2011 (1) TMI 265

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.... Menon appearing for the appellant, and learned counsel appearing for the respondent-assessee which is a Government undertaking. 2. Natural rubber obtained from plantation is essentially agricultural income which could not be brought to tax under the Central Income-tax Act. However, when large planters started processing field latex to intermediary products of rubber, Central Government felt that so much of the income attributable to the industrial activity, that is conversion and manufacture of rubber into products should be brought to tax under the Central Income-tax Act. This is in line with the provision under the Income-tax Rules providing for bifurcation of income from manufactured tea between agricultural income and Income-taxable....

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....is not considered by any of the authorities. The Tribunal, however, accepted the contention of the respondent that scrap sold was generated in the course of agricultural operation, and so much so, it is not assessable under Rule 7A. The contention of the revenue on the other hand is that respondent has sold scrap rubber generated by the industry as a whole which attracts tax under Rule 7A. Even though without details on facts as to the nature and source of scrap obtained and sold by the respondent, it would not be possible to decide the issue this way or that way, we still feel Rule 7A requires some clarification for the purpose of not only deciding the issue in this case, but also cases that will arise in future in the case of this assesse....

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....othing but a process whereunder rubber latex is concentrated, coloured and preserved. Centrifuged rubber also has a shelf life of around 6 months. As is clear from Rule 7A, apportionment of income derived from manufacture of centrifuged latex and other products referred to therein for the purpose of assessment between agricultural income and central income is in the ratio of 65:35. What is intended to be taxed under the Central Act is 35 per cent of the income from sale of rubber products referred to in Rule 7A(1), that is centrifuged latex, latex based crepe, pale latex crepe (PLC), etc. 5. Rubber latex is extracted from rubber trees by cutting the bark in a particular pattern. In the course of tapping the trees for extraction of latex,....