Agricultural income exemption denied for spontaneous forest growth income from tree sales under the Indian Income-tax Act.

Income from the sale of forest trees was not agricultural income because the statutory exemption applied only where the income was derived from land by agriculture, involving basic human cultivation such as tilling, sowing or planting. On the evidence, the trees were found to be of spontaneous growth and not shown to have been planted by the estate authorities, and that factual finding was binding. The High Court erred in treating the issue as one of burden of proof against the Department and in relying on later forest-preservation activity and Podu cultivation. The income was therefore not exempt under the Indian Income-tax Act, 1922.

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Issues: Whether income derived from the sale of trees in the forest estate was agricultural income exempt from tax under the Indian Income-tax Act, 1922.

Analysis: To claim exemption, the assessee had to establish that the income fell within the statutory definition of agricultural income. Agricultural income required derivation from land by agriculture, meaning basic operations such as tilling, sowing, planting, or equivalent human cultivation. Income from products of spontaneous growth was not agricultural income. The Tribunal had found, on the evidence, that the trees from which the income arose were not shown to have been planted by the estate authorities and were of spontaneous growth. That finding of fact was binding in reference. The High Court erred in treating the matter as turning on the burden of proof against the Department and in relying on subsequent forest-preservation activities and Podu cultivation to conclude that the income was agricultural income.

Conclusion: The income from the sale of forest trees was not agricultural income and was not exempt under section 4(3)(viii) of the Indian Income-tax Act, 1922.

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