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Issues Involved:
1. Whether the income derived by the assessee trust could be regarded as agricultural income or income from a business carried on by the assessee trust. 2. Applicability of Section 11(4A) of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Agricultural Income vs. Business Income: The primary issue in these appeals is whether the income derived by the assessee trust from the sale of resin could be regarded as agricultural income or income from a business carried on by the assessee trust. The trust, created in 1846 by Maharaja Gulab Singh of Jammu and Kashmir, received large tracts of land with chir and pine wood trees. The resin yielded from these trees was sold, and the proceeds were utilized for the purposes of the trust. The assessee contended that this income was agricultural and thus not liable to income tax under Section 2(1A) of the Income-tax Act, 1961. The department, however, considered it income derived from a business and thus taxable under Section 11(4A). The Commissioner(A) held that the income from the sale of resin was business income and taxable. He observed that forest lands covered by trees of spontaneous growth could not be held to be agricultural land unless linked with agricultural purposes. He concluded that the activity of tapping resin from pine wood trees was a business activity within the meaning of Section 2(13) of the Income-tax Act, 1961. The assessee argued that the income was agricultural, citing the Supreme Court's decision in CIT v. Raja Benoy Kumar Sahas Roy, which laid down that if trees are planted or agricultural operations are carried out on existing trees, the income derived therefrom would be agricultural. The assessee pointed out that the trees were not of spontaneous growth and that agricultural operations were carried out, making the income agricultural. 2. Applicability of Section 11(4A): The Assessing Officer and the Commissioner(A) held that Section 11(4A) applied, making the income from the business of manufacturing resin taxable. The assessee conceded the applicability of Section 11(4A) but argued that the activity was not business and the income was agricultural. The Commissioner(A) agreed with the Assessing Officer, stating that the income was rightly taxed under Section 11(4A). The Tribunal noted that the Supreme Court in Raja Benoy Kumar Sahas Roy had laid down that agriculture involves basic and subsequent operations on land. The Tribunal found that the forest was over 150 years old, and new trees must have been planted, involving agricultural operations. Expenditure was incurred for maintenance and extraction of resin, indicating agricultural operations. Thus, the income derived from resin was agricultural and exempt from tax. The Tribunal also considered that even if Section 11(4A) applied, the income would still be exempt if the business was carried on by an institution wholly for charitable purposes and the work was mainly carried on by the beneficiaries. In this case, the trust carried on the business for charitable purposes, and the work was carried out by the trustees or their employees. Conclusion: The Tribunal concluded that the income derived from resin was agricultural income and exempt from tax. The appeals were allowed, and the income should not have been brought to tax under Section 11(4A).
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