1973 (7) TMI 30 - HC - Income Tax

Madras Agricultural Income Tax Act - Whether land held by the assessee or the land actually cultivated is relevant for assessment under Madras Agricultural Income-tax Act, 1955 for the purpose of section 10 of Madras Agricultural Income-tax Act, 1955 as it stood during the assessment year 1966-67 it is the extent of agricultural land actually held by the assessee that is relevant - Whether the land on which fodder is grown on commercial scale can be treated as pasture land

Summary

Issues:
1. Assessment of agricultural income-tax for the assessment year.
2. Exemption from the provisions of the Act based on land extent.
3. Treatment of land used for raising grass as pasture land.
4. Valuation of crop raised by the assessee.

Analysis:
1. The judgment concerns the assessment of agricultural income-tax for a specific year under the Agricultural Income-tax Act, 1955. The assessee, a cement manufacturing company, utilized a portion of its land for cultivating elephant grass to feed cattle. The agricultural income for that year was estimated at Rs. 4,047. The assessment was challenged but upheld by the Appellate Assistant Commissioner and the Agricultural Income-tax Appellate Tribunal.

2. The first contention raised was regarding the exemption from the Act based on the extent of land cultivated. The Appellate Assistant Commissioner found that the assessee had more than 12 1/2 standard acres of cultivable land in previous years, although in the assessment year, elephant grass was cultivated only in 8.04 acres. The court held that the extent actually cultivated may not be material for exemption, and the assessee had held lands exceeding the exempted limit in previous years, making it assessable under the Act.

3. The second contention focused on whether the land used for raising grass should be treated as pasture land. The definition of "land" in the Act excludes land exclusively used for pasture from the definition of agricultural land. The court disagreed with the argument that land used for fodder crops should be deemed pasture land, stating that pasture land typically involves spontaneous growth of grass for grazing animals, not cultivated crops like elephant grass.

4. The final contention was about the valuation of the crop raised by the assessee. The authorities valued the elephant grass lower than market rates, leading to a dispute. The court held that income derived from the land, regardless of marketability, makes it taxable. The valuation method used by the authorities was deemed appropriate, considering the absence of a specific market for elephant grass at the location. The court upheld the assessment, emphasizing that income estimation should consider actual expenses incurred in raising the crop. The tax case was dismissed with costs.