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[1927] 2 ITC 363 (MAD.

)
HIGH COURT OF MADRAS
Linga Reddi
v.
Commissioner of Income-tax
SIR MURRAY COUTTS TROTTER, KT., CJ. AND WALLACE AND BEASLEY, JJ.
REFERRED CASE NO. 2 OF 1926
APRIL 27, 1927

Section 2(1A) of the Income-tax Act, 1961 [Corresponding to section 2(1) of the Indian Income-tax
Act, 1922] Agricultural income Whether agricultural purposes could be said to cover process of
flooding land occupied by letting in sea water and then extracting sodium chloride from it by
elimination of other chemical constituents Held, no Whether, therefore, profit derived by
assessee from manufacture of salt on land of which he was lessee, was not revenue derived by
land used for agricultural purposes and, as such, was taxable Held, yes
FACTS
The assessee was a licensee of a salt factory. From the manufacture of salt on the land of which he was the
lessee he made a profit which was assessed to income-tax. He contended that said profit was revenue derived
from the land which was used for agricultural purposes and, therefore, not taxable.
On reference :
HELD
It would be a gross misnomer to hold that agricultural purposes could be held to cover the process of flooding
the land occupied by letting in the sea water and then extracting the sodium chloride from it by eliminating
the other chemical constituents. The assessment was right and must be confirmed.
Note : The case was decided against the assessee.
T.V. Venkatarama for the Assessee.
M.Patanjali Sastri for the Crown.
JUDGMENT
The Chief Justice In my opinion this case is unarguable. The assessee was a licensee of the Krishnapatam
Salt Factory in the Nellore District. From the manufacture of salt on the land of which he was the lessee he
made a profit of some Rs. 7,000 which has been assessed to income-tax. He now contends that this is
agricultural income, that it is revenue derived from the land which is used for agricultural purposes and
therefore not taxable. To my mind it would be a gross misnomer to hold that agricultural purposes could be
held to cover the process of flooding the land occupied by letting in the sea water and then extracting the
sodium chloride from it by eliminating the other chemical constituents. In my opinion the assessment was right
and must be confirmed. The answer to the specific question referred is in the negative. The assessee will pay
the costs of this reference. Counsel's fee Rs. 250.
Wallace, J.I agree.
wBeasley. J.I agree.