TMI Blog1952 (4) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... at Perur near Coimbatore. The family also owned 65 cows and ten pairs of bulls. With reference to the cows the statement of the assessee furnished to the Income-tax Officer was :- The cows are purely pasture-fed and not stall-fed. It is not being run as a commercial proposition. The cows are maintained purely for manuring and other purposes connected with agriculture and only surplus milk after satisfying assessee's needs is sold to outsiders . During the year of account, the assessee received about ₹ 28,000 as sale proceeds of milk. The milk was sold to the Co-operative Milk Supply Union at Coimbatore. The assessee claimed that the profits of the sale of milk constituted agricultural income which was exempt from the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such land, or occupied by the cultivator, or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any operation mentioned in sub- clauses (ii) and (iii ) of clause (b) is carried on: In Commissioner of Income-tax, Burma v. Kokine Dairy, Rangoon [1938] 6 ITR 502 , Roberts, C.J., delivering the leading judgment of the Full Bench of the Rangoon High Court, observed at page 509 :- What is exempted from tax by the Income-tax Act is agricultural income and for the purpose of considering the position of a dairy farm and the milk which is derived from it, it is necessary to enquire whether the cattle are kept in an urban area and stall-fed or whether they are pastured upon the land........Where cattle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case. That leaves Section 2(1)(b)( i) and 1(1)(b)( iii). Even before either of these provisions could be invoked, the condition to be satisfied by the assessee was that the income had been derived from such land within the meaning of Section 2(1)(b). The expression such land has to be construed with reference to the definition in Section 2(1)(a), i.e, it must have been land used for agricultural purposes and assessed to land-revenue. That this test was satisfied by the assessee in the accounting year was really never in dispute. The 70 acres of land that the assessee owned at Perur were agricultural lands, held obviously on ryotwari tenure, subject to liability for payment of land-revenue to the Government. So the question is, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agement of livestock, which live on the land and draw their sustenance from the soil . We respectfully agree with those observations. It should therefore be unnecessary for us to review again the case law on the subject which was considered in Commissioner of Income-tax, Madras v. K. E. Sun-dara Mudaliar [1950] 18 ITR 259 . We shall content ourselves with a reference to the dicta of Lord Wright at pages 638, 639 in Lord Glanely v. Wightman [1933] A.C. 618 :- ...........equally it is obvious that the rearing of animals, regarded as they must be as products of the soil-since it is from the soil that they draw their sustenance and on the soil that they live-is a source of profit from the occupation of land, whether these animals are f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural lands. The cows were fed primarily on the produce of those agricultural lands. There was no indication that they were stall-fed. The assessee satisfied the test formulated by the Full Bench of the Rangoon High Court in Commissioner of Income-tax, Burma v. Kokine Dairy, Rangoon [1938l 6 ITR 502, with which test, as we have pointed out, we agree. The grounds given by the Tribunal for holding that it was not agricultural income were set out in the statement of the case :- The Tribunal was not satisfied that this was agricultural income for the reasons inter alia:- (i) it was not explained why 65 cows were necessary for obtaining manure; (ii) there was nothing to show how much manure was actually required for agri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference to ground 5 we have to observe that it was not the sale price of the milk but the quantum of yield of milk that the Tribunal should have considered. The primary question that they should have considered was whether the cows were stall-fed or whether they were primarily fed on the produce of the land ; and to that question neither the taxing authorities nor the Tribunal ever really addressed themselves. The assessee's failure to produce his accounts was no doubt a relevant factor in deciding whether the cows were primarily fed on the produce of the land. If accounts had been maintained the failure to produce them would justify, in the absence of any other relevant factor, an inference of facts adverse to the assessee. But there w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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