Agricultural income: receipts from sale of naturally growing forest trees are not agricultural income and are not exempt.

Receipts from the sale of forest trees naturally growing on land are not covered by the statutory definition of agricultural income and therefore do not qualify for exemption under the Income-tax Act provisions cited (including the exemption provision for agricultural income). The analysis confines itself to the legal question posed on reference and applies the statutory definition and exemption text; it does not decide any separate capital-versus-revenue character issue. Operatively, such receipts are held outside the agricultural-income exemption and the reference is answered against the assessee.

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Issues: Whether receipts from the sale of forest trees growing naturally on land (assessed to land revenue) constitute agricultural income within the meaning of Section 8(1)(a) and are exempt under Section 4(3)(viii) of the Income-tax Act.

Analysis: The question referred assumes the receipts are income and the High Court's jurisdiction on reference under Section 66(1) is confined to the specific question of law presented. The Court declined to consider, and found no referral of, any distinct question whether the receipts were capital in nature. Applying the prior decision of the Court on the same general question, the receipt from sale of naturally growing forest trees was examined against the statutory definition of agricultural income under Section 2(1) and the exemptions in Section 4(3)(viii) and the related provisions raised in the reference.

Conclusion: The receipts from the sale of forest trees growing naturally on the land do not constitute agricultural income within the meaning of the Income-tax Act and are not exempt; the reference is answered against the assessee (in favour of Revenue).

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