9911796707
TMI Blog1980 (11) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in computing the total income of the previous year of any person for purposes of levy of income-tax under the Act. Section 2(1) defines " agricultural income ". Relevant part of the definition reads : 2. In this Act, unless the context otherwise requires, (1) 'agricultural income' means- . ...... (b) any income derived from such land by (i) agriculture ; or (ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver or rent-in-kind to render the produce raised or received by him fit to be taken to, market; or ...... .." The business of the assessee is to purchase silk-worm eggs available for sale in the market and to rear the worms after the eggs are hatched, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king their leaves and cutting them to suitable size amounts to agricultural income, but not beyond that. He was of the view that agricultural operation ceased after the leaves were fed to the silk worms and that the activity of the assessee in rearing silk-worms and selling the cocoons did not constitute agricultural activity and, therefore, the income attributable to these activities was liable to be taxed under the Act. Taking all the relevant factors into account, the ITO assessed that out of the total income of the assessee from the sale of cocoons, 75% represented the agricultural income and 25% the non-agricultural income. The AAC in his common order, vide annex. B, on the appeals preferred by the assessee, accepted the plea of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haracter of the produce: (ii) the produce does not retain its original character; (iii) the said change is not brought about in the produce to make it marketable. That being the position, we are of the opinion that the income derived from the process employed by the assessee i.e., the rearing of silk-worms, to feed them with the mulberry leaves, is not entitled to exemption under section 2(1)(b)(ii)." Thereafter, on the application made by the assessee, the Tribunal has made these twelve references under s. 256(1) of the Act and has referred the following common question for the opinion of this court: " Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the income derived by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a High Court in the case of CIT v. Woodland Estates Ltd. [1965] 58 ITR 612 (Ker) in which it was held that income derived by the sale of sole crepe produced after the conversion of latex collected from rubber trees was agricultural income. (iii) Decision of the Bombay High Court in the case of CIT v. H. G. Date [1971] 82 ITR 71 (Bom) in which the income derived from the sale of jaggery after producing it from the sugarcane grown by the assessee was held to be agricultural income. The ratio of all the three decisions is the same and not applicable to the case of the assessee. In all those cases, the process adopted by the assessee was to make the agriculture produce marketable and what was sold was found in substance to be the agricultur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilk produced by silk worms cannot be considered as a marketable form of mulberry leaves. Learned counsel, however, contended that there was no market at all for mulberry leaves as they have got to be plucked and fed to the silk-worms immediately, the growers invariably are consumers and, therefore, the only known process to make mulberry leaves marketable and to receive the income from them was to produce silk cocoons by feeding the leaves to the silk-worms. In this behalf learned counsel for the assessee relied on the finding of the Tribunal that there was no market for the mulberry leaves. We see no substance in the contention. As held by the Supreme Court in Dooars Tea Co. Ltd. v. Commr. of Agrl. LT. [1962] 44 ITR 6, on which Sri Rajas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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