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TMI Blog1996 (6) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... ome from man-made forest as well as natural forest and which is, therefore, both agricultural and non-agricultural in nature. Section 10(1) of the Income-tax Act, 1961, excludes agricultural income from the purview of the total income and the same is thus not exigible to income-tax. As, however, no separate accounts were ever maintained by the assessee the entire income was being taxed as income from non-agricultural sources. The dispute in this batch of references relates to the question of deduction of the expenses incurred in regeneration of forest. According to the assessee, the expenses incurred by it over regeneration of forest, being an agricultural activity, should be treated as revenue expenditure and deducted from the total incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dibility of the income derived from man-made regenerated forest/regeneration has since been resolved between the parties and as per the terms of the agreement dated January 29, 1993, 30 per cent. of the gross receipt from sale of fast growing varieties of timber including bamboo, firewood poles, fencing posts, cane bundles, and 15 per cent. of the slow growing species of forest which usually mature after 25 years, is to be excluded from the total income as being income derived from agricultural sources. It was pointed out that the aforesaid agreement has been reached in the light of the circular of the Central Board of Direct Taxes No. 456, dated September 21, 1972, and rules 7 and 8 of the Income-tax Rules framed under section 295(2)(b) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aged in agricultural activity on account of regeneration of forest and derives income therefrom ; and, if so, the manner and the extent to which such income is to be excluded from the total income. That dispute having been settled between the parties the first question referred to this court for opinion, now, has mere academic importance. As regards the second question regarding exclusion of the amount spent on royalty, it was not disputed by counsel for the Department that the same is covered by the decision of the Supreme Court, in favour of the assessee and against the Department. We would, accordingly, decline to answer the question on the merits and return the same giving liberty to make fresh assessments for the assessment years in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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