STATE OF KARNATAKA Vs. CONSOLIDATED COFFEE LIMITED

JUDGEMENT

(1.) These revision petitions are directed against the orders of the Karnataka Appellate Tribunal made in the appeals preferred by the respondent in which the assessments under the Karnataka Sales Tax Act for the years 1962-63 to 1970-71 were challenged. The respondent is a public limited company dealing in coffee, cardamom, pepper, minor estate produce, lubricants, motor spirits, etc. In Coorg, the company has extensive coffee estate.

(2.) It is a well-known accepted fact that a coffee estate requires shade trees and for the purpose of new plantation the forest area must be cleared. The company in order to facilitate new plantation cleared the forest growth with shade trees. Some trees were cut and sold as logs, timber, charcoal or firewood. In each of the assessment years, the company realised substantial amounts by the sale of such items.

(3.) For the assessment years 1961-62 and 1963-64 the question arose whether the sale amount of the shade trees was liable to be brought to tax under the Karnataka Agricultural Income-tax Act. The controversy ultimately reached this Court. The decision of this Court is reported in Consolidated Coffee Estates Ltd. v. Commissioner of Agricultural Income-tax, Mysore [1970] 76 ITR 29. It will be useful to refer to the points urged in that case and the decision rendered. Although the case related to the liability to pay agricultural Income-tax, this Court notified the income-tax department. From the judgment it will be seen that it was urged on behalf of the income-tax department that the amount realised by the company was in the nature of income to be brought to tax, under the Income-tax Act. On behalf of the State it was, however, contended that the income was agricultural income which was liable to be taxed under the Agricultural Income-tax Act. But this Court held that the shade trees in the plantations of the company were of spontaneous growth and they were not found to have been planted or grown by the company. To be more precise this is what this Court observed at page 37 :