A. K. T. K. M. VISHNUDATTA ANDHARJANAM REPRESENTED BY. D. V. NAMBUDIRIPAD, DESAMENGALAM. versus COMMISSIONER OF AGRICULTURAL INCOME TAXT, TRIVANDRUM

Citation: [1971] 1 S.C.R. 535 · Decided: 05-05-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

Judgment (excerpt)

535 
A 
A. K. T. K. M. VISHNUDATTA ANDHARJANAM REPRE· 
SENTED BY. D. V. NAMBUDIRIPAD, DESAMENGALAM. 
B 
c 
ID 
F 
G 
n: 
V, 
COMMISSIONER OF AGRICULTURAL INCO'ME TAX, 
TRIVANDRUM 
Ma.v 5, 1970 
[J. C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.J 
Jnco1ne or capital-Teak trees removed by their roots _and solc..1.-Sale 
receipts whether income or capital. 
In the course of the appellant"s assessment under the Kerala Agri,,uJ. 
tural Income-tax Act, 1950, for the years 
1963·64 and 1964-65, the 
Agricultural Income-tax Officer included in the appellant's 
income 
a.11 
amount realised from the sale of teak trees which had been planted in the 
year 1946-47 and were removed from the appellant's land and sold dur-
mg the assessment years. The Appellate Assistant Commissioner as well 
as the Tribunal confirmed the assessment. 
On a reference under s. 60(1) 
of the question whether the receipt from the sale df teak trees was capital 
in nature and exempted from agricultural 
income-tax, 
the High Court 
found against the appellant. 
On appeal to this Court : 
HELD : Allowing the appeal, 
The form of the question referred to the High Court itself showed that 
the trees were cut and completely removed from the land together with 
thc.r roots 'for the purpose of planting rubber. There was no question of 
any further regeneration or growth of the trees which had been cut and 
·removed. 
In other \\'Ords there was no possibility 
of recurring income 
from these trees. 
The sale of such trees thus 
affects capital structure and cannot give 
rise to a revF:nue receipt. 
V. Venugopala Verma Rajah v. Commissioner of Income-tax, Kera/a 
C.A. 1810 of 1967 decided on 24-9-69; The Commissioner of Income-tax, 
Ben1<al v. Messrs Shah Wallace and Company, 6 I.T.C. 178; Commissioner 
of Income-tax, Bombay South v. N. T. Patwardhan 41 I.T.R. 313; re'ferred 
to. 
The _profit. motive. is not decisive of .the question whether a particular 
receipt ts capital or income. 
An accretion to capital 
does 
not become 
taxable income merely because an asset is acquired in the hope that it may 
be sold at a profit [538 B-E] 
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2327 
and 2328 of 1968. 
Appeals by special leave from the judgment and order dated 
August 21, 1968 of the Kerala High Court in Income-tax Referred 
Cases Nos. 28 and 29 of 1967. 
536 
SUPREME COURT REPORTS 
[1971] l S.C.R. 
K. P. Radhakrishna Menon, 
for the appellant (in both the 
appeals). 
M. C. Chag/a and M. R. K. Pillai, for the respondent (in both 
the appeals). 
The Judgment of the Court was delivered by 
Grover, .1. 
These appeals by special leave from a judgment 
of the Kerala High Court arise out of the assessment of agricul-
tural income of the assessee made under the Kerala Agricultural 
Income tax Act, 1950, hereinafter called the "Act", in respect of 
the assessment years 1963-64 and 1964-65. 
For the asse_ssment year 1963-64 the assessee filed a return 
showing a net agricultural income of Rs. 12,558-76. 
When the 
matter came up for hearing before the Agricultural Income tax 
Officer another statement showing an amount of Rs. 43,2'50-00 
as income from teak trees was filed. 
The Agricultural Income 
tax Officer disallowed certain expenses and assessed the income 
for the year 1963-64 at Rs. 62,021-00. For the assessment year 
I 964-65 a return was filed declaring a net agricultural income 
of Rs. 25,733-63. 
No income was shown from the sale of teak 
trees. 
The Agriculturnl Income tax Officer found that teak trees 
had bee,h sold for a lump sum of Rs. 76,500-00 out of which 
Rs. 43,250-00 had been received in the previous year 1963-64 
and he included the said amount in that year's income. 
The 
balance amount of Rs. 33,250-00 was received in the previous 
year corresponding to the assessment year 1964-65. 
In deter-
mining the assessable income for that year this amount was added 
to the income which had been returned and after 
disallowing 
certain amount which had been claimed by way of expenses the 
net income was determined at Rs. 61,041-00. 
The assessee filed 
appeals before the Additional Appellate Assistant Commissioner 
who confirmed the assessment and dismissed the appeals. Further 
appeals were taken to the Agricultural Income tax Tribunal. The 
Tribunal held that the amount in dispute was agricultural income 
and not capital. 
The expenses which were cliamed were also 
disallowed. 
On an appiication made under s. 60 ( l) of the Act 
the following two quest

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