Case: Commissioner of Income Tax, Madras Vs. R. Venkataswamy Naidu

flowers or roots, though no doubt they differ in obvious respects";on the observations of Viswanatha Sastri J. in - Commissioner of Income-tax, Madras v. K. E. Sundara Mudaliar, 1950 Mad 566 (AIR V 37) (C):"In my opinion the word agriculture is used in S. 2 of the Income-tax Act in a wide sense so as to denote the raising of useful or valuable products which derive nutriment from the soil with the aid of human skill and labour. It would include horticulture, which involves intensive cultivation of land as garden in the production of fruits, flowers or vegetables. It would also include growing of trees or plants whose growth is effected by the expenditure of human effort, skill and attention in such operations, as those of ploughing, sowing, planting, pruning, manuring, watering, protecting etc., as held by Spencer J., in Pavadai Pathan v. Ramaswami Chetty".1922 Mad 351 (AIR V9) (D). The word agriculture applies to the cultivation of the soil for food produce or any other useful or valuable growth of the field or garden and is wide enough to cover the rearing, feeding and management of livestock, which live on the land and draw their sustenance from the soil"; and also on the following passage from the referring judgment of Bose, Acting C. J. in - Mahendralal Choudhari v. Commissioner of Income-tax, C. P. and Berar, 1952 Nag 205 (AIR V 39) (E) at p. 207."I do not conceive that the term "agriculture" has been used as a term of art in the Act. It must therefore bear its ordinary meaning. I find it defined in Websters Dictionary as "the art or science of cultivating the ground including the harvesting of crops, and the rearing the management of livestock; tillage, husbandry, farming"and it was urged that the 65 cows in this case were appurtenant to the soil and drew their sustenance from the soil and the milk which was given by these 65 cows stood on the same footing as the fruit of trees, the milk of goats or eggs laid by fowls and was income "derived from land by agriculture" within the meaning of S. 2 (1) (b) (i) or was income derived from such land "by the sale by a cultivator ....of the produce raised .....by him in respect of which no process has been performed other than a process of the nature described in sub-clause (ii)" within the meaning of S. 2 (1) (b) (iii) of the Act.8. This contention was rejected by the Income-tax Officer, the Appellate Assistant Commissioner as well as the Income-tax Appellate Tribunal. They were of the opinion that the assessee had failed to furnish proper materials and had failed to discharge the burden which lay on it to prove that the income derived by it from the sale of milk during the accounting year was agricultural income. They rightly placed the burden of proof on the assessee but the High Court erroneously framed the question in the negative form and placed the burden on the Income-tax Authorities of proving that the income from the sale of milk received by the assessee during the accounting year was not agricultural income. In order to claim an exemption from payment of income-tax in respect of what the assessee considered agricultural income, the assessee had to put before the Income-tax Authorities proper materials which would enable them to come to a conclusion that the income which was sought to be assessed was agricultural income. It was not for the Income-tax Authorities to prove that it was not agricultural income. It was this wrong approach to the question which vitiated the judgment of the High Court and led it to an erroneous conclusion.9. We are not called upon in the facts and circumstances of the case before us to express any opinion as to whether the word "agriculture" is synonymous with "husbandry" or whether the opinions expressed in the several passages cited above are correct becausewe are of the opinion that the assessee failed to put before the Income-tax Authorities the proper materials which it was incumbent upon it to do to enable them to decide whether the income from the sale of milk during the accounting year was agricultural income as claimed by the assessee. The bare allegations unsupported as they were by any evidence of the nature specified above or by any books of account in connection with the maintenance of the 65 cows and marketing of what according to the assessee was the surplus milk after satisfying its needs were not sufficient to discharge the burden which lay upon the assessee of proving that the income derived by it from these sales was agricultural income. On the contrary, the regularity with which the sales of milk were effected by it to the Co-operative Milk Supply Union at Coimbatore, the quantity of milk sold by it which was of the average value of Rs. 2,500 per month and the payment of the sales-tax of Rs. 235 for the year ended the 31st March 1946 showed that what the assessee carried on was a regular business of producing milk and selling it as a commercial proposition and was, therefore, a business and not agricultural operation.10.The assessee was solely responsible for the paucity of these materials inasmuch as it did not furnish any materials to the Income-tax Officer in spite of the latter having given it an adjournment for the purpose. Counsel for the assessee, as an ultimate resort, appealed to us that we should send back the case to the High Court for calling a further statement of case from the Income-tax Appellate Tribunal but we declined to entertain the application at that late stage, the assessee having not availed itself of the opportunity given by the Income-tax Officer to it in the earlier stages of the enquiry and having rested merely on the position in law as emerging from the judgment of Roberts, C. J. in 1938 Rang 260 (AIR V 25) (FB) (A).

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]9. We are not called upon in the facts and circumstances of the case before us to express any opinion as to whether the word "agriculture" is synonymous with "husbandry" or whether the opinions expressed in the several passages cited above are correct becausewe are of the opinion that the assessee failed to put before theAuthorities the proper materials which it was incumbent upon it to do to enable them to decide whether the income from the sale of milk during the accounting year was agricultural income as claimed by the assessee. The bare allegations unsupported as they were by any evidence of the nature specified above or by any books of account in connection with the maintenance of the 65 cows and marketing of what according to the assessee was the surplus milk after satisfying its needs were not sufficient to discharge the burden which lay upon the assessee of proving that the income derived by it from these sales was agricultural income. On the contrary, the regularity with which the sales of milk were effected by it to theMilk Supply Union at Coimbatore, the quantity of milk sold by it which was of the average value of Rs. 2,500 per month and the payment of theof Rs. 235 for the year ended the 31st March 1946 showed that what the assessee carried on was a regular business of producing milk and selling it as a commercial proposition and was, therefore, a business and not agricultural operation.10.The assessee was solely responsible for the paucity of these materials inasmuch as it did not furnish any materials to theOfficer in spite of the latter having given it an adjournment for the purpose. Counsel for the assessee, as an ultimate resort, appealed to us that we should send back the case to the High Court for calling a further statement of case from theAppellate Tribunal but we declined to entertain the application at that late stage, the assessee having not availed itself of the opportunity given by theOfficer to it in the earlier stages of the enquiry and having rested merely on the position in law as emerging from the judgment of Roberts, C. J. in 1938 Rang 260 (AIR V 25) (FB) (A).