Agricultural income character of resin receipts from forest lands excludes taxation as business income.

Income derived from resin collected from forest lands is treated as agricultural income where the land and trees are shown to have undergone basic and subsequent agricultural operations, including extraction, maintenance, and nurturing. On those facts, the receipt is not characterised merely as business proceeds, and the statutory definition of agricultural income in section 2(1A) applies on the settled principle that income from land under agricultural operations retains that character. The discussion of section 11(4A) does not change the result where the primary nature of the receipt is agricultural. Accordingly, resin income is not taxable as business income in the assessee's hands.

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Issues: Whether the income derived from resin collected from forest lands constituted agricultural income or business income, and whether such income was liable to tax under section 11(4A) of the Income-tax Act, 1961.

Analysis: The decisive inquiry was whether the land and trees were being subjected to basic and subsequent agricultural operations of the kind recognised in the settled law on agricultural income. The forest lands were of very old origin, and the record showed expenditure on extraction, maintenance, nurturing, and related operations. On those facts, the income could not be treated merely as proceeds of a commercial undertaking. The statutory definition of agricultural income in section 2(1A) was applied in the light of the established principle that income arising from land on which agricultural operations are carried on remains agricultural income. The discussion of section 11(4A) did not alter the result, because the primary character of the receipt was found to be agricultural.

Conclusion: The income from resin was agricultural income and was not taxable as business income in the hands of the assessee.

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