Judgment :- 1. The Agricultural Income tax Appellate Tribunal has made this reference under S.60 (1) of the Agricultural Income-tax Act, 1950 (hereinafter referred to as the Act). The year of assessment is 1962-63 and the question referred reads thus: "Whether on the facts and in the circumstances of the case, the managing agency commission on rubber replanting subsidy is allowable expenditure." During the relevant accounting period pertaining to the year of assessment, 1962-63, a sum of Rs. 50,388/-has been received as rubber replanting subsidy by the assessee company. The assessee company is engaged in the business of running a rubber estate. The company claimed 9 per cent of the amount of Rs. 50,388/-as an item of expenditure which they urged, should be deducted in computing its income for the purpose of taxation under the Act. This has been negatived. 2. It is not contended before us that this amount can be claimed as a deduction under any provision other than S.5 of the Agricultural Income-tax Act, 1950. The relevant sub-section is sub-section 0) which is in these terms: "Computation of agricultural income: The agricultural income of a person shall be computed after making the following deductions, namely: 0) any expenditure (not being in the nature of capital expenditure or personal expanses of the assessee) laid out or expended, wholly and exclusively for the purpose of deriving the agricultural income;" 3. The deductions allowable under S.5, we think, must relate to deductions from agricultural income earned by the person sought to be assessed. So the question arises as to whether the sum of Rs. 50,388/-received from the Rubber Board by the assessee company as rubber replanting subsidy can be said to be agricultural income. This is as amount paid to the assessee company by virtue of the provisions in the Rubber Act, 1947. A reference to S.9A and 9B as well as S.12 of that Act indicates that these must be payments either from the general fund or from the pool fund as envisaged by that statute. And it also seems to be clear that the bulk of it must have come out of the amounts that have been collected from persons like the assessee company by way of cess as envisaged by S.12 (1) of the Rubber Act, 1947. And it also seems to be clear that the bulk of it must have come out of the amounts that have been collected from persons like the assessee company by way of cess as envisaged by S.12 (1) of the Rubber Act, 1947. Even so it is difficult to treat the amount received from the Rubber Board by the assessee company as agricultural income. Dealing with the question what is agricultural income the Privy Council observed in Commissioner of Income tax v. Raja Bahadur Kamakhaya Narayan Singh reported in (1948) 16 ITR. 325: "The word 'derived' is not a term of art. Its use in the definition indeed demands an enquiry into the genealogy of the product. But the enquiry should stop as soon as the effective source is discovered. In the geneological trees of the interest land indeed appears in the second degree, but the immediate and effective source is rent, which has suffered the accident of nonpayment. And rent is not land within the meaning of the definition." This passage has been quoted with approval by the Supreme Court in Commissioner of Income tax U.P. v. Kumar Trivikram Narain Singh reported in(1965) 57 ITR. 29 and we said following these decisions in Commissioner of Agricultural Income, tax v. K. S. Narayanan Tratan Nambudiripad reported in 1965 KLT. 913: "If the immediate and effective source is not land the income cannot be considered to be agricultural income." 4. We therefore are of the view that the sum of Rs. 50,388 received by the company as rubber replanting subsidy is not agricultural income of the assessee company. In fact it has not been suggested either by the company or by the department that this is agricultural income. Admittedly the company had not included this amount in its return and the amount has not been taxed as such. 5. The deduction claimed is 9 per cent of the sum of Rs. 50,388/-which is admittedly not treated as agricultural income and such an amount we do not think, can be claimed as a deduction under S.5 0) of the Agricultural Income Tax Act, 1950. This should normally dispose of the case but we cannot leave it without referring to the further arguments advanced by counsel on behalf of the assessee company. 6. This centred round the contentions based on S.348 and 349 of the Companies Act, 1956. It was contended that the. This should normally dispose of the case but we cannot leave it without referring to the further arguments advanced by counsel on behalf of the assessee company. 6. This centred round the contentions based on S.348 and 349 of the Companies Act, 1956. It was contended that the. subsidy received by the assessee company is a subsidy that would fall within sub-section (2) of S.349 of the Companies Act, 1956, which states: "In making the computation aforesaid, credit shall be given for the following sums: bounties and subsidies received from any Government, or any public authority constituted or authorised in this behalf, by any Government unless and except in so far as the Central Government otherwise directs." and therefore the Managing Agents will be entitled to claim commission on that account as well. 7. We will assume without deciding that the Rubber Board is a 'public authority' as envisaged by the section. The question still arises as to whether the rubber replanting subsidy received by the assessee company is a 'subsidy' within the meaning of that term in that part of S.349 which we have extracted. We have very serious doubts whether this will be so. A reference to the report of the Company Law Committee seems to indicate that the subsidy in the section can refer only to such subsidies which augment the profits of the company. The relevant paragraph in the report runs thus: (Page 98 of the report) "Item C which refers to bounties or subsidies effects a change in the present practice by including them as part of the profits on which the managing agents' commission can be charged. We consider that receipts in the form of bounties or subsidies should not be ignored in calculating the 'managing agents' commission. If a concern is helped to earn profits by protective duties, and if such profits are treated as part of the normal profits on which the managing agents are entitled to charge commission, we do not see why, when such profits are earned through the receipt of bounties or subsidies, these payments should not be treated as part of the normal profits for the purpose of calculating the managing agents' commission especially when the bounties or subsidies, as we are given to understand, are treated as revenue receipts for purpose of taxation." 8. We do not wish to deal with this matter further as we are of the view that even if the payments by the Rubber Board with which we are concerned are 'subsidies' within the meaning of that term in S.349 of the Companies Act, 1956 the commission payable on that cannot be deducted as an item of expenditure under S.5 f j) of the Act as the subsidy is not agricultural income. 9. We answer the question referred to us in the negative, that is, against the assessee and in favour of the department. There will be no order regarding costs.