TMI Blog2021 (6) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... falls under the agricultural produce category to make it eligible for Income Tax exemption. Such instances are far and few and definitely the exception cannot be a rule - the assessment Officer in his order dated 18.11.2005 has categorically found that the present assessee did not state the circumstance under which the asseessee converted the sugarcane into jaggery. It is further observed by him that the assessee has incurred an expenditure of ₹ 1,70,000/- for manufacturing of jaggery while he incurred expenditure of ₹ 1,30,000/- towards cultivating sugarcane. As also seen that though manufacturing of jaggery can be done by a small scale by a group of farmers by extracting juice from fresh sugarcane which is filtered and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the market. It is sine qua non that the produce must retain its original character and the only change which is permitted in the produce would be that which makes it marketable. In the instant case, the sugarcane crops which were harvested by the appellant was converted into jaggery and the profit made out of the sale of jaggery was shown as agricultural income. This classification of income was not accepted by the assessing officers as well as the Commissioner of Income Tax(Appeals). These orders were further confirmed by the Income Tax Appellate Tribunal leading to these two appeals. 3. Mr.Niranjan Rajagopal, learned counsel for the appellant relied on CIT Vs. H.G. DATE (1971) reported in 82 ITR 71 (Bombay), in which, the High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss in itself should be a necessary one to render the original commodity marketable. Reliance was placed on the decision in Banarsi Das Gupta Vs. Commissioner of Income Tax [1977] 106 TTR 804 (Allahabad) wherein the assessee had sold part of the sugarcane in its original form and the remaining was converted into jaggery claiming exemption for both the incomes. It was held that the portion of income earned from sale of jaggery is not an agricultural income and it was not entitled for any exemption from Income Tax. Therefore, it was contended that the appellant/assessee was not eligible to declare the income derived from the sale of jaggery as agricultural income merely because jaggery is a by-product of sugarcane. 7. According to the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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