Slaughter-tapping receipts from rubber trees were treated as sale proceeds, not agricultural income, under the agreement.

Receipts from slaughter-tapping and sale of old rubber trees were not agricultural income under section 2(a) of the Agricultural Income-tax Act, 1950. The agreement showed that the assessee acquired the trees for removal and annihilation, with the land remaining with the owner for replanting, so the land was only the place of extraction and not the source of any continuing agricultural yield to the assessee. The amounts were therefore treated as consideration for sale of goods rather than income derived from land. The issue was answered against the department and in favour of the assessee.

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Issues: Whether the amount received by slaughter-tapping and sale of rubber trees under the agreement constituted agricultural income within section 2(a) of the Agricultural Income-tax Act, 1950.

Analysis: The determination turned on the terms of the agreement under which the assessee purchased old and uneconomical rubber trees for removal and replanting of the land. The agreement showed an intention that the trees be cut, removed and annihilated, with the land to remain with the owner for replanting. On that footing, the land was only the place from which the trees were to be taken away and not the effective source of any continuing agricultural yield to the assessee. The receipts were therefore attributable to a sale of goods and not to a transfer of an interest in land from which agricultural income could be said to be derived.

Conclusion: The receipts from slaughter-tapping and sale of the rubber trees did not amount to agricultural income, and the question was answered in the affirmative against the department and in favour of the assessee.

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