Agricultural income treatment for eucalyptus tree sales on agricultural land was upheld under income-tax law.

Income from the sale of eucalyptus trees grown on dry agricultural land was treated as agricultural income under section 2(1A) of the Income-tax Act, 1961 because revenue records supported the land's agricultural character and the material showed planting and cultivation of the trees. The income was therefore derived from land used for agricultural purposes, satisfying the statutory test for exemption. On these facts, the disallowance made by the authorities below was held unsustainable.

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Issues: Whether the income from sale of eucalyptus trees grown on agricultural land qualified as agricultural income under section 2(1A) of the Income-tax Act, 1961 and was therefore exempt from tax.

Analysis: The land was supported by revenue records and was used for growing eucalyptus and other trees. The record showed initial planting and subsequent cultivation activities, and the income arose from the sale of trees grown on dry agricultural land. On these facts, the statutory requirement that the income be derived from land used for agricultural purposes was satisfied.

Conclusion: The income from sale of eucalyptus trees was agricultural income within section 2(1A) of the Income-tax Act, 1961, and the disallowance made by the authorities below was not sustainable.

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