COMMISSIONER OF INCOME TAX Vs. MADDI VENKATASUBBAYYA

JUDGEMENT

(1.) THE question referred to us is as follows :

(2.) THE assessee was not a land-holder or a ryot or a lessee of the land on which the tobacco crop stood. THE tobacco plants had been raised on land by its owner or lessee and they had reached such a degree of maturity as to render them saleable as standing crops to tobacco merchants in the locality. We may observe that it is not uncommon for merchants and traders in agricultural produce to purchase standing crops of tobacco, sugarcane, groundnut etc., when the crop is ready or nearly ready for harvest. THE purchaser in such a case may have to do some pruning work with reference to the crops as in this case and then cut the crops and market the produce. THE operations said to have been performed by the purchaser in the present case were evidently performed with the consent of the person who raised the standing crop. THEy are incidental to reaping the fruits of the purchase. THE Income-tax Officer and the Appellate Assistant Commissioner held that a part of the profit of the assessee realised by the sale of the tobacco, namely, Rs. 7500 was derived from non-agricultural sources or operations and therefore liable to income-tax. THE Appellate Tribunal held that the entire profits of the assessee from the tobacco dealer calculated in the sum of Rs. 12000 was agricultural income and was exempt from income-tax under Section 4 (3) (viii) of the Income-tax Act. THE Commissioner of Income-tax disputes the correctness in law of the decision of the Appellate Tribunal. Hence this reference.

(3.) FOR these reasons we hold that the sum of Rs. 7500 was not exempt from liability to assessment to income-tax and that the answer to the question referred to must be in the negative and against the assessee. The assessee shall pay Rs. 250, the costs of the Commissioner of Income-tax on this reference.