Exemption for produce grown by assessee requires substantial interest in land; mere usufruct lease is insufficient.

The proviso to section 2(r) of the Madras General Sales Tax Act, 1959, grants exemption only where the produce is grown by the assessee and the assessee has a substantial interest in the land. A mere annual lease giving only the right to collect the usufruct from coconut trees does not satisfy that requirement. Because the exemption is a tax relief, its conditions must be strictly met. On the stated facts, the lessee was not treated as having grown the coconuts himself and was not entitled to the exemption.

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Issues: Whether the turnover from sale of coconuts obtained under an annual lease of a coconut thope was exempt under the proviso to section 2(r) of the Madras General Sales Tax Act, 1959.

Analysis: The exemption under the proviso to section 2(r) was held to apply only when the produce is grown by the assessee himself and the assessee has a substantial interest in the land on which the produce is grown. A mere lease conferring only the right to collect the usufruct from coconut trees does not amount to such an interest in the land. The exemption being in the nature of a tax relief, its conditions must be strictly satisfied. On the facts found, the lease was annual and conferred only the right to the usufruct, so the assessee could not be treated as having grown the coconuts himself for the purpose of the proviso.

Conclusion: The assessee was not entitled to exemption under the proviso to section 2(r) of the Madras General Sales Tax Act, 1959.

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