STATE OF KERALA Vs. KARIMTHARUVI TEA ESTATE LIMITED

JUDGEMENT

(1.) This appeal, by special leave, is against the judgment and order of the High Court of Kerala in Income-tax Reference Case No. 10 of 1962, and raises the question as to whether the amount realized by the sale of grevelia trees as firewood is a revenue receipt and liable to tax under the Kerala Agricultural Income Tax Act, 1950 (XXII of 1950), hereinafter called the Act.

(2.) The facts leading to the case may be briefly stated. The respondent is a company which carries on the business of manufacturing and selling tea. For the purpose of affording shade to the tea bushes, the respondent grows grevelia trees in its different tea estates. During the accounting year relevant to the assessment year 1957-58, the respondent received a sum of Rs. 600-12-0 by the sale of grevelia firewood and this amount was included by the Agricultural Income-tax Officer, Special Circle, Quilon, in computing the agricultural income of the respondent. The respondent appealed to the Deputy Commissioner of Agricultural Income-tax & Sales Tax, Quilon, contending that the said sum was a capital receipt, but the Deputy Commissioner rejected the contention. The contention was reiterated by the respondent in second appeal filed by it to the Kerala Agricultural Income-tax Appellate Tribunal.

(3.) The Appellate Tribunal by its order dated August 2, 1962, held that the said sum could not be considered to be a revenue receipt and was not therefore liable to be included in computing the agricultural income of the respondent. On a reference made to the High Court, the Division Bench agreed with the Tribunal and answered the question in favor of the respondent. The appellant thereupon applied to this court and obtained special leave.