BOGGAVARAPU PEDA AMMAIAH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question that requires an answer in this reference is framed in the following words :

(2.) THE reference relates to the asst. year 1955 -56. The assessee is an HUF. One of the businesses carried on by the assessee is export in tobacco, which is grown on the assessee's lands. Exemption from tax was claimed by the assessee under S. 4(3)(viii) of the Indian IT Act in respect of income arising on the sale of tobacco as agricultural income. The Department allowed the claim in part. The income ascribable to the operations carried on up to the stage of "flue -curing" of the tobacco was regarded as agricultural income, while that accruing from subsequent activities up to and including the sale of tobacco by export to foreign countries was treated as income from business which is subject to tax. The tobacco to be made fit for export to countries like United Kingdom and Russia had to undergo a further process of re -drying, stripping and grading. The order of the proper ITO was affirmed on appeal by the AAC as also by the Tribunal on a further appeal. Further,as the Tribunal thought that the case raises a question of law, it referred the matter to this Court under S. 66(1) of the Indian IT Act.

(3.) IN this enquiry, the problem that presents itself is whether the income attributable to operations of re -drying, stripping and grading would also come within the connotation of the expression