Law:

Section:

Section 10(1) , read with section 2(1) of the Income-tax Act, 1961 [Corresponding to section 4(3)(viii), read with section 2(1) of the Indian Income-tax Act, 1922] - Agricultural income - Assessment year 1946-47 - Assessee owned a forest - Trees in said forest were of spontaneous growth - During relevant assessment year, assessee derived income from sale of said trees and claimed that income as agricultural income Revenue authorities rejected claim of assessee and brought income to tax - On reference, High Court, however, allowed assessee's claim - Whether since trees were of spontaneous growth and nothing was done by assessee to grow trees from soil itself, income derived by assessee from sale of said trees could not be said to be agricultural income under section 2(1) and thus, it was not exempt from taxation under section 4(3)(viii) of 1922 Act - Held, yes FACTS The assessee owned a forest. The trees in the forests were of spontaneous growth and there was no planting or sowing or employment of any human agency for the purpose of tilling the soil. In course of assessment, the assessee claimed that income from the sale of sal trees was agricultural income and exempt from tax. The ITO rejected the claim of the assessee and income in question was subjected to tax. The appeal was dismissed by the Commissioner (Appeals) as well as the Tribunal. On reference, the High Court, however, held that the receipts from the sale of sal trees could be said to be agricultural income under section 2(1) and exempt from taxation under section 4(3)(viii) of the 1922 Act. On appeal to the Supreme Court: HELD In the instant case, it appeared that there was no planting or sowing of the seeds nor was any human agency employed for the purpose of tilling the soil. The soil had remained untouched and in the production of the income the assessee had made no contribution by way of cultivation. There were no basic operations either which were performed by the assessees on the forests lands. What was done by then was the performance of forestry operations which were in the nature of subsequent operations; operations which were performed after the produce had sprouted from the soil. The…

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