KAIRBETTA ESTATES SYNDICATE Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE petitioner/assessee is engaged in the manufacture of tea. THE Income-tax Officer, having finalised the assessment of the firm for the assessment year 1979-80, 60 per cent. of the income was taken as the income relating to agriculture within the meaning of the Tamil Nadu Agricultural Income-tax Act. THE Agricultural Income-tax Officer added to this the sale value of timber realised out of silver oak shade tress to the tune of Rs. 52,381. It is this turnover which is the subject-matter of the present revision. In the assessment order, there is a categorical averment that the turnover relates to the sale of trees "not grown spontaneously but by human labour." On appeal, the Assistant Commissioner also held that the shade trees were not grown solely for the purpose of giving shade to the tea plants and that threes were being felled at regular intervals and sold as firewood. THE petitioners were again planting further trees in the area. THErefore, it was held that the sale of such trees and the income therefrom would amount to agricultural income. On further appeal, the Tamil Nadu Agricultural Income-tax Appellate Tribunal confirmed the assessment made by the statutory authorities. THE assessee is in revision before us.

(2.) LEARNED counsel for the petitioners contended that the shade trees are grown from the purpose of giving protection to the tea plants and, therefore, such shade trees when cut and sold, the sale proceeds whereof would not amount to agricultural income. In State of Kerala v. Karimtharuvi Tea Estate Ltd. , the assessee had grown gravellia trees for the purpose of providing shade to the tea plants. When such trees were cut and sold after the trees had become old and useless, the sale proceeds were held as not eligible to agricultural Income-tax. In United Nilgiris Tea Estates Co. Ltd. v. Government of Tamil Nadu [1980] 45 STC 10 (Mad), a Division Bench of this court had taken the view that the sale of shade trees may constitute a sale of a produce from the land and such produce may be agricultural if the trees had been planted on land on which labour had been expended. It was made clear that the trees would not be agricultural produce if the trees and come up by spontaneous growth. More recently, a Division bench of this court in United Nilgiris Tea Estates Co. Ltd. v. State of Tamil Nadu [1991] 191 ITR 397 (Tax Cases Nos. 720 to 722 of 1981 by a judgments were not in any way contradictory or conflicting. The Division bench laid down the ratio as follows (at page 402) :