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TMI Blog1991 (2) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... act tax under the said Act. The cases relate to the assessment years 1973-74, 1974-75 and 1975-76. It is not in dispute that the petitioner grew tea in the estates owned by it in the Nilgiris. It, however, sold wattle bark and firewood for Rs. 1,51,716 and timber for Rs. 1,95,000 during the assessment year 1973-74. The Central Income-tax Officer, however, did not include these amounts in the assessment for taxes. But the Agricultural Income-tax Officer issued notice under section 35 and revised the assessment by including a sum of Rs. 1,51,716 being the sale proceeds of wattle bark and firewood and Rs. 1,95,000 being the sale proceeds of timber as agricultural income. This was followed by similar assessments for the years 1974-75 and 1975 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner has questioned the finding with respect to the sales of barks of wattle trees and the sales of cut trees as firewood on various grounds. His main contention, however, is that agricultural income has to be understood only as any rent or revenue derived from land and for that, it must necessarily be found to be an income out of the agricultural operations upon the land. According to learned counsel, the two items of income, viz., by way of sales of barks of wattle trees and the sales of cut trees (firewood) have wrongly been included in the agricultural income. There is a catena of cases decided under various taxing statutes in relation to the sale of trees, some cases holding that it is a capital receipt and some cases concluding in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trees. The intention and subsequent conduct of the assessee establishes that the stipulation against removal of the stumps and roots was intended to protect the surface of the land from indiscriminate injury because the land was to be applied to cultivation. Intention is a material factor in such cases, and each case has to be decided on its particular facts. Without evidence of the intention or object behind such a stipulation, the mere fact that the trees were sold without stumps and roots cannot lead to the necessary inference that a profit-making activity was involved. Where the evidence shows that the land had been acquired for the purpose of cultivation, and that the prohibition on the purchaser against removing the stumps and roots ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd they were not of any spontaneous growth." We are, however, faced with a judgment of the Supreme Court in the case of State of Kerala v. Karimtharuvi Tea Estate Ltd. [1966] 60 ITR 275 specifically dealing with agricultural income-tax. In that case also, the assessees were the owners of tea estates. They had planted grevelia trees and derived income by the sale of such trees as firewood. They had been subjected to tax under the Kerala Agricultural Income-tax Act, wherein similar definition of agricultural income is found. The Supreme Court said (at p. 276) : "There is no controversy about the fact that the owners of tea estates plant grevelia trees not for the purpose of deriving any income therefrom but solely for the purpose of provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regularly grown for sales of bark. When such trees were felled at regular intervals and sold as firewood, new plants were also grown in that area and they were not of any spontaneous growth." We may, however, before proceeding further refer to a judgment of this court in United Nilgiris Tea Estates Co. Ltd. v. Government of Tamil Nadu [1980] 45 STC 10, wherein a Division Bench of this court has taken the view that the sale of shade trees may constitute a sale of produce from the land and such produce may be agricultural if the trees had been planted on land on which labour had been expended. The trees would not be agricultural produce if the trees had come up by spontaneous growth. If we may say so with respect, the view expressed by this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they use the land upon which such trees were grown by them for agricultural purposes. But, once it is found that they had grown the trees not for the purpose of deriving any income therefrom, but solely for the purpose of providing shade for the tea plants, the trees cut and sold by them thus gave no agricultural income to them (See State of Kerala v. Karimtharuvi Tea Estate Ltd. [1966] 60 ITR 275 (SC). No doubt, the Tribunal has said that in Nilgiris District, during March, 1980, shade trees were not grown in the tea estate. This, however, will not answer the question whether the petitioner had grown the trees cut and sold by them solely for the purpose of providing shade to its tea plantations or not. The answer to this question alone wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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