Law:

Section:

Section 2(1A), read with section 10(1) of the Income-tax Act, 1961 (Corresponding to section 2(1)(a), read with section 4(3)(viii) of the Indian Income-tax Act, 1922) - Agricultural income - Assessment year 1941-42 - Whether in order to qualify as "agricultural income", income has not only to be derived from land which is used for "agricultural purposes" but such income has to be derived by process of "agriculture" also - Held, yes - Whether, therefore, income from sale of forest trees of spontaneous growth, growing on land naturally and without intervention of human agency, was not 'agricultural income' within meaning of section 2(1)(a) of 1922 Act' and as such was not exempt from tax under section 4(3)(viii) of 1922 Act - Held, yes FACTS The assessee was holder of certain land on which there were, and had been for many years, a number of forest trees, khar and wild plants. The ITO, in assessment for the assessment year 1941-42, included the income derived by the assessee from the sale of timber from his zamindari property. The AAC upheld the assessee's contention that the receipt from 'the sale of timber trees' was agricultural income. On revenue's appeal, the Tribunal held that the income from the sale of forest timber did not constitute agricultural income within the meaning of section 2(1)(a) of 1922 Act as the land from which the income was derived was not used for agricultural purposes. On reference: HELD In order to qualify as "agricultural income" the income has not only to be derived from land which is used for "agricultural purposes" but such income has to be derived by the process of "agriculture". In the instant case, the Tribunal came to a finding that the trees were of spontaneous growth, growing on the land naturally without the intervention of any human agency. The trees being of spontaneous growth, to the production of which the assessee had made no contribution by way of cultivation, no question could arise either of the land on which they grew being "used for agricultural purposes" or of the trees themselves and the income they produced being the result of "agriculture." The finding of any ITO in any previous year was not binding, nor had…

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