Outright sale of rubber trees treated as capital receipt, with no bifurcation into agricultural income from slaughter tapping.

An outright sale agreement for identified rubber trees at a fixed price per tree was treated as a transfer of capital assets, not as a transaction generating agricultural income. Because the agreement did not confer any right to slaughter tap or otherwise extract latex, the sale consideration could not be bifurcated and taxed as income attributable to latex extraction. Any independent latex income, if actually earned, would have to be assessed on proper material against the person liable for that income. The sale consideration under the agreement itself remained a capital receipt and was not subject to agricultural income tax.

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Issues: Whether the consideration received under the agreement for sale of 3,000 rubber trees was a capital receipt or agricultural income, and whether any part of it could be bifurcated and taxed as income attributable to slaughter tapping.

Analysis: The agreement contemplated an outright sale of identified rubber trees for a fixed price per tree, with the purchaser obliged to cut and remove the trees in accordance with the instalment payments. The terms did not confer any right to slaughter tap the trees, nor did they show that any part of the agreed consideration was attributable to extraction of latex. On the language of the agreement and the governing principles drawn from the decided cases, the receipt represented the price of trees sold as capital assets. If any latex income had in fact arisen independently, the assessing authority could proceed only on proper material against the person liable to tax for that income, but the sale consideration under the agreement itself could not be treated as agricultural income.

Conclusion: The receipt under the agreement was held to be a capital receipt, not agricultural income, and the attempted bifurcation of the sale consideration was rejected.

Final Conclusion: The assessment and revisional orders were quashed because the amount received for the sale of rubber trees could not be subjected to agricultural income-tax on the footing of slaughter tapping.

Ratio Decidendi: Where an agreement is an outright sale of trees and does not confer a right to extract latex, the consideration for the sale is a capital receipt and cannot be split up and taxed as agricultural income merely on an assumed linkage to slaughter tapping.

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