TMI Blog1973 (2) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... he profit on the sale of shade trees is assessable as capital gains under section 45 of the Income tax Act, 1961 ? " During the accounting period relating to the year of assessment 1964-65, the assessee sold old shade trees (albizzia) for a sum. of Rs. 40,633. The profits and gains arising from such sale were assessed by applying section 45 of the Income-tax Act, 1961 (hereinafter called " the Act "), by the Income-tax Officer. The assessee's appeal before the Appellate Assistant Commissioner was accepted by that authority on the ground that the profits, if any, arising from the sale constitute agricultural income and therefore could not have been taxed under the Act. The department appealed to the Tribunal and contended before the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that " what is attached to the land belongs to the land " is a principle not applicable to India. The judicial Committee of the Privy Council has said so very early (Vallaabs Narainji v. Development Officer, Bandra ). This court followed that decision in State v. Mahadeva Iyer Venkitasubramania Iyer and in Chellappan Nadar v. Krishnan Nair and the Supreme Court approved the decision of the Privy Council in Dr. K. A. Dhairyavan v. J. R. Thakur. We cannot, therefore, postulate that the trees attached to the land belong to the land. It is difficult to say that trees are agricultural land in India. Our attention was drawn to a decision of this court in Sainaba v. Narayanan, wherein the learned judge for the purpose of Explanation III of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Supreme Court in Commissioner of Agricultural Income-tax v. Kailas Rubber Co. Ltd. In the face of this decision, it is impossible to contend that the profits and gains arising from the transfer of the trees in question are agricultural income. Confronted with this position, counsel on behalf of the assessee has raised a very much larger contention which was also raised before the Tribunal and it was this. It was contended that just as profits and gains arising from assets that are different from what the assessee's counsel called " agricultural capital asset " is income and can be treated as income for income-tax purposes and has been included for a long time now under the statutes applicable to income-tax, it is poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm agricultural income " in the items in the Lists has necessarily to be understood in the light of the definition of " agricultural income " in the Act. If this is so, the principle well-established that constitutional entries should not be read in a narrow manner but must be given the widest amplitude will have no application, for what we have to understand is the scope and ambit of the definition in the Act. So understood, there is no difficulty in excluding from the ambit of " agricultural income " the profits and gains arising from the transfer of the so-called " agricultural capital assets ". We have assumed for the purpose of this discussion that there can be what is known as " agricultural capital asset " but we should not be taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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