Agricultural income exemption denied where sugar-cane was marketable without conversion into gul before sale.

Income from the sale of gul made from sugar-cane was held not to qualify as agricultural income because the conversion process was not shown to be necessary to make the produce fit for market. The court applied the test that a process must be ordinarily employed by a cultivator and used to render the produce marketable; although cultivators used similar methods, the decisive point was that sugar-cane itself was already marketable in its raw state. As the produce could be sold without conversion into gul, the resulting income fell outside the agricultural income exemption and was taxable.

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Issues: Whether income derived from the sale of gul manufactured from sugar-cane was agricultural income within the meaning of the relevant definition so as to be exempt from tax.

Analysis: The relevant test required not only that the process should be one ordinarily employed by a cultivator, but also that it should be employed to render the produce fit to be taken to market. The finding that large cultivators and small cultivators used substantially similar methods supported the first element. The decisive question was the second element. On the facts found, the sugar-cane itself was marketable without being converted into gul, and the mere fact that it was not fit for chewing did not mean that it had no market. Since the produce could be sold in its raw condition, the conversion into gul was not a process necessary to make it fit for market.

Conclusion: The income from the sale of gul was not agricultural income and was not exempt from taxation.

Ratio Decidendi: For income to qualify as agricultural income under the relevant definition, the process relied upon must be ordinarily employed by a cultivator to render the produce fit for sale where the produce has no market in its raw state; if the produce is itself marketable without such process, the income does not fall within the exemption.

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