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

2. The assessee, a Hindu undivided family, owned about 70 acres of agricultural land at Perur near Coimbatore. It also maintained in the estate 65 cows and 10 pairs of bulls. During the accounting yearit received Rs. 28,000 from theMilk Supply Union at Coimbatore to which it sold the milk of these cows. For the assessment yearit claimed that the profits from the sale of milk, constituted agricultural income and as such were exempt from payment ofAs no material had been placed before theOfficer in support of this claim, it was granted an adjournment for furnishing complete materials and thereupon a letter dated thesigned by the auditors was filed the relevant portion whereofcows are purelyed. 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 assessees needs is sold to outsiders. In this connection, we would refer to you the decided case ofx, Burma v. Kokine Dairy, Rangoon, 1938 Rang 260 (AIR V 25) (FB)An appeal was taken by the assessee to the Appellate Assistant Commissioner who confirmed the order of theOfficer. An appeal toAppellate Tribunal also met with the same fate. The assessee thereupon applied to the Tribunal for referring the question of law arising out of its order but the Tribunal refused to state the case. The assessee then applied to the High Court of Madras and the High Court directed the tribunal to refer the following question under S. 66(2) of the Act for its decision: "Whether on the facts and circumstances of the case, the income from the sale of milk received by the assessee during the accounting year is not agricultural income within the meaning of theAct".4. The said reference was heard by the High Court and judgment was delivered onwhereby the High Court held that there was no material available to the Tribunal to hold that the income received from the sale of milk by the assessee during the accounting year was not agricultural income within the meaning of the Act and allowed the appeal. The Commissioner ofMadras, applied for and obtained from the High Court the requisite certificate for leave to appeal to this Court and hence this appeal.5. The facts which were not in dispute between the parties were that the assessee owned 70 acres of land which was used for agricultural purpose. Some part of the land was used for agriculture and produce of the value of Rs. 32,220 was raised on it and some part of the land was used as pasture. 65 cows and 10 pairs of bulls were maintained on the land and milk of the value of Rs. 28,000 was sold by the assessee to theMilk Supply Union at Coimbatore during the accounting year and a sales tax of Rs. 235 was paid by the assessee for the year endedThe assessee did not produce any materials before theOfficer to show that the income received by it from the sale of milk was agricultural income. It did not produce any materials showing what was the portion of land which was used for agricultural operations and what was the portion of the land which was used as pasture, what was the food given to the 65 cows by way of chaff, grain orapart from their grazing on the land used as pasture, what was the expenditure incurred on the 65 cows such as the number of servants employed to look after them, etc., and what was the quantity of manure actually required for the agricultural operations for which only the 65 cows were alleged to have been maintained by it, but contented itself by alleging that the cows were purelyfed and that they were maintained purely for manure and other purposes connected with agriculture. The sale of milk, it was further alleged, was not a commercial proposition but was only the sale of surplus milk after satisfying the assessees needs. In regard to these allegations also no proof was furnished by the assessee to theOfficer and the matter rested with the bare allegations contained in the letter of its auditors dated the

Court's reasoning:
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).