufficient that such land should be involved collaterally either as consideration or security for the income so created [vide Commissioner of Income-tax v. Captain Maharaj Kumar Gopal Saran Narayan Singh]. Subject to these exceptions or explanations it seems to me that if the existence of an interest in such land as is described in section 2(1)(a) of the Indian Income-tax Act is inherent in the transaction by which the income is created, then the income so created is agricultural income within the meaning of the Indian Income-tax Act.

I note that the proposition just stated does not directly answer the question which was left open by their Lordships of the Judicial Committee in Habibulla v. Commissioner of Income-tax, Bengal, namely, the question whether the mutwalli's remuneration would have been agricultural-income had it been by way of fractional part of the income of the wakf estate or by percentage as commission, though my proposition may suggest the way in which this question may be solved should it arise for decision.

Before returning to the direct consideration of the question before us, I wish to consider a little more closely the reasons given by their Lordships of the Calcutta High Court in Radhika Mohan Roy Wards Estate for holding that interest on arrears of agricultural rent is not agricultural-income. The fact that section 67 of the Bengal Tenancy Act, like section 67 of the Bihar Tenancy Act and section 58 of the Chota Nagpur Tenancy Act, gives statutory right to such interest does not, in my opinion, form a valid ground for distinguishing the source of income consisting of such interest from income by way of agricultural-rent. In stating that in the case before him “rent was payable to the landlord by the tenant by virtue of a contract of tenancy of land” Derbyshire, C.J may have been referring to the particular facts of the case before him. It cannot, however, be overlooked that rents payable in these parts for agricultural land are not entirely a matter of contract. By section 24 of the Bengal Tenancy Act as by section 24 of the Bihar Tenancy Act and section 24 of the Chota Nagpur Tenancy Act an occupancy raiyat shall pay rent for his holding at a fair and equitable rate; and these statutory provisions cannot be overridden by a contract between the parties. Even, however, if the rent of the tenant is taken as fixed by the contract, it seems to me entirely unnecessary to regard the statutory provision for interest on such rent as being in the words of Mukherjea, J., “a sort of statutory recompense which is allowed to the landlord for being deprived of the use of the money which is payable as rent by the tenant”. Rents are payable either by contract or by law on fixed dates. Why then should the interest allowed by the provision of the statute not be treated as damages for breach of the contract between landlord and tenant, the measure of which has been fixed by statute? In my opinion it is clear that the source of income derived by way of damages for breach of contract is the same as any income obtained by the contract itself.

Applying the principles already stated, I consider that whether income derived by way of interest on agricultural rent is considered as damages for breach of the contract between landlord and tenant or not, such income was clearly created by the same transaction, whether contract or not, by which the tenancy itself came into existence. The existence of an interest in agricultural land as defined in section 2(1)(a) of the Indian Income-tax Act was inherent in the relationship of the parties created by that, contract or transaction; and, therefore, the income derived by way of such interest is agricultural income as defined in that section the question referred to us should, therefore, be answered in the affirmative.

K.D

Reference answered.