E. PALANIAPPAN Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) Both the appeals by the assessee are directed against the order of the Income Tax Appellate Tribunal, Bench-'D', Chennai, for the assessment year 2003-2004.

(2.) The one common point in both these appeals pertain to the question whether the profit from the sale of Jaggery falls within the definition of agricultural income. It is common knowledge that the expression "agricultural income" connotes any income derived from land by agricultural operations including processing of agricultural produce raised or received so as to render it fit for the market. It is sine qua non that the produce must retain its original character and the only change which is permitted in the produce would be that which makes it marketable. In the instant case, the sugarcane crops which were harvested by the appellant was converted into jaggery and the profit made out of the sale of jaggery was shown as agricultural income. This classification of income was not accepted by the assessing officers as well as the Commissioner of Income Tax(Appeals). These orders were further confirmed by the Income Tax Appellate Tribunal leading to these two appeals.

(3.) Mr.Niranjan Rajagopal, learned counsel for the appellant relied on CIT Vs. H.G. DATE, 1971 82 ITR 71 (Bombay), in which, the High Court of Bombay held that though there can be no dispute that the sugarcane produce of the assessee had not retained original condition or character when it was converted into jaggery, there was a convincing reason that the nearest sugar mill refused to buy the sugarcane citing the poor quality as a reason. In such a compelling circumstance, the assessee had shown the income derived out of the sale of the jaggery as agricultural income and the same was accepted after the intervention of court.