(Judgment of the Court was delivered by the Honourable the Chief Justice).
We disagree with the opinion of the Income-tax Appellate Tribunal that a question of law arises in this case. The question is one of fact.
Section 2(1) (b) (ii) of the Indian Income-tax Act defines agricultural income as income derived from land by the performance by a cultivator of any process ordinarily employed by a cultivator to render the produce raised or received by him fit to be taken to market. The assessee are growers of tobacco in the Kistna District. The leaf which they produce is used for the making of Virginia cigarettes. They have been in the habit of selling most of their produce to the Indian Leaf Tobacco Development Company which has an office at Guntur. In order to make the leaf suitable for the market, the assessees dry it by a process known as 'flue-curing'. There are four methods of curing tobacco :- (1) Flue curing, (2) raw curing, (3) ground or sun-curing and (4) pit curing. Mr. Rama Rao Sahib who appears for the Commissioner of Income-tax admits that if the assessees leaf were cured by any of these methods other than flue curing, the case would fall under Section (2) (1) (b) (ii) : but he maintains that flue curing is not a method ordinarily employed by a tobacco cultivator to fit his produce for the market.
In the order of the Income-tax Appellate Tribunal on the appeal from the order of the Income-tax authorities refusing to recognise the applicability of Section 2(1) (b) (ii) in this case the process of flue curing is described as follows :
'Flue curing consists of drying green leaf under artificial atmospheric conditions by adopting a process which does not allow the green which permits the regulation of the temperature and humidity.'
Of the Virginia tobacco leaf grown in this Province 95 per cent. is cured by this method. It is true that Virginia leaf only represents about two per cent of the total production of tobacco, but this is beside the point. The best method, and the method almost universally adopted in respect of Virginia tobacco, is flue curing and therefore it must be regarded as a process ordinarily employed by a cultivator of this tobacco. This is clearly not a matter of law. It is simply a question of fact. We may add that this is what the Tribunal itself held and the matter should have been allowed to rest there. As the Tribunal has made the reference, we will answer it in this way :-The process of curing tobacco employed by the assessee is a process ordinarily employed by a tobacco cultivator to render it fit to be taken to the market when the tobacco grown is that of the nature grown by the assessees.
The respondents are entitled to their costs which we fix at Rs. 250/-
Reference answered accordingly.