Judgement Appeal (No. 15 of 1948) from a judgment of the High Court (December 10, 1945) delivered on a reference made to it under s. 66, sub-s. 1, of the Indian Income-tax Act, 1922 (as amended to Act VII of 1939). The following facts and statutory provisions are taken from the judgment of the Judicial Committee. The appellants were the assessees. The assessment was made with respect to the year 1942— 1943, Law Rep. 76 Ind. App. 170 ( 1948- 1949) Rajah Ravu Venkata Mahi-Pathi V. C ommissioner of Income Tax 90 the previous year being 1941— 1942. The question arising for determination in this appeal was whether the appellants were exempt from taxation in respect of a part of their income, amounting to Rs. 7,612, derived from the sale of wood, bark, leaves, usufruct of trees, etc., on the ground that (a) the income was derived from a permanently settled estate, and (b) the income was agricultural income within the meaning of s. 2, sub-s. 1, of the Indian Income-tax Act, 1922. The appellants were the sons of the Maharajah of Pithapuram, the proprietor of the zamindary of Pithapur, which was permanently settled under the Madras Permanent Settlement Regulation. A part of the permanently settled estate known as Pulivela was settled on the appellants by their father. That estate included forest and non-forest areas of spontaneous growth from which the appellants derived income by the sale of wood, bark, leaves, minor forest produce, usufruct of trees, including Jadivala in Jiarayati lands, and levy of licence fees. They also derived income from the sale of proceeds of trees which were also of spontaneous growth, in non-forest areas. It was admitted that the trees in the forest and non-forest areas had grown wild, and that agricultural operations were not carried on in any of the areas from which the income in question was derived. For the year of account 1941- 1942 the income derived by the appellants from the sources mentioned above amounted to Rs. 7,612, and the appellants were taxed on that sum for the year 1942- 1943. The material part of the assessment order made by the income tax officer was as follows — "It is stated that the income from forests as well as " miscellaneous income from non-forest areas referred to above " are in the nature of agricultural income and not liable to " be taxed. The material part of the assessment order made by the income tax officer was as follows — "It is stated that the income from forests as well as " miscellaneous income from non-forest areas referred to above " are in the nature of agricultural income and not liable to " be taxed. It is however admitted that the entire income “from various sources detailed above relates to trees of " spontaneous growth in forests as well as in non-forest areas, " that no trees are grown by the assessees and no agricultural " operations are carried on in any of these areas. The income “from these sources does not then fall under agricultural " income as defined in s. 2, sub-s. 1 (a) and (b) (i), of the " Income-tax Act and is not exempt from tax. The total " income of Rs. 7,612-1-5 will therefore be taxed/ The above order was objected to before the Appellate Assistant Commissioner on two grounds —(1.) that as the government had fixed the public assessment for ever under the Madras Permanent Settlement Regulation, any further taxation would be illegal; and (2.) that the income sought to be taxed was agricultural income within the meaning of s. 2, sub-s. 1, of the Indian Income-tax Act and exempt from the levy of the tax by virtue of s. 4, sub-s. 3 (viii). Both contentions were rejected by the Appellate Assistant Commis- sioner, and also on appeal from his order by the Income Tax Appellate Tribunal. At the request of the appellants the Tribunal referred two questions to the High Court. These were " (r.) Whether the imposition of income-tax in respect “of income derived from a permanently settled estate would "be a breach of Regulation XXV of 1802 relating to” permanent settlement. (2.) Whether the income of Rs. 7,612 "derived from the sale of wood, etc. (as detailed herein above)” is exempt under s. 4, sub-s. 3 (viii), read with s. 2, sub-s. 1, " of the Indian Income-tax Act, 1922.” Both those questions were answered against the appellants by the High Court (Leach C.J. and Patanjali Sastri J.). The following were the relevant provisions of the Madras Permanent Settlement Regulation XXV of 1802, and of the Indian Income-tax Act bearing on the question. Madras Permanent Settlement Regulation XXV of 1802. The following were the relevant provisions of the Madras Permanent Settlement Regulation XXV of 1802, and of the Indian Income-tax Act bearing on the question. Madras Permanent Settlement Regulation XXV of 1802. That regulation was passed “for declaring the proprietary " right of lands to be vested in individual persons, and for " defining the rights of such persons, under a permanent " assessment of the land-revenue in the British territories " subject to the Presidency of Fort St. George." Law Rep. 76 Ind. App. 170 ( 1948- 1949) Rajah Ravu Venkata Mahi-Pathi V. C ommissioner of Income Tax 91 Articles 1, 2 and 4 of that Regulation were as follows— Article 1. For the reasons stated in it, art. 1 said " „ . . . the British Government .... has resolved " .... to grant to zamindars and other landholders, " their heirs and successors, a permanent property in their " land in all time to come, and to fix for ever a moderate " assessment of public revenue on such lands, the amount " of which shall never be liable to be increased under any " circumstances.” Article 2. "In conformity to these principles, an assessment shall” be fixed on all lands liable to pay revenue to the Government; and in consequence of such assessment, the " proprietary right of the soil shall become vested in the " zamindars or other proprietors of land, and in their heirs “and lawful successors for ever." Article 4. " The Government having reserved to itself the entire " exercise of its discretion in continuing or abolishing, " temporarily or permanently, the articles of revenue " included, according to the custom and practice of the " country, under the several heads of salt and saltpetre—of "the sayar, or duties by sea or land—of the abkari or tax " on the sale of spirituous liquors and intoxicating drugs— " of the excise on articles of consumption—of all taxes " personal and professional, as well as those derived from " markets, fairs or bazaars—of lakhiraj lands (or lands "exempt from the payment of public revenue), and of all " other lands paying only favourable quit-rents—the " permanent assessment of the land-tax shall be made " exclusively of the said articles now recited." The Indian Income-tax Act (Act XI of 1922). The relevant provisions of the Indian Income-tax Act were as follows— “Section 2. The relevant provisions of the Indian Income-tax Act were as follows— “Section 2. Definitions—In this Act, unless there is anything repugnant in the subject or context,— " (1.) 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 British India or subject to a local rate assessed and collected by officers of the Crown as such ; “(b) any income derived from such land by— " (i) agriculture, * * * * " “ Section 4.—(3.) Any income, profits or gains falling " within the following classes shall not be included in the " total income of the person receiving them— Law Rep. 76 Ind. App. 170 ( 1948- 1949) Rajah Ravu Venkata Mahi-Pathi V. C ommissioner of Income Tax " (i) to (vii)------- " (viii) Agricultural income “Section 6.—Heads of income chargeable to income-tax.— " Save as otherwise provided by this Act, the following " heads of income, profits, and gains, shall be chargeable " to income-tax in the manner hereinafter appearing, " namely — " (i) Salaries. “(ii) Interest on securities.” (iii) Income from property. “(iv) Profits and gains of business, profession or vocation.” (v) Income from other sources." “Section 12.—Other sources.—(1.) The tax shall be payable "by an assessee under the head other sources in respect “of income, profits and gains of every kind " which may be included in his total income (if not included under any of the preceding heads). 1949- April 26, 27. Cyril King K.C. and Jayakar for the appellants. In view of the decision of the Board in Raja Mustafa Ali Khan, through Specil Manager, Court of Wards, Utraula District Gonda v. Commissioner of Income Tax (( 1948) L. R. 75 I. A. 268.) it cannot now be contended that the income in question was agricultural income, so that point goes out, and leaves only the second matter. It is submitted that the Rs. 7,612 are not taxable to Indian income-tax because the terms of the Settlement of 1802 were that the exactions which the Government could make in respect of profits of this sort were exhaustively fixed at the amount of the jama, and in the face of the specific exemption the general words of charge in s. 6 of the Income-tax Act, 1922, are not sufficient to overcome that express provision. There must be something more than a mere general charge to overcome an exemption. It is common ground that the lands 4|om which the disputed income arose were part of the lands included in the settlement, and observing that the income in question, was, so to speak, derived directly from natural fruits of the earth, and not by any process of manufacture, the jama fixed at the time of the settlement is, it is submitted, one which covers profits derived by merely gathering the fruits of the land. The appellants, however, are today met by the decision of the Board in Probhat Chandra Barua v. King-Emperor (( 1930) L. R. 57 I. A. 228.) which, ex; facie, is against them, but when that case is examined it would appear that items of income there in question were outside the jama which had been fixed, and the case may be distinguished. [Tucker K.C. for the respondent, intervened to point out that it appeared from the case stated by the Commissioner of Income Tax, Bengal, for the opinion of the High Court in that case that some of the items were admittedly taken into account in assessing the jama.] Cyril King K.C. The profits in the present case would have been notionally taken into account in fixing the jama. I have not to satisfy the Board that the exact source of the income was quantified and included in the jama. If it is established that the land was included in the settlement, and that all the things on land are covered by the assessment of the jama, it is then of critical importance to show that the profits sought to be taxed do come within the jama. It was held that they did in Chief Commissioner of Income Tax v. Zamindar of Singampatti (( 1922) I. L. R. 45 M. 518.) and in Maharajadhiraj of Darbhanga v. Commissioner of Income Tax (( 1924) I. L. R. 3 Pat. 470.). [Reference was also made to Emperor v. Indu Bhusan Sarkar (( 1926) I. L. R. 53 C. 524.).] The Zamindar of Singampattis case (1) was not expressly overruled in Probhat Chandra Barua v. King-Emperor (L. R. 57 I. A. 228.), though it was cited to the Board, and that decision of the Board is Law Rep. 76 Ind. App. 470.). [Reference was also made to Emperor v. Indu Bhusan Sarkar (( 1926) I. L. R. 53 C. 524.).] The Zamindar of Singampattis case (1) was not expressly overruled in Probhat Chandra Barua v. King-Emperor (L. R. 57 I. A. 228.), though it was cited to the Board, and that decision of the Board is Law Rep. 76 Ind. App. 170 ( 1948- 1949) Rajah Ravu Venkata Mahi-Pathi V. C ommissioner of Income Tax 93 only authority on its facts. In that case the Board do not seem to have stressed the point of what is the fundamental conception of what is included in the jama, and they did not deal with the three authorities which were cited in the forefront of the argument for the appellant. This income from natural sources is not liable to tax. Tucker K.C. and Subba Row for the respondent, were not called on. June 14. The judgment of their Lordships was delivered by SIR MADHAVAN NAIR, who stated the facts set out above and continued In a recent decision of the Board, namely, Raja Mustafa Ali Khan, through Special Manager, Court of Wards, Utraula, District Gonda v. Commissioner of Income Tax, United Provinces, Ajmer and Ajmer Merwara (L. R. 75 I. A. 268.) it was held that " Income derived from the sale of forest trees growing " on land naturally and without the intervention of human " agency, even if the land is assessed to land revenue, is not " agricultural income within the meaning of s. 2, sub-s. I (a) “or (&), of the Indian Income-tax Act, 1922, and is not “therefore exempt from income tax under s. 4, sub-s. 3 (viii), “of the Act....." In view of this decision, Mr. Cyril King, learned counsel for the appellants, stated frankly that he was not prepared to argue that the income in the present case is exempt from taxation on the ground that it is “agricultural " income.” Therefore, their Lordships have to consider in this appeal only one question, namely, whether the income should be held to be exempt from taxation under the Indian Income-tax Act on the ground that it arose from a permanently settled estate which must be presumed to have been exempted from all taxation, beyond the peishkush (jama) payable to government, fixed under Regulation XXV of 1802. The argument of the learned counsel proceeded on these lines The forest and the non-forest areas from which the income is derived have all been included in the zamin lands on which the zamindar has to pay peishkush, and as such peishkush has been fixed for ever no increase in the peishkush can ever be made under any circumstances, as the tax levied on the income from the produce of the forests will in effect amount to an addition to the peishkush and will thus be contrary to the terms of the sanad. It is admitted that the forest and non-forest areas were all included in the zamindary at the time of the settlement. In support of the above argument reliance was placed on Chief Commissioner of Income Tax, Madras v. Zamindar of Singampatti (I. L. R. 45 M. 518.) and Maharajadhiraj of Darbhanga v. Commissioner of Income Tax (I. L. R. 3 Pat. 470.), both of which support the appellants. It is not necessary to discuss these decisions, or to consider further the arguments of the learned counsel, for it was decided by the Board in Probhat Chandra Barua v. King-Emperor (L. R. 57 I. A. 228.)—a case under the Bengal Permanent Settlement Regulation—that " While the Bengal regulations " contain assurances against any claim to an increase of the " jama, based on an increase of the zamindari income, they " contain no promise that a zamindar shall in respect of the " income which he derives from his zamindari be exempt " from liability to any future general scheme of property ‘taxation, or that the income of a zamindari shall not be " subjected with other incomes to any future general taxation " of incomes. “Under the Indian Income-tax Act, 1922, s. 6 (vi) (other " sources), and s. 12, sub-s. 1, the zamindar of a permanently “settled estate is assessable to tax under the Act in respect” of income, profits, and gains derived from his zamindari, “subject to the exemptions in s. 4, sub-s. 3; the assessment “should be computed after making proper allowance, under " s. 12, sub-s. 2, in respect of the jama assessed and paid.” Ten items were mentioned in that case, those being " (i) Jalkar or rents received from fisheries, (ii) Ground rent " from land used for potteries, (iii) Ground rent from land " used as brick fields, (iv) Fees received from the tying up " of boats against the assessees land, (v) Fees received from " land used for storing purchases of crops (paliali). (vi) Fees " received from cart-stands, Law Rep. 76 Ind. App. 170 ( 1948- 1949) Rajah Ravu Venkata Mahi-Pathi V. C ommissioner of Income Tax 94 (vii) Punyaha nazar or nazar " paid by tenants of agricultural holdings at the beginning " of the zamindari year, (viii) Nazar for petitions presented " to the zamindar, dealing with questions of succession, " settlement, and partition, (ix) Ground rent for permanent " shops at hats and bazaars, (x) Stall fees paid by temporary " (daily) sellers at hats and bazaars." The Bengal Permanent Settlement Regulation is Bengal Regulation I of 1793. Though the two regulations are differently worded it was conceded by the learned counsel, and their Lordships think rightly, that the language of both the regulations is to the same effect. The decision of the Board was sought to be distinguished by the learned counsel on the ground that the items mentioned in the case before the Board had been excluded from the assessment of the jama at the time of the permanent settlement. If that was so, no doubt the decision would be inapplicable to the present case. As pointed out by Mr. Tucker, the learned counsel for the respondent, from the "case" stated by the Commissioner of Income Tax, Bengal, for the opinion of the High Court (see Vol. II, I.T.C. 392 at 394), it clearly appears that some of the items were admittedly taken into account in assessing the jama. As pointed out by Mr. Tucker, the learned counsel for the respondent, from the "case" stated by the Commissioner of Income Tax, Bengal, for the opinion of the High Court (see Vol. II, I.T.C. 392 at 394), it clearly appears that some of the items were admittedly taken into account in assessing the jama. It appears from it that some of the items " such as ‘Jalkar were admittedly " taken into account in assessing the jama at the time of the " Permanent Settlement; some were not, such as the abwabs. “The cases of some of the remaining items are not free from " doubt . . " In the circumstances, the learned counsel for the appellants stated that it was not possible for him to press his contention based on the Permanent Settlement Regulation any further, but he pointed out that the decision in Chief Commissioner of Income Tax, Madras v. Zamindar of Singampatti (1), on which he relied strongly, has not been referred to in the judgment of the Board, though as will appear from the arguments reference had been made to it. Their Lordships have no doubt that though the case is not mentioned by name it must have been considered by the Board. In view of the decision in Probhat Chandra Barua v. King-Emperor (L. R. 57 I. A. 228.) it must now be held that the decisions in Chief Commissioner of Income Tax, Madras v. Zamindar of Singampatti (I. L. R. 45 M. 518.) and Maharajadhiraj of Darbhanga v. Commissioner of Income Tax (I. L. R. 3 Pat. 470.) are no longer good law. Following the decision in Probhat Chandra Barua v. King-Emperor (L. R. 57 I. A. 228.) their Lordships hold that the decision of the High Court on the questions referred to it is right ; and that the tax was rightly levied on the amount of Rs. 7,612 in the present case. For the above reasons, their Lordships will humbly advise His Majesty that this appeal should be dismissed with costs. PRACTICE NOTE. Appeal to Privy Council—Contempt of court—Criminal matter—Federal Court (Enlargement of Jurisdiction) Act (I. of 1948), 5. 1. 7,612 in the present case. For the above reasons, their Lordships will humbly advise His Majesty that this appeal should be dismissed with costs. PRACTICE NOTE. Appeal to Privy Council—Contempt of court—Criminal matter—Federal Court (Enlargement of Jurisdiction) Act (I. of 1948), 5. 1. On a petition for special leave to appeal from a judgment of the High Court at Patna holding the petitioner, a district magistrate, guilty of contempt of court for having failed to give immediate effect to an order of that High Court, it was argued, on the basis of In re Pollard ( 1868) L. R. 2 P. C. 106, OShea v. OShea and Parnell ( 1890) 15 P. D. 59, Scott v. Scott [ 1913] A. C. 417, and Parashuram Detaram Shamdasani v. King-Emperor ( 1945) L. R. 72 I. A. 189, 195, that a contempt of court of the nature alleged was a criminal matter and that therefore the case was not affected by the Federal Court (Enlargement of Jurisdiction) Act (I. of 1948), which only applied to proceedings in civil cases. Special leave to appeal was granted.