C HANUMANTHA RAO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE appellant has preferred this appeal against the order of the Income Tax Appellate Tribunal dated 08.07.2008 made in ITA No,2626/Mds/96.

(2.) THE facts of the case are : THE assessee is an individual and owner of a coffee estate filed its return of income for the assessment year 1991-92 declaring loss. THE said return of income had been processed under section 143(1)(a) of the Income Tax Act accepting loss returned. Subsequently, the case of the assessee was taken up for scrutiny and notice under section 143(2) of the Act has been issued. After rejecting the stand of the assessee that the sale proceeds of the silver oak trees (shade trees) standing in the coffee estate would not attract the capital gain and following the decision of the Supreme Court in the case of CIT v. Jothy Kanna Choudhary, 1957 (32) ITR 705, the assessing officer concluded the sale of shade trees would attract capital gains and accordingly computed the capital gains at 40% of the sale price. On appeal, the Commissioner of Income Tax (Appeals) while upholding the assessment on capital gains on the sale of shade trees, directed the assessing officer to adopt the gross capital gain at 30% of the sale price. THE Tribunal confirmed the order of the Commissioner of Income tax (Appeals) on appeal being taken by the assessee. THE present appeal is filed against that order of the Tribunal.

(3.) IN respect of the first question of law, it is contended that a Division Bench of this Court in the case of Kil Kotagiri Tea and Coffee Estates Co. Ltd., v. State of Tamil Nadu, (1998) 234 ITR 252, arising out of the Tamilnadu Agricultural INcome Tax Act, has held that the Supreme Court in the case of CIT v. Raja Benoy Kumar Sahas Roy, (1957) 32 ITR 466 has observed that any income to be regarded as agricultural income, it should be derived by the assessee by tilling of the land, sowing of the seeds, planting and similar operations on the land. The other operations like weeding, digging the soil around the growth, removal of undesirable undergrowth, etc., would not per se be regarded as agricultural operations and in order to invest them with the character of agricultural operation, the subsequent operation of the weeding, digging etc must necessarily be in conjunction with and in continuation of the basic operations, which are the effective cause of the products being raised on the land.