Law: Income Tax Act, 1961

Section: 2,2(1)

[Indian income Tax Act, 1961]......Section 2(1) - Agricultural income - Exemption - Grant of - Prayer for - Assessee was a partnership Firm indulging in growing mulberry leaves, rearing silk worm and selling cocoons in market - Exemption to the extent of growing mulberry leaves was accepted by ITO but claim of assessee that rearing of silk worms and selling of cocoons was agricultural income, exempt from payment of tax repelled - A.A.C. held that income derived by assessee from selling of Cocoons was exempt from tax - Tribunal accepted appeal of department and reversed the decision of A.A.C. - Reference to High Court was also concluded accordingly Appeal against - Expression agricultural income Meaning of - Sale of commodity different from what was cultivated and processed - Contemplation and essence of S. 2( 1) of Act - Question of law - Determination for Whether to avail of exemption u/s 2( 1) of Act, the commodity taken to market and sold must be produce which was grown by cultivator - Held yes - Whether Agricultural produce of assessee would be mulberry leaves and under no stretch of imagination could be silk worm or silk cocoons which could be regarded produce of assessee - Held yes Whether income derived by assessee by sale by Silk Cocoons was exempt from tax - Held no. Section 2(1) of the Act defines the expression "agricultural income". Agricultural income" would mean any Income derived from such land by the performance by a cultivator of any process ordinarily employed by him to render the produce raised by him fit to be taken to market. It is clear from the reading of the aforesaid statutory provision that what is taken to the market and sold must be the produce which is raised by the cultivator. Even though for the purpose of making It marketable or fit for sale some process may have to be undertaken, the section does not contemplate the sale of an item or a commodity which Is different from what Is cultivated and processed. Had mulberry leaves been subjected to some process and sold in the market as such, then certainly the income derived there from would be regarded as agricultural Income but the case of the appellant before the authorities, and in…

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