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TMI Blog1993 (10) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... be advantageous to slaughter the trees and the assessee agreed to do so on payment of a consideration of one and a half lakhs of rupees. The further provision in the agreement was that the assessee should slaughter and cut the rubber trees within a period of three years and that the assessee should not plant new rubber trees or other trees. The owner of the land, on which the rubber trees stood, further agreed that he would not in any manner obstruct the cutting of the trees by the assessee till the expiry of the period of three years. Some other provisions with reference to the removal of the cut trees after obtaining clearance from the various authorities and the furnishing of the income-tax clearance certificate and other documents were also incorporated in the agreement and they are not very material for the purpose of deciding the question that has arisen. In addition, the assessee had also taken another extent of 18 acres for slaughter tapping and he also owned 3.19 acres of land with immature rubber trees. Since the assessee did not file returns, notices were issued under section 35 of the Act calling upon him to file the returns for the assessment year in question and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the assessee and Sastha and also the provisions of the Act referred to earlier. From the terms of the agreement, it is seen that the assessee had not been granted any interest in the land. There is no provision that the trees permitted to be slaughter-tapped under the agreement should be protected, preserved or should derive sustenance from the land so as to continue to yield latex and income therefrom to the assessee. The object of the agreement appears to be the annihilation of 1,100 rubber trees on payment of a lump sum of Rs. 1.50 lakhs by the assessee, without any apportionment thereof, between latex and trees and a period of three years had been granted to the assessee to cut the large number of trees, as it was contemplated that the removal of the trees would take considerable time. That, however, would not mean that the intention was that the trees should be cared for and protected and should receive nourishment from the assessee so as to give rise to agricultural income to him. On the terms of the agreement, it is clear that the permitted slaughter-tapping by the assessee was in the nature of just a step towards the ultimate annihilation of the trees just as in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uf v. ITO [1970] 77 ITR 237 (Ker), while considering the applicability of section 2(1) of the Income-tax Act, 1961, with reference to income derived by the assessee by sale of rubber obtained by slaughter-tapping of rubber trees, which had been purchased for being cut and removed, it was held that as the income was derived under contracts of sale entered into, such income was clearly non-agricultural. This decision was affirmed in Agricultural Income-tax Officer v. C. P. A. Yoosuf [1973] 90 ITR 501 (Ker), holding that as the assessee derived no interest in the land, but only a right to the trees, the income derived by the purchasers of the trees from slaughter tapping, was not agricultural income. In Commissioner of Agrl. I. T. v. George Varghese and Co. [1970] 90 ITR 496 (Ker), construing section 2(2)(a) of the Kerala Agricultural Income-tax Act, 1950, which is in pari materia with section 2(2) of the Act, it was held that the question has to be answered in the light of the provisions in the agreement between the parties and the intention was that the trees, which were sold should be withdrawn from the land and the land was considered as a mere warehouse of the thing sold and, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that purpose, the income derived by him was held to be agricultural income. From the provisions of the agreement referred to earlier, it is clearly established that the assessee was not obliged to carry on any agricultural operations nor did he carry on any such operations holding the land for that purpose and this decision, therefore, does not in any manner assist the Revenue. In CIT v. Kunwar Trivikram Narain Singh [1965] 57 ITR 29 (SC), the character of the amount received under the terms of a compromise arrived at in 1837 came to be considered. Under the compromise, the jagirdhar and his heirs were granted a pension in perpetuity by the Government, the quantum being regularly calculated on the basis of one-fourth of the net revenue collections of the jagir. The Supreme Court laid down that under the arrangement of 1837, no interest in the land or land revenue payable had been secured and the source of the income was the arrangement of 1837 and as the income was not derived from the land, it was not agricultural income within the meaning of section 2(1)(a) of the Indian Income-tax Act, 1922. On the terms of the agreement, it had earlier been noticed that the source of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc., and to maintain the fences, and this would mean agricultural operations had to be carried on to secure the best yield from the trees. It was also further found that under the terms of the agreement, the assessee was to make efforts to maintain the trees in a condition fit for maintaining the best yield and the arrangement could not, therefore, be regarded as not contemplating any agricultural operations. It is thus seen that the decision was rendered on the basis of the terms of the agreement and since there were clear and umambiguous provisions for the carrying on of certain agricultural operations by the assessee, the income realised by him was also held to be agricultural income subject to tax under the provisions of the Act. In this case, there is no provision in the agreement with reference to the carrying on of any agricultural operations by the assessee. The consideration is also not partly towards manuring, spraying, dusting, keeping the fences, intact, etc., etc., which would be essential components of agricultural operations. It had earlier been found that the agreement in this case was only for the purpose of annihilating the trees by slaughter tapping, that being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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