1. The question that arises in this tax case is as to whether the sale value of albezia trees of Rs. 6,080 and the sale value of malavembu trees of Rs. 3,970 are includible as taxable receipts of the assessee along with his other agricultural income. The assessee's contention was that these trees have been specially planted by him only with a view to give shade to the rubber plants and that the object of planting these trees was not with a view to exploit the same by periodical operations of cutting and selling them in the market. The Tribunal has accepted the assessee's case that these trees were grown with the specific purpose of protecting the rubber plants in his plantation. But, however, it has taken the view that the income by way of the sale of these trees, even though they have become useless as shade trees, will still be an agricultural income, assessable to tax under the Travancore-Cochin Agricultural Income-tax Act, 1930. The Tribunal felt that there can foe no differentiation between the income from the rubber plants and the income from other trees grown, in the plantation area and the reasoning given for such a view can be stated in their own words :
'Any such attempt of trying to differentiate between the type of plants and trees grown would make the administration of the Act difficultand the computation of income allowing only those expenses attributable to the growth of trees other than those trees which are to be treated as capital assets almost impossible of determination. It is precisely for this reason that all expenses incurred in connection with the agricultural operations are treated as allowable expenditure and it follows that all the sales of items grown out of the lands are revenue receipts.'
2. We are not in a position to understand the above reasoning. There is always a distinction between receipt of a capital nature and receipt of a revenue nature, and that if the receipt is in the nature of capital, that receipt cannot be brought to charge even under the Agricultural Income-tax Act. On the finding given by the Tribunal that the trees have been grown specifically for the purpose of giving shade to the rubber plants and to facilitate the further and effective growth of the rubber plants, the sale of such trees when they become useless as shade trees cannot be said to be a revenue receipt. This is clear from the decision of the Supreme Court in State of Kerala v. Karimtharuvi Tea Estate Ltd., : 60ITR275(SC) . In that case, their Lordships of the Supreme Court had to consider a question similar to the one arising in this case. That case arose under the provisions of the Kerala Agricultural Income-tax Act, 1950. There a company, which carried on business of manufacturing and selling tea, grew grevelia trees in its tea estate solely for the purpose of affording shade for the tea bushes. When the grevelia trees became useless by efflux of time they were cut down and sold. The question arose whether the sale proceeds of the said grevelia trees cut and sold will constitute agricultural income under that Act. The Supreme Court, after referring to the definition of 'agricultural income' under Section 2 of that Act, expressed the view thus :
'There is no controversy about the fact that the owners of tea estates plant grevelia trees not for the purpose of deriving any income therefrom, but solely for the purpose of providing shade for the tea plants and that such shade is essential for the proper cultivation of tea. The trees were cut down and sold after they had become useless by efflux of time. The grevelia trees in the tea estate of the respondent constituted, therefore, capital assets and the proceeds derived therefrom by sale as firewood would not constitute agricultural income under the Act.'
3. In view of the above decision of the Supreme Court which was rendered subsequent to the decision of the Tribunal, the order of the Tribunal has to be set aside. The question referred to us is, therefore, answered in favour of the assessee. There will, however, be no order as to costs.