Law: Income Tax Act, 1922

Section: 4(3)(viii),2

Section 2(1) of the Income-tax Act, 1961 [Corresponding to section 2(1)(b)(ii) of the Indian Income-tax Act, 1922] - Agricultural process - Assessment years 1954-55 to 1956-57 - Assessee grew galkas on his lands and prepared loofahs, commonly used in manufacture of shoes after subjecting them to process which consisted of steps like taking out seeds, deskinning them, given them acetic acid bath, boiling them in salicyclic and, drying than, putting them in cold water and last pressing them for purpose of packing - Thereupon, assessee tried to market those loofahs abroad and sent them abroad on consignment basis for sale, but it was found that it was not possible to sell them - Loofahs were, thus, reshipped to India - Accordingly, assessee suffered loss on aforesaid transaction - Said losses were claimed by assessee as business losses arising out of non-agricultural operations - ITO rejected assessee's claim holding that process ordinarily employer by cultivator (assessee) to render galkas produced by him fit to be taken to market and losses resulting from those operations were agricultural losses within meaning of section 2(1)(b)(ii) of 1922 Act - Before Tribunal, case of assessee was that galkas had market by themselves and that subsequent operations were in nature of manufacturing operations - Tribunal did not accept assessee's claim holding that galkas as a commodity had no market in India - However, there was no finding from Tribunal that galkas had no market even outside India - Whether, in order to proper determination of controversy to effect that whether process employed by assessee was process within meaning of section 2(1)(b)(ii), it was necessary for Tribunal to give a finding on question whether there was no market for galkas in India or outside India, for it was only if there was no market for galkas in India or abroad, that process employed by assessee could be said to be process covered by section 2(1)(b)(ii) of 1922 Act as contended by revenue - Held, yes - Whether, therefore, matter was to be remanded to Tribunal to record its finding on aforesaid aspect of case - Held, yes [- Matter remanded to Tribunal] FACTS The assessee was an individual and…

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