TaxTMI 
TaxTMI 
1973 (2) TMI 21
X X X X Extracts X X X X
X X X X Extracts X X X X
....eriod relating to the year of assessment 1964-65, the assessee sold old shade trees (albizzia) for a sum. of Rs. 40,633. The profits and gains arising from such sale were assessed by applying section 45 of the Income-tax Act, 1961 (hereinafter called " the Act "), by the Income-tax Officer. The assessee's appeal before the Appellate Assistant Commissioner was accepted by that authority on the ground that the profits, if any, arising from the sale constitute agricultural income and therefore could not have been taxed under the Act. The department appealed to the Tribunal and contended before the Tribunal that the trees in question would be " property of any kind " mentioned in section 2(14) of the Act defining " capital assets " and that it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....il has said so very early (Vallaabs Narainji v. Development Officer, Bandra ). This court followed that decision in State v. Mahadeva Iyer Venkitasubramania Iyer and in Chellappan Nadar v. Krishnan Nair and the Supreme Court approved the decision of the Privy Council in Dr. K. A. Dhairyavan v. J. R. Thakur. We cannot, therefore, postulate that the trees attached to the land belong to the land. It is difficult to say that trees are agricultural land in India. Our attention was drawn to a decision of this court in Sainaba v. Narayanan, wherein the learned judge for the purpose of Explanation III of section 2(25) of the Kerala Land Reforms Act of 1964 proceeded on the basis that " land " in that Explanation does not mean the soil alone but the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is impossible to contend that the profits and gains arising from the transfer of the trees in question are agricultural income. Confronted with this position, counsel on behalf of the assessee has raised a very much larger contention which was also raised before the Tribunal and it was this. It was contended that just as profits and gains arising from assets that are different from what the assessee's counsel called " agricultural capital asset " is income and can be treated as income for income-tax purposes and has been included for a long time now under the statutes applicable to income-tax, it is possible to include the profits and gains arising from the transfer of " agricultural capital asset " as agricultural income " for the purpo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....come " in the Act. If this is so, the principle well-established that constitutional entries should not be read in a narrow manner but must be given the widest amplitude will have no application, for what we have to understand is the scope and ambit of the definition in the Act. So understood, there is no difficulty in excluding from the ambit of " agricultural income " the profits and gains arising from the transfer of the so-called " agricultural capital assets ". We have assumed for the purpose of this discussion that there can be what is known as " agricultural capital asset " but we should not be taken as having decided any such question though we must say it appears to be a very plausible argument. If an asset is created by operations....