High Court Of Madras
CIT vs. Tamil Nadu Forest Plantation Corporation
Asst. Year 1978-79
R. Jayasimha Babu & Mrs. A. Subbulakshmy, JJ.
T.C. No. 890 of 1991
3rd November, 1998
Mrs. Chitra Venkataraman, for the Revenue : P.P.S. Janarthana Raja, for the Assessee
R. JAYASIMHA BABU, J. :
The assessee is the Tamil Nadu Forest Plantation Corporation, Trichy, which had issued grazing permits for fees and also sold the firewood, and claimed that the income from the grazing permits should be treated as agricultural income. The ITO refused should be treated as agricultural income in that manner for the asst. yr. 1978-79. In appeal, the CIT treated the income realised from the sale of firewood as agricultural income. The CIT found that the entire plantation was a man-made plantation and trees had been cultivated and were not of spontaneous growth. That finding was affirmed by the Tribunal. We see no error in the same. With regard to the grazing permits, the Tribunal found that the assessee had levelled the ground, tilled the soil and thereafter protected the area by erecting fences. It was not a case of spontaneous growth on virgin soil with no contribution whatsoever in terms of human effort. We do not find any error in that approach of the Tribunal and uphold its view that the income derived from the sale of grazing permits is agricultural income. The assessee also collected registration fees from the persons to whom it gave permission to participate in the auctions. It also collected compounding fees from those who entered on the assesseeâs arrear and had removed the produce owned by the assessee. The ITO regarded the income so derived as non-agricultural income while the Tribunal held that it would be agricultural income. This Court in T.C. No. 1266 of 1986 decided on 9th Sept., 1998, concerning the same assessee, has held that the registration fee is not directly linked to the agricultural operation and does not constitute agricultural income. The compounding fee, however, represented the value of the agricultural produce unauthorisedly removed by the buyer and therefore constitutes agricultural income. We, therefore, answer the first question referred to us, viz., whether the income derived by sale of firewood and grazing permits was agricultural income, in the affirmative in favour of the assessee. We answer the other question referred to us as to whether the registration fee and compounding fee collected by the assessee constituted agricultural income, in favour of the assessee so far as the compounding fee is concerned and in favour of the Revenue so far as the registration fee is concerned.
[Citation : 248 ITR 331]