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Cherian Dominic and anr. Vs. Commissioner of Agricultural Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberIncome-tax Referred Case No. 2 of 1971
Judge
Reported in[1975]98ITR283(Ker)
ActsAgricultural Income-tax Act, 1950 - Sections 2 and 60(1)
AppellantCherian Dominic and anr.
RespondentCommissioner of Agricultural Income-tax
Appellant Advocate K. George Verghese, Adv. and Ors.
Respondent AdvocateGovernment Pleader
Excerpt:
direct taxation - agricultural income - sections 2 and 60 (1) of agricultural income-tax act, 1950 - whether income from slaughter tapping received by assessee during 1959-60 agricultural income of assessee taxable under act of 1950 - assessee was in possession of estate - as such assessee fall under definition of person and liable to be taxed - held, income from slaughter tapping received by assessee agricultural income liable to be taxed. - - '6. an attempt to have the question referred to the high court by an application under section 60(1) of the act failed and thereafter this court was moved by o......m/s. kuttanad rubber co. ltd. was entitled to slaughter tap the rubber trees in the estate. the income in question was admittedly derived from this slaughter tapping. it was contended before the agricultural income-tax officer that the income so derived is not agricultural income taxable under the kerala agricultural income-tax act, 1950, for short, ' the act '. it was urged before the officer that the assessee had not conducted any basic agricultural operations or what may be termed 'operations' as explained by the supreme court in commissioner of income-tax v. raja benoy kumar sahas roy, [1957] 32 itr 446. this contention was negatived and there was an appeal before the appellate assistant commissioner. the appeal too was dismissed and there was a further appeal before the tribunal.....
Judgment:

Govindan Nair, J.

1. At the instance of the assessee, the Kerala Agricultural Income-tax Appellate Tribunal has referred the following question for our decision :

' Whether, on the facts and in the circumstances of the case, the income from slaughter tapping received by the assessee during 1959-60 is agricultural income of the assessee taxable under the Agricultural Income-tax Act, 1950? '

2. The assessment year is 1959-60. The assessee under an oral agreement with M/s. Kuttanad Rubber Co. Ltd. was entitled to slaughter tap the rubber trees in the estate. The income in question was admittedly derived from this slaughter tapping. It was contended before the Agricultural Income-tax Officer that the income so derived is not agricultural income taxable under the Kerala Agricultural Income-tax Act, 1950, for short, ' the Act '. It was urged before the officer that the assessee had not conducted any basic agricultural operations or what may be termed 'operations' as explained by the Supreme Court in Commissioner of Income-tax v. Raja Benoy Kumar Sahas Roy, [1957] 32 ITR 446. This contention was negatived and there was an appeal before the Appellate Assistant Commissioner. The appeal too was dismissed and there was a further appeal before the Tribunal and before the Tribunal the contention that there was no agricultural income earned by the assessee was elaborated upon and two specific points were taken: (1) that the assessee had not performed any agricultural operations, and (2) that the assessee was not a person as defined under Section 2(m) of the Act. Relating to the first contention, the Tribunal said :

' Here the appellants were given the right to slaughter tap the trees, and they could so tap the trees, and recover the yield only after performing certain acts which are absolutely necessary. It is seen from the return made by them that they have spent money for weeding, for laying out roads, for erecting smoke houses, for curing the rubber and have incurred expenditure for clearing the undergrowth. This is not an identical case to that of a licensee of cocoanut trees permitted to take toddy where the licensee has nothing to do by way of pruning, tending or weeding, to enable him to get the juice from the cocoanut trees. '

3. After distinguishing the decision in Commissioner of Income-tax v. Yagappa Nadar, AIR 1927 Mad 1038. and some other decisions, it was held:

' Therefore, we repel the contention of the assessee that the income obtained by them is not agricultural income.'

4. Section 2(m) of the Act defines ' person ' thus :

' 'Person' means any individual or association of individuals, owning or holding property for himself or for any other, or partly for his own benefit and partly for another, either as owner, trustee, receiver, common manager, administrator or executor or in any capacity recognised by law, and includes a Hindu undivided family, a firm or a company, an association of individuals, whether incorporated or not, and any institution capable of holding property.'

5. The second contention raised before the Tribunal by the assessee was that the assessee did not either own the estate nor was he holding the property. This contention was negatived by the Tribunal observing thus :

' It was next contended that even though the income may be agricultural income, the appellants cannot be made liable for the same, as according to them they do not ' own ' the land or 'hold it' for themselves or for any other, and that, therefore, they will not come within the definition of ' person ' in Section 2(m) of the Act. It is true that these appellants do not own the land. But they hold this property. It is not as if possession of the land has not been given to them, as in the case of the licensee of a cocoanut tree permitted to extract toddy. It is not correct to say that they have merely been given .possession of the rubber trees and not the estate itself. Their accounts prove that they have laid out roads. They have removed the undergrowth. They put up smoke houses. They have done weeding. In short, the estate has been put in their possession for two years, during which period they have slaughter tapped the trees. For slaughter tapping the trees the land also has necessarily to be put in the possession of the person who does the work. In any view the evidence in this case, which is the evidence supplied by the appellants themselves, conclusively establish that they have possession of the estate. So they were ' holding ' the estate. Consequently, they fall under the definition of ' person ' and are liable to be taxed. We would, therefore, hold that the income obtained by the appellants by the slaughter tapping of the rubber trees during the year in question is liable to be taxed. '

6. An attempt to have the question referred to the High Court by an application under Section 60(1) of the Act failed and thereafter this court was moved by O. P. No. 1318 of 1965, seeking reference to this court of as many as 9 questions. Two conclusions reached by the Tribunal that the assessee was conducting agricultural operations and that he held the property were also specifically challenged and questions relating to such challenge were also sought to be raised. But the only question that was referred was the one that we have extracted above.

7. On the above facts, the assessee's counsel contended before us that the question referred to us must be answered in favour of the assessee and urged that no agricultural operations had actually been conducted by the assessee find that he did not hold the property and whatever acts he had done on the property were only incidental to those that he had to perform to exercise his rights under the agreement to slaughter tap the trees and he submitted, therefore, that the principle of the decision of this court in Commissioner of Agricultural Income-tax v. George Varghese & Co., : [1973]90ITR496(Ker) should apply. We quite see that two views are possible--in fact we are inclined to think that the assessee had not performed any agricultural operations and that on the facts the assessee was not holding the property--on the question as to whether the assessee had conducted agricultural operations or that he was holding the property. But we are certain that we are precluded from going into that question of fact In the absence of a specific question being referred to us whether these findings entered by the Tribunal are arbitrary or perverse or unreasonable in the sense they are unsupportable on the basis of the materials that were available. We think that the principle of the decision of the Supreme Court in Commissioner of Income-tax v. Kamal Singh Rampuria, : [1970]75ITR157(SC) must apply. Counsel for the assessee contended that there was no finding on the question that the assessee had performed agricultural operations. There is no finding in the sense that the Tribunal has not stated, ' we find '. But, reading the relevant part of the order, we have no doubt in our mind that they have found that the assessee had not performed agricultural operations and there is of course the definite finding which we have extracted that the assessee was holding the property. The principle of the decision in Commissioner of Agricultural Income-tax v. George Varghese & Co. is not, therefore, attracted. We answer the question referred to us on the basis of the findings entered by the Tribunal, in the affirmative, that is, in favour of the department and against the assessee. We direct the parties to bear their respective costs.

8. A copy of this judgment under the seal of the High Court and the signature of the Registrar will be forwarded to the Kerala Agricultural Income-tax Appellate Tribunal, Trivandrum.


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