1997 (8) TMI 12

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..... coffee estate and constituted capital assets. The fact that the assessee owns a coffee estate and that these trees grown on the coffee estate were in fact shade trees, is not in dispute. It was not the case of the authorities at any time that these trees were used solely for the purpose of gaining revenue by way of sale of trees and that they are not necessary for the cultivation of coffee. That these trees were shade trees and are necessary for the effective cultivation of coffee is borne out by a letter sent by the Senior Liaison Officer, Coffee Board, addressed to power of attorney Moganad Group Plantations, Sommanatham PO, Yercaud, which had been extracted in the order of the Tribunal. In that letter, it has been said that "for cof .....

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..... described above regardless of the nature of the products raised on the land. These products may be grain or vegetable or fruits which are necessary for the sustenance of human beings, including plantations and groves, or grass or pasture for the consumption of beasts or articles of luxury such as betel, coffee, tea, spices, tobacco, or commercial crops like cotton, flax, jute, hemp, indigo. All these are products raised from the land but the term agriculture cannot be confined merely to the production of grain and food products for human beings and beasts ; it must be understood as comprising all the products of the land which have some utility either for consumption or for trade and commerce and would also include forest products such as .....

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..... ation, such trees however cannot be regarded as trees grown for the purpose of obtaining an income from their sale as timber or firewood. Even in the case of such trees, if the trees are not uprooted, but the trees are cut above the ground, the income realised from the sale of such timber would constitute agricultural income as the capital assets would still remain, the tree being capable of being regenerated from the roots which have been left intact. The Supreme Court in the case of State of Kerala v. Karimtharuvi Tea Estate Ltd. [1966] 60 ITR 275 held that when the grevelia trees grown on a tea plantation as shade trees are cut down and sold after they had become useless by efflux of time, the amount realised from their sale would not .....

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