TaxTMI 
TaxTMI 
1964 (8) TMI 69
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....ome-tax Act, 1922 ? " Section 2(1) of the Act defines the expression " agricultural income " and section 4(3)(viii) of the Act provides that " agricultural income " shall not be included in the total income of an assessee. The relevant portion of the definition reads as follows : " ' agricultural income ' means (a) any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land revenue in the taxable territories or subject to a local rate assessed and collected by officers of the Government as such ; (b) any income derived from such land by- . . . . . (ii) the performance by a cultivator or receive....
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....out of the tree, is an opaque liquid resembling milk. The latex itself has a limited market and is bought by the manufacturers of foam rubber, dipped goods and other similar products. It has, however, to be preserved to prevent coagulation and deterioration during transport and storage. It has also to be homogenised and concentrated to reduce the transport charges. The three familiar varieties are creamed latex, evaporated latex and centrifuged latex. The more important forms in which plantation rubber is usually sold are as sheets and crepe. The Encyclopaedia Britannica deals with them as follows : " The details of the methods employed in the prepara....
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....o the smoke of a wood fire for about 14 days. " (14th edition, volume 19, page 604). Several grades of rubber have been defined by the Rubber Manufacturers Association of America according to which natural rubber is bought and sold in the markets of the world. They consist of six qualities of ribbed smoked sheet : RMA No. 1 X Superior quality 1. Standard quality 2. Good fair average quality 3. Fair average quality 4. Low fair average quality 5. Inferior fair average quality ; three qualities of thick latex crepe: 1 X Superior quality No. 1. Standard quality 2. Fair average quality; and three qualities of thin latex crepe: 1 X Superior quality No. 1. Standard quality 2. Fair average quality. The Central Government has....
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....ot in smoke house). The long strips are hung from rails in well ventilated rooms or hot air at 38-50 C. is passed through the rooms for 5-6 days. Several layers of thin pale crepe are placed one over the other and subjected to pressure to make sole crepe. This fetches a higher price than smoked sheets." It will be seen from paragraphs Nos. 7 and 8 above that sole crepe is not mentioned either by the Rubber Manufacturers Association of America in the grading of natural rubber or by the Central Government in the fixation of the maximum and minimum prices. It may be that this is due to the fact that sole crepe is a commodity manufactured for a specific purpose for use as soles of shoes and other types of foot-wear. And if such is the case, ....
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....at whether the process employed is one that is necessary, or more than one that is necessary, for rendering the produce fit to be taken to market is essentially a question of fact, that as the order of the Tribunal amounts to a finding of fact in favour of the assessee and that in view of the finding, we must answer the question referred in favour of the assessee. We are inclined to accept this contention. The order of the Tribunal consists of three short paragraphs. It reads as follows : " The only question, which this appeal raises for our consideration, is whether the process of conversion of latex into sole crepe is a process employed by the cultivator ....
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....t but conclude that in the view of the Tribunal smoked sheets and sole crepe should be treated alike and that both have undergone only processes that are necessary to render the produce fit to be taken to market. That smoked sheets should be considered as having undergone only a process necessary for rendering the plantation produce fit to be taken to market is clear from Muhamed v. Sales Tax Officer (1961) K. L. J. 1156) and Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Travancore Rubber and Tea Co. Ltd. ((1964) K. L. J. 534) as well. Paragraph 3 of the latter decision will also show that it was not even disputed that the usual method is conversion into smoked sheets and that the said conversion is not a manufacturing pro....