TaxTMI 
TaxTMI 
1998 (2) TMI 10
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....for short, "the Act"). The appellant is a partnership firm constituted for the purpose of carrying out agricultural activities. During the course of its business it indulges in the activity of growing mulberry leaves and rearing silk worms. The assessee purchases silk worm eggs and when they are hatched the worms are principally fed on mulberry leaves. The mulberry leaves are plucked from the trees grown by the appellant and these leaves are cut into strips which are fed to the silk worms. The worms wind around themselves the saliva which oozes from their mouth and the hardened saliva forms the protective cocoons. These cocoons are then sold in the market by the appellant. Before the Income-tax Officer, the appellant claimed that the enti....
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....all within the purview of section 2(1) of the Act inasmuch as the agricultural produce, viz., the mulberry leaves, was not what was sold in the market and what in fact was sold were cocoons which were not the agricultural produce of the appellant. At the instance of the appellant, the Tribunal then stated the case and referred the following question of law to the High Court : "Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the income derived by the assessee from the process, i.e., the rearing of silk worms, is not entitled to exemption under section 2(1)(b)(ii) of the Income-tax Act, 1961 ?" The High Court in the impugned judgment has answered the question of law in favour of the Reve....
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....d mulberry leaves been subjected to some process and sold in the market as such, then certainly the income derived therefrom would be regarded as agricultural income but the case of the appellant before the authorities, and in this court, has been that mulberry leaves cannot be sold in the market and they can only be fed to the silk worms. The agricultural produce of the cultivator will be mulberry leaves and by no stretch of imagination can the silk worms, and certainly not the silk cocoons, be regarded as the agricultural produce of the cultivator. The aforesaid view finds support from the following observations of this court in Dooars Tea Co. Ltd. v. Commr. of Agrl. I. T. [1962] 44 ITR 6 at page 12 : "Section 2(1)((b) consists of three....