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1 preliminary income at the outset it is essential to know the meaning of some important concepts. first of all we must know the meaning of income as income-tax is a tax on income. section 2 (24) of the income-tax act, 1961, gives an inclusive definition of "income". it is by no means comprehensive or exhaustive: (24) "income" includes — (1) profits and gains; (2) dividend; (2)(a) voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes or by an association or institution referred to in clause (21) or clause (23), or by a fund or trust or institution referred to in sub-clause (4) or sub-clause ( 5 ) or by any university or other educational institution referred to in sub-clause (in ad) or sub-clause ( 6 ) or by any hospital or other institution referred to in sub-clause (3 ae) or sub-clause ( 6 a) of clause (23-c) of section 10 or by an electoral trust); explanation - for the purposes of this sub-clause, "trust" includes any other legal obligation; (3) the value of any perquisite or profit in lieu of salary taxable under clauses (2) and (3) of section 17; (a) any special allowance or benefit, other than perquisite included under sub-clause (hi), specifically granted to the assessee to meet expenses wholly, necessarily and exclusively for the performance of the duties of an office or employment of profit; (b) any allowance - granted to the assessee either to meet his personal expenses at the place where the duties of an office or employment of profit are ordinarily performed by him or at a place where he ordinarily resides or to compensate him for the increased cost of living; (4) the value of any benefit or perquisite, whether convertible into money or not, obtained from a company either by a director or by a person who has a substantial interest in the company or by a relative of the director or such person, and any sum paid by any such company in respect of any obligation which, but for such payment, would have been payable by the director or other person aforesaid (2) the value of any benefit or perquisite, whether convertible into money or not, obtained by any representative assessee mentioned in clause (3) or clause (4) of sub-section 160 or by any person on whose behalf or for whose benefit any income is receivable by the representative assessee (such person being hereafter in this sub clause referred to as the "beneficiary") and any sum paid by the representative assessee in respect of any obligation which, but for such payment, would have been payable by the beneficiary. (5) any sum chargeable to income-tax under clauses (2) and (3) of section 28 or section 41 or section 59: (a) any sum chargeable to income-tax under clause of section 28; (b) any sum chargeable to income-tax under clause of section 28;
it is not necessary that the income must be received in the form of money. receipts in kind or service having money equivalent can also be income. the income arises either on receipt basis or accrual basis, but the substance of the matter is income. if an assessee has earned an income but has not actually received it, it will be treated as income of the assessee because he is entitled to receive it. relief or reimbursement of expenses is not income. therefore, reimbursement of actual travelling expense to an employee is not income. a revenue receipt is always liable to tax whether it is received in installments or in lump sum. for instance, an arrears of pay revision received in lump sum is income. for the purposes of income-tax actual profit earned by a trader is taxable and not the maximum profit which he could have earned. if there is no income, there cannot be a tax, even though an entry has been made in accounts about a "hypothetical income". single transaction may result in income. losses represent minus income. thus the following general principles emerge regarding the concept of income: (1) regularity of income: income is a periodical monetary return coming with some sort of regularity, or expected regularity, from definite sources. however, recurring nature is not an absolute necessity in order that an item may be designated as "income" for the purposes of income-tax. thus income may not necessarily be recurring in nature; though it is generally of that character. (2) form of income: income may not be in the form of cash only. it may be in kind or service, i.e. in the form of other property or right which has monetary value. when income is received in kind like perquisites, the value of perquisites will be calculated as per rules prescribed in the income-tax act, 1961, and that value will be taken as income. (3) illegal income: income earned by unlawful means is also taxed just like any legal income. money embezzled is also "income" under the income-tax act. (4) application of income: where an income is applied to discharge an obligation after such income reaches the assessee, it is an application of income and is taxable. however, where there is a diversion of income before it reaches the assessee, it is not treated as income of the assessee. (5) connection with outside agency: a person cannot have income without outside agency. a person cannot make income out of oneself. (6) disputed title: income-tax assessment cannot be held up or postponed merely because of existence of a dispute regarding the title of income. the recipient is, therefore, chargeable to tax, though there may be rival claims to the sources of income. (7) personal gifts: gifts received by a person on one's birthday, marriage etc. is not the income of the assessee. however, gift received from unrelated person on or after september 1, 2004 shall be chargeable to income-tax if the sum of money received as gift exceeds rs. 25,000/- (rs. 50,000/- in aggregate w.e.f. assessment year 2007-08). (8) contingent income: contingent income i.e. an income which may or may not arise is not chargeable to income tax until such contingency actually occurs and income accrues to the assessee. (9) money received by a woman from husband for private or household expenses: money received by a woman from her husband for her dress, jewellery etc. and the savings effected by a housewife out of money received from her husband for kitchen or household expenses is not her income. any property acquired with such money or savings would be the capital asset belonging to the woman [r.b.n.j. naidu verses c.i.t.]
(10) lump sum receipt: a lump sum receipt is also income if it is in the nature of revenue receipt. for example, if a person receives arrears of salary in a lump sum amount, it would be his income. (11) compensation for death: any compensation for death on account of fatal accident or fatal injuries sustained by the deceased would not be income [c.i.t. verses fletcher (1937)]. (12) compensation from insurance company: compensation received from a insurance company against injuries sustained in a road accident is not income and therefore not chargeable to tax. diversion of income and application of income where by an obligation, income is diverted by an overriding title of another person to the income before it reaches the assessee, it is diversion of income and not taxable. where the income is required to be applied to discharge an obligation after such income reaches the assessee, it is an application of income and is taxable. in order to decide whether a particular payment is a diversion of income or application of income, it has to be determined whether it reaches the assessee as his own income or not. for example, a and b prepare an article for publication in the economic times on the understanding that the remuneration will be shared by them equally. after the publication of the article, a receives the entire remuneration of rupees. 2,500, half of which is later on paid by a to b. the payment of rupees. 1,250, being 50% by a to b is diversion of income. the taxable income of a will be rupees. 1,250 and the payment of rupees. 1,250 to b will not be treated an income of a as it is diverted by an overiding title. any expenditure or investment by a out of this income of rupees. 1,250 will be an application of income. assessee an assessee is a person who is liable to pay tax or any other sum of money e.g. penalty, interest, etc. under the income tax act, 1961. section 2(7) of the income-tax act, 1963 defines an assessee as follows: "assessee" means a person by whom any tax or any other sum of money is payable under this act, and includes — (a) every person in respect of whom any proceeding under this act has been taken for the assessment of his income or assessment of fringe benefit or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or the amount of refund due to him or to such other person; (b) every person who is deemed to be an assessee under any provision of this act; (c) every person who is deemed to be an assessee in default under any provision of this act. since an assessee is a person, it is important to note the definition of 'person' —given in section 2(31) of the income-tax act, 1961. according to section 2(31) ''person" includes— (1) an individual, (2') a hindu undivided family, (3') a company, (4) a firm, (5) an association of persons or body of individuals, whether incorporated or not, (6) a local authority, and (7) every artificial juridical person, not falling within any of the preceding sub-clauses. the following categories of person are included in the definition of assessee:
therefore, the following broad principles may be laid down as guide for determining whether a particular receipt is of capital nature or of revenue nature: (1) a receipt on account of fixed assets or fixed capital is a capital receipt whereas a receipt on account of floating or circulating capital is a revenue receipt. fixed capital is that which is retained in the business for the purpose of earning profits, e.g. plant machinery, building, goodwill patents etc. circulating capital circulates in the business such as stock-in trade, and due to this circulation the profit is earned. (2) a receipt in substitution of source of income is a capital receipt whereas a receipt in substitution of income alone is a revenue receipt. for example, compensation for loss of employment or agency is a capital receipt (though taxable) whereas damage for breach of a business contract is a revenue receipt. (3) an amount received for the surrender of certain rights under an agreement is a capital receipt whereas the amount received by way of compensation for loss of future profits is a revenue receipt. for example, pension is revenue receipt whereas a lump sum received in computation of pension is capital receipt (though taxable). (4) the nature of a receipt is determined exclusively by its character in the hands of the receiver and the source of payment is immaterial. (5) where an asset is held as an investment, the sale proceeds of such asset is capital receipt. but where an asset is held as stock-in-trade, the sale proceeds of such asset is a revenue receipt. for example, profit on the sale of shares to a dealer in shares is a revenue receipt. (6) it is immaterial whether the amount is received in lump sum or in installments. for example, salary is a revenue receipt whether it is received periodically every month or once a year. (7) compensation received for immobilization, sterilization, destruction or loss of a capital asset is capital receipt and compensation for injurious effect on a trading asset is a revenue receipt. in c.i.t. verses the panbari tea co. ltd., the assessee company, by a registered lease deed, leased out two tea estates along with machinery and buildings owned and held by it, to a firm for a period of ten years commencing from january 1, 1950. the lease was executed in consideration of a sum of rupees. 2, 25,000/- as and by way of premium and an annual rent of rupees. 54,000/- both payable by installments. the premium was made payable as follows: rupees. 45,000/- at the time of execution of the lease deed and the balance of rupees. 1,80,000/- in sixteen half-yearly installments of rupees. 11,250/-. the lease deed also contained a clause under which the less or had the option to terminate the lease and retain the premises in the circumstances mentioned therein without prejudice to all his rights under the document. the supreme court held that the installment of rupees. 11,250/- paid towards the premium in the relevant accounting year constituted a capital receipt although it was payable in installments and thus not taxable. it was held to be the consideration paid by the tenant for being let into possession. it can be neither rent nor revenue but it is a capital receipt in the hands of the landlord. capital expenditure and revenue expenditure the distinction between capital expenditure and revenue expenditure is important because revenue expenditure is allowed to he deducted while computing income from business or profession and not capital expenditure (unless specifically provided). the decided cases have, from time to time evolved various tests for distinguishing between capital and revenue expenditure but no test is paramount or conclusive. there is no all embracing formula which can provide a ready solution to the problems. every case has to be decided on its own facts, keeping in mind the broad picture of whole operation in respect of which the expenditure has been incurred. the following tests are applied in determining whether a particular item of expenditure is of capital or revenue nature: (1) amount spent in acquiring and installing a capital asset for the enduring benefit of the business is a capital expenditure whereas the amount spent for the purpose of stock-in-trade is of a revenue nature. assam bengal
cement co. ltd. verses c.i.t ., (1955). however, there may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may nonetheless be on revenue account and the test of enduring nature may break down. "it is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test. what is material to consider is the nature of the advantage in the commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. if the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be revenue even though the advantage may endure for an indefinite future. the test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case (empire jute co. ltd verses c.i.t],). the word 'enduring' is not synonymous with 'everlasting'. acquiring monopoly rights for a period can also be capital expenditure. [assam bengal cement co. verses c.i.t ., .in fast changing scientific and technological atmosphere, the expenditure on "know how" may not be of enduring nature. constant update of technology is essential to business today. by making that technical knowledge available the supplier does not part with any asset of his own business, nor does the assessee acquire any asset or advantage of enduring nature [c.i.t. verses ciba of india ltd. ]. (2) expenditure made for increasing the efficiency or earning capacity of capital asset is a capital expenditure whereas the expenditure made just to maintain the existing efficiency or the earning capacity is revenue expenditure. (3) expenditure made for the start or extension of business or for substantial replacement of equipment is of capital nature because it is incurred in setting up the profit-earning machinery. (4) expenditure made to a source of income is a capital expenditure whereas expenditure made in order to earn income is of revenue type. (5) expenditure incurred by an assessee to free himself from a capital liability, for instance, disadvantageous lease is a capital expenditure and amount spent in discharging himself from the recurring liability is of revenue nature. a lump sum amount paid to a pensioner by the employer is revenue expenditure. compensation paid to a contractor for termination of contract for termination of building is a capital expenditure, and the compensation paid to the employee on account if termination of service is revenue expenditure. (6) expenditure incurred for protecting the business is revenue expenditure. for example the amount spent on propaganda campaign to oppose the threatened nationalization of industry is of revenue nature. in assam bengal cement co. ltd. verses c.i.t_._ , the supreme court laid down a simple test for determining the nature of the expenditure. it observed: "if the expenditure is made for acquiring or bringing into existence an asset or advantage for the ending benefit of the business it is properly attributable to capital and is of the nature of capital expenditure. if, on the other hand, it is made not for the purpose of bringing into existence any such asset or advantage but for running the business or working it with a view to produce the profits it is revenue expenditure. if any such asset or advantage for the enduring benefit of the business is thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital or the income of the concern or whether the payment was made once and for all or was made periodically. the aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or revenue expenditure." the expenditure incurred by the assessee who gives him a right to carry on a particular business will be capital expenditure. the distinction between the two is important because it is only revenue or trading loss of business which is deductible in computing the profits and rules of set off and any forward of losses are different. the nature of loss depends upon the facts of the case. any loss which is not a revenue loss will be regarded as a capital loss. a revenue loss is that which is not merely connected with the business but is incidental to the business itself. a loss of some revenue receipt or loss of stock-in-trade or loss incurred in the course of the business and incidental to it is a revenue loss. therefore, the loss of stock-in-trade by fire or by ravages by white ants or in transit or by negligence or fraud by the employees will be a revenue loss. on the other hand loss on account of
income deemed to accrue or arise in india certain income is deemed to accrue or arise in india under section 9, even though it may actually accrue or arise outside india. the following income shall be deemed to accrue or arise in india:
6. dividend paid by an indian company outside india: a dividend paid by an indian company outside india shall be deemed to accrue or arise in india. [section 9(l) (4)]. however w.e.f. assessment year 2004-05 such dividend income shall be exempted from tax. 7. interest payable outside india: income by way of interest payable in certain case shall be deemed to accrue or arise in india. [section 9(l) (5)]. 8. royalty payable outside india: income by way of royalty payable in certain cases shall be deemed to accrue or arise in india. [section 9(l)(6)]. 'accrue' means 'to arise or spring as a natural growth or result', to come by way of increase. 'arising' means 'coming into existence or notice or presenting itself. the two words together mean 'to become a present and enforceable right' and 'to become a present right of demand. the word "accrue" connotes the idea of growth or accumulation and the word "arise" connotes the growth or accumulation with a tangible shape so as to be receivable.
3. bodies formed for short duration (section 174a). section 174a has been inserted from the assessment year 2002-03. the section provides that where it appears to the assessing officer that any association of persons or a body of individuals or an artificial judicial person, formed or established or incorporated for a particular event or purpose is likely to be dissolved in the assessment year in which such association of persons or a body of individuals or an artificial juridical person was formed or established or incorporated or immediately after such assessment year, the total income of such association or body or juridical person for the period from the expiry of the previous year for that assessment year upto the date of its dissolution shall be chargeable to tax in that assessment year. 4. persons trying to alienate their assets (section 175). where it appears to the assessing officer during any current assessment year that any person is likely to charge, sell, transfer, dispose of or otherwise part with any of his assets with a view to avoiding payment of any liability under the act, the total income of such person for the period from the expiry of the "previous year" for that assessment year to the date when the assessing officer commences proceedings under this section is chargeable to tax in that assessment year, 5. discontinued business or profession (section 176(1)). where any business or profession is discontinued in any assessment year, the income of the period from the expiry of the previous year for that assessment year up to the date of such discontinuance may, at the direction of the assessing officer, be charged to tax in that assessment year.
3 residential status and tax incidence need to determine residential status income-tax is levied in any assessment year on the total income of the previous year unless it is otherwise provided in the act. according to section 5 the incidence of tax depends upon and is determined with reference to the residential status of an assessee in the previous year. for example, in the case of an individual ordinarily resident in india the foreign income is liable to be included in the total income assessable. however, if the individual is not ordinarily resident foreign income is not so included unless it is derived from a business controlled in, or a profession set up in india. the residential status is to be determined every year as it may be different in different years. in one year the assessee may be resident while in another year he may be non-resident basic rules for determining residential status an assessee cannot have different residential status for different previous years in relation to a particular assessment year even if he has different previous years for different sources of income. this is provided by section 6(5) of the act which states that "if a person is resident in india in previous year, relevant to an assessment year in respect of any source of income, he shall be deemed to be resident in india in the previous year relevant to assessment year in respect of each of his other sources of income". residential status is to determined for each category of persons separately. it may be noted that citizenship of a country and residential status of that country are different concepts. section 6 of the act divides taxable entities, on the basis of their residence, in the following three categories: (1) persons who are "resident" in india. (2) persons who are "not ordinarily resident" in india, (3) persons who are "non-resident". this division is applicable only in case of an individual and hindu undivided family. in all other cases there are only two divisions: resident and non-resident. for the purpose of determining the residence of a person, in the context of the income-tax act, 1961, the categories of 'persons' have been grouped into four separate classes as under: (1) an individual (2) a hindu undivided family, firm or other association of persons; (3) a company; and
if an individual does not satisfy any of the basic conditions mentioned in section 6(1), he is said to be "non- resident". a person is said to be "not ordinarily resident" in india in any previous year if such person is an individual who has been a non-resident in india in nine out of the ten previous years preceding that year, or has during the seven years preceding that year been in india for a period of, or periods amounting in all to, seven hundred and twenty-nine days or less. thus if an individual satisfies any one of the basic conditions (as discussed above), prescribed in section 6(1) but does not satisfy the two additional conditions, i.e., conditions (1) and (2) mentioned above, he is "not ordinarily resident". in other words an individual is a resident but not ordinarily resident in india in any of the following circumstances: (a) if he satisfies at least one of the basic conditions as mentioned in section 6(1) and none of the additional conditions as mentioned in section 6(6) (a). (b) if he satisfies at least one of the basic conditions as mentioned in section 6(1) and one of the two additional conditions as mentioned in section 6(6) (a). non-resident an individual shall be a "non-resident" in india during the relevant previous year if he does not satisfy any of the basic conditions prescribed for becoming resident under section 6 (1) as discussed above. residential status of hindu undivided family, firm or other association of persons resident {section 6 (2)} —any person falling within the above mentioned group is "resident" in india in a previous year unless the control and management of its affairs is situated wholly outside india during the said previous year. thus even if a part of the control and management is situated in india during the previous year, it will be called "resident" in india. it was further pointed out that: (1) normally a hindu undivided family will be taken to be resident in india unless the control and management of its affairs is proved to be situated wholly outside india; (2) the word "affairs" must mean affairs which are relevant for the purpose of the income-tax act and which have some relation to income; and (3) the word "wholly suggests that hindu undivided family may have more than one "residence" in the same way as a corporation may have. "resident and ordinarily resident" and "resident but not ordinarily resident" {section 6(6) (d)} firms and other association of persons cannot be "not ordinarily resident". as said earlier a hindu undivided family is said to be resident in india in any previous year in every case except where the control and management of its affairs is situated wholly outside india. but in order to be "resident and ordinarily resident" it must fulfill two more conditions, namely,— (1) that its karta or manager has been resident in india as individual {by fulfilling any one of the two basic conditions prescribed under section 6 (1)} in 9 (2 from the assessment year 2004-05 onwards) out of 10 previous years preceding the relevant previous year;
(2) that the karta or manager has, during the 7 previous year preceding the relevant previous year been in india for a period or periods amounting in all to 730 days or more. if either of these two conditions or both the conditions are not fulfilled the hindu undivided family would be regarded as "not ordinarily resident" in india. non-resident {section 6(2)} a hindu undivided family, firm or other association of persons shall &e non-resident where the control and management of its affairs is situated wholly outside india. residential status of a company resident [section 6(3)] a company is said to be "resident" in india in any previous year if it satisfies any of the two alternative conditions, viz: (1) it is an indian company; or (2) if during the relevant previous years the control and management of its affairs is situated wholly in india. not ordinarily resident a company does not fall in this category. non-resident if a company does not satisfy any of the aforesaid two alternative conditions of resident, it is said to be "non- resident" in india. thus it is clear from the above mentioned conditions that if the assessee company is an indian company, it is automatically resident. and only if it is any other company, it is resident if and only if, the control and management of its affairs is situated wholly in india during the relevant previous year. whereas in the case of a hindu undivided family, firm or other association of persons any measure of control and management in india would make them resident. the expression "control and management" used in reference to a company has the same meaning as it has in the case of hindu undivided family, or other association of persons. residential status of "every other person" every other person (for example, local authority, an artificial judicial person etc.) other than those described in the preceding paragraphs is said to be "resident" in india in any previous year in every case, except where during that year the control and management of his or its affairs is situated wholly outside india [section 6(4)]. in case of such entities the status can only be of "resident" or "non-resident". residential status in case of other source of income section 6 (5) provides that if a person is resident in india in any previous year relevant to an assessment year in respect of any source of income, he shall be deemed to be resident in india in the previous year relevant to the assessment year in respect of each of his other sources of income. relationship between residential status and incidence of income tax under the act, incidence of tax on a taxpayer depends on his residential status and also on the place and time of accrual or receipt of income. this is provided in section 5 of the income-tax act, 1961 which is explained below:
4 agricultural income definition under the constitution parliament has no power to levy tax on agricultural income. only the state governments are empowered to levy tax on agricultural income. therefore, according to section 10 (1) of the income-tax, act, 1961, agricultural income is exempt from central income-tax. but with effect from the assessment year 1974- 73 agricultural income became a factor in the determination »of tax on the non-agricultural income, it becomes necessary therefore, to determine what is agricultural income. the definition is given in sub-clause (1) of section 2 of the act. it is as follows: "(1a) "agricultural income" means: (a) any rent or revenue derived from land which is situated in india and is used for agricultural purposes; (b) any income derived from such land by (1) agriculture; or (2) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market; or (3) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him in respect of which no process has been performed other than a process of the nature described in paragraph (2) of this sub-clause; (c) any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator or the receiver of rent-in-kind, of any land with respect to which, or the produce of which any process mentioned in paragraphs (2) and (3) of sub-clause (b) is carried on: provided that — (1) the building is on or in the immediate vicinity of the land, and is a building which the receiver of the rent or revenue or the cultivator, or the receiver of rent-in-kind, by reason of his connection with the land, requires as a dwelling house, or as a store-house, or other out-building, and
(2) the land is either assessed to land revenue in india or is subject to a local rate assessed and collected by officers of the government as such or where the land is not so assessed to land revenue or subject to a local rate, it is not situated- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or (b) in any area within such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a), as the central government may, having regard to the extent of and scope for urbanization of that area and other relevant consideration, specify in this behalf by notification in the official gazette. explanation l—for the removal of doubts, it is hereby declared that revenue derived from land shall not include and shall be deemed never to have included any income arising from the transfer of any land referred to in item (a) or hem (b) of sub-clause (in) of clause (14) of this section. explanation 2.—for the removal of doubts, it is hereby declared that income derived from any building or land referred to in sub-clause (c) arising from the use of such building or land for any purpose (including letting for residential purpose or for the purpose of any business or profession) other than agriculture falling under sub- clause (a) or sub-clause (b) shall not be agricultural income." explanation 3.— for the purposes of this clause, any income derived from saplings or seedings grown in a nursery shall be deemed to be agricultural income. explanation 1 and explanation 2 were inserted by the finance act, 2000 (w.e.f. 1- 4 - 2001 and explanation 3 was inserted by the finance act, 2008 w.e.f. 1- 4 - 2009). basic conditions thus the three basic conditions which must be satisfied before a particular item of income may be treated as agricultural income are: (1) that the income has relation to land;, (2) that such land is situated in india; and (3) that the land is used for agricultural purposes. land used for agricultural purposes the supreme court explained the meaning of "agricultural" and "agricultural purposes" in c.lt. verses raja benoy kumar sahas roy,. the relevant portion from judgment is reproduced below: (1) "agricultural" in its primary sense denotes the cultivation of the field and is restricted to cultivation of the land in the strict sense of the term, meaning thereby tilling of the land, sowing of seeds, planting and similar operations on the land. these are the 'basic operations' requiring expenditure of human skill and labour on land itself. these are absolutely necessary for the purpose of effectively raising produce. (2) operations to be performed subsequently like "weeding" "digging" etc. (3) "agriculture" comprises within its scope all produce "regardless of the nature". these produce may be grain, vegetable or fruits including plantations and grass or pastures or articles of luxury such as betel, coffee, tea, spices, tobacco or commercial crops like cotton, jute etc." it was further observed that activities not involving any basic operation on the land would not constitute agriculture merely because they have relation to or connected with the land e.g., breeding and rearing of livestock, dairy-farming, butter and cheese making and poultry fanning, would not by themselves be agricultural processes