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Rubber slaughter proceeds

JIJO YOHANNAN (Student CA Final ) (89 Points)

12 November 2017

Rubber Slaughter tapping and tree cutting proceeds in 2 Hectare amounts to Rs 23.5 Lakh whether taxable?

Can we claim it as agriculture income?

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JIJO YOHANNAN (Student CA Final ) (89 Points)
Replied 15 November 2017

The Velimalai Rubber Co. Ltd vs Assistant Commissioner Of Income ... on 10 December, 2004

. 8.Therefore the controversy over the matter can be settled in the following way:

(a) The revenue derived from the latex by the grower when the "slaughter tap" of rubber trees is done by the owner himself is agricultural income. Like so the amounts received by the owner of the trees from third parties (lessee) for the right to take the latex during "slaughter tap" continues to be agricultural income.

(b) The income from latex in the hands of the lessee is not agricultural income but there is an element of payment towards capital.

(c) The latex and coconuts are derived from the trees and the payment made by the lessee to the lessor for the said latex and coconuts, the receipts in the hands of the owner (lessor) in this case can only be agricultural income.

(d) The income received from the lessee and the income received by the lessor on the basis of the rent agreement is to be bifurcated, in such cases when W.P.(C) No. 2190 of 2008 dispute arises.

(e) In case of permission given by owner of the tree to 'slaughter tap' with agreement to cut and remove trees, then income derived from the latex and the value of trees must be bifurcated.

(f) The part of income deducted by the owner from latex is agriculture income and the value of trees will not come under agricultural income.

Here the agreements are made only to draw income from latex and coconut which will come under Agricultural Income Tax Act.

In the circumstance Ext.P11 issued by the first respondent is hereby quashed by invoking the jurisdiction under Article 226 of the Constitution of India and this petition is allowed.