YOUNUS SAIT SONS Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE assessee is the petitioner. THE assessee has claimed deduction of Rs. 65,000 realised from the sale of trees. According to the assessee, the trees grew spontaneously. THErefore, the sale proceeds of these trees are not amenable to tax. However, the Agricultural Income-tax Officer took the view that even trees grown spontaneously or planted, since they are forming a "thope", the sale proceeds of the trees would be amenable to tax. THE addition made by the Agricultural Income-tax Officer was sustained by the appellate authority and the Tribunal. According to the assessee, if the sale proceeds come from the sale of the trees spontaneously grown, such sale proceeds are not taxable. Similarly, it was contended that if the trees are grown for the purpose of giving shade, then also the sale proceeds of these trees are not taxable. Reliance was placed on the decisions in State of Kerala v. Karimtharuvi Tea Estate Ltd. ; United Nilgiri Tea Estates Co. Ltd. v. State of Tamil Nadu [1991] 191 ITR 397 (Mad) and Viswanatha Chettiar v. Agrl. ITO [1965] 55 ITR 692 (Mys).

(2.) HOWEVER, the learned Additional Government Pleader (Taxes) sub-mitted that these trees are grown in a thope numbering about 351 trees and the sale proceeds of such trees which are grown in a thope are taxable. It remains to be seen that in the order, the Assessing Officer has mentioned that the sale proceeds would have been related to the sale of shade trees like silver-oak, etc. This view was taken by the Assessing Officer, since the sale proceeds amounted to Rs. 65,000. In Viswanatha Chettiar v. Agrl. ITO [1965] 55 ITR 692 (Mys), while considering the provisions of sections 2(1)(a) and (3) of the Coorg Agricultural Income-tax Act, 1951, the Mysore High Court held that income from the forest trees growing naturally and without the intervention of human agency, even if the land is assessed to land revenue, is not agricultural income within the meaning of section 2(1)(a) of the Income-tax Act. In State of Kerala v. Karimtharuvi Tea Estate Ltd. [1966] 60 ITR 275, the Supreme Court held that the grevelia trees which are grown for giving shade were capital assets and the proceeds derived by sale as firewood of those trees did not constitute agricultural income under the Kerala Agricultural Income-tax Act, 1950. In United Nilgiri Tea Estates Co. Ltd. v. State of Tamil Nadu [1991] 191 ITR 597, this court held that if the trees are spontaneously grown, the sale proceeds of the said trees are not amenable to tax. Similarly, if the trees are grown for giving shade to the crops, then also the sale proceeds as of such trees cannot be taxed under the Agricultural Income-tax Act. According to the facts arising in this case, the Assessing Officer pointed out that the sale proceeds would have come out of the trees like silver-oak, meant for giving shade to the crops. According to the assessee, the trees are grown spontaneously. When the trees are grown spontaneously or when the trees are grown for giving shade to the crops, in both these cases, the sale proceeds of those trees are not taxable under the Agricultural Income-tax Act. Accordingly, the authorities below were not correct in adding the sum of Rs. 65,000 realised from the sale of trees. Hence, we delete the addition of Rs. 65,000.