Agricultural income exemption for milk sales fails without proof, as regular production and sale can amount to a business

Income from milk sales is not agricultural income merely because the cows are pasture-fed or kept on agricultural land; the assessee must prove the statutory basis for exemption with proper material. In the absence of accounts or evidence showing the extent of pasture land, the manner of feeding and maintenance, the agricultural necessity for keeping the cows, or the basis of the alleged surplus milk sales, the burden of proof is not discharged. Regular and substantial milk production and sale may indicate a commercial business rather than agricultural operations, so the exemption claim failed.

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Issues: Whether the income from the sale of milk received by the assessee during the accounting year constituted agricultural income and was therefore exempt from income-tax, and whether the assessee had discharged the burden of proving that claim.

Analysis: The assessee relied on the theory that the cows were pasture-fed, maintained for agricultural purposes, and that the milk sold was only surplus milk. However, no adequate materials, accounts, or evidence were produced to show the extent of the agricultural land used as pasture, the manner of feeding and maintenance of the cows, the agricultural necessity for keeping them, or the basis on which the alleged surplus milk was sold. The claim for exemption therefore failed for want of proof. The burden lay on the assessee to establish that the income fell within the statutory concept of agricultural income, and that burden was not discharged. The regular and substantial sales of milk and the surrounding circumstances indicated a business of milk production and sale rather than agricultural operations.

Conclusion: The income from the sale of milk was not agricultural income within the meaning of the Income-tax Act, and the finding was against the assessee.

Ratio Decidendi: A claim that income is agricultural income and thus exempt from tax must be proved by the assessee with proper materials; bare assertions, unsupported by evidence, do not discharge that burden, and regular milk production and sale may constitute a commercial business rather than agricultural income.

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