TMI Blog1963 (11) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... 55-56. The assessee is a Hindu undivided family. 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 section 4(3)(viii) of the Indian Income-tax 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities also come within the sweep and range of clause (ii). He further submits that all the processes commencing from flue-curing should together be described as agriculture. In support of this contention, the learned counsel draws our attention to the judgments of the High Courts of Patna, Madras and Kerala in J.M. Casey v. Commissioner of Income-tax A.I.R. 1930 Pat. 44 (S.B.), State of Madras v. Saravana Pillai [1956] 2 M.L.J. 306; [1956] 7 S.T.C. 541 and Deputy Commissioner of Agricultural Income-tax and Sales Tax, Kerala State v. A.P. Raman [1960] 11 S.T.C. 263 respectively. In the first of these cases, it was decided by a Special Bench of the Patna High Court that the whole of the profits derived from the manufacture of fibr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which we are concerned is in fact cultivated and that the cultivator in order to render the produce fit to be taken to market ordinarily employs a process to treat the produce of actual cultivation. It is by applying this test that the learned judges negatived the contention of the department that the income derived did not fall outside the contemplation of section 2(1)(b)(ii) and section 4(3)(viii). State of Madras v. Saravana Pillai [1956] 7 S.T.C. 541 also does not come to the rescue of the assessee. The question that fell to be considered there was whether subjecting arecanuts to certain processes such as pealing, slicing, boiling and drying to make them fit for marketing would take the produce out of the purview of section 2(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was necessary to preserve the value and to prevent the deterioration of the husks. Thus, this case also is easily distinguishable, the facts being quite dissimilar to those in the instant case. Sheolal v. Commissioner of Income-tax A.I.R. 1932 Nag. 61 is of some assistance to the department. The problem that presented itself before the Nagpur High Court in this case was whether the whole of the income derived from ginned cotton would attract the applicability of section 2(1)(b)(ii) of the Indian Income-tax Act. The learned judge decided against the assessee on the ground that ginning was not essential to make cotton fit for being taken to market. Although it might be distinctly advantageous even from the mere point of transport, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttle doubt that the operations of re-drying, stripping and grading are not quite essential to make tobacco marketable. It is not disputed that Virginia tobacco after fluecuring has a large market in our country. It is pointed out in a bulletin issued by the Agricultural Research Institute, Poona, extracted from an article written by Messrs F.J.F. Shaw, Imperial Economic Botanist, and Kashiram, Second Assistant to Imperial Economic Botanist, and relied on by the assessee before the Income-tax Appellate Tribunal that the tobacco after curing and bulking is completed must be passed through re-ordering and drying machines . Indisputably, these machines are very expensive plants and I am told by the learned counsel for the assessee that ea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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