TaxTMI 
TaxTMI 
1998 (1) TMI 52
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....t of toddy tapping was not agricultural income exempt under section 10(1) of the Income-tax Act? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the activity of tapping toddy did not involve manufacture or production of an article or thing? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not entitled to deduction under section 80HHA in respect of its toddy business?" The facts of the case are that the assessee is the licensee for tapping and vending of toddy. He filed his returns for the assessment year 1983-84 declaring nil income. A notice under section 142 of the Income-tax Act was issued and a represent....
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....nt. The first question that arises for consideration is as follows : "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee's income as a result of toddy tapping was not an agricultural income exempt under section 10(1) of the Income-tax Act?" The business of the assessee consists of extracting toddy and vending toddy in the districts of Mysore, Nanjangud and Periapatna taluks. The assessee has shown the income of Rs. 1,11,558 as profits from business. The question is whether the activity of tapping and vending toddy constitute an agricultural operation. The assessee has not produced any evidence to show that he does an agricultural operation for extracting toddy and ven....
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....y is an agricultural activity. The lessee will be given only the right to extract the toddy and vend the same. The excise toddy trees which are also on the private lands and Government lands are auctioned for the purpose of leasing them to the highest bidders in the concerned excise year. The trees are naturally grown on the lands. Even taking that the trees are owned by the owner of the land, he is not permitted to tap the trees. Only the Government has got a right to cut the trees, tap and vend the liquor. At the most the owner will be paid the tax as per the rules or in case the trees are situated in such a land which is an agricultural land wherein tapping is permitted, his crops will be spoilt but the trees will not be exempted from ta....
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....ning, watering, digging the soil around the growth and removing undergrowths could be regarded as agricultural operations when they are taken in conjunction with and as continuation of the basic operations mentioned before, they could not, apart from those operations, be regarded as bearing the character of agricultural operations. But if these basic operations are wanting, the subsequent operations do not acquire the characteristic of agricultural operations. It is agreed on all hands that products which grow wild on the land or are of spontaneous growth not involving any human labour or skill upon the land are not products of agriculture and the income derived therefrom is not agricultural income. There is no process of agriculture involv....
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.... above question against the assessee and in favour of the Revenue. Questions Nos. 2 and 3 are interlinked and they are as follows : "(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the activity of tapping toddy did not involve manufacture or production of an article or thing? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not entitled to deduction under section 80HHA in respect of its toddy business?" It is the case of the assessee that he is carrying on industrial operations. Therefore, he is entitled to claim exemption under section 80HHA of the Act. As stated supra, the activity conducted by the asse....