The Kerala High Court in the decision of M/S. Kuthuparamba Range v. The Commissioner of Income Tax held that income derived from tapping and vending of toddy shall be categorized as agricultural produce and hence Tax deductible from income.
The Co-operative Societies – assessee in the present matter are engaged in tapping of toddy and vending it through licensed shops. The issue before the present Court is that whether the assessee can claim a deduction when no return was filed.
The revenue in their Income Tax Appeals has contended that toddy cannot be termed to be an ‘agricultural produce’. Further, this finding of the lower authorities with respect to toddy being an ‘agricultural produce’ is perverse.
The assessee, on the other hand, invoked the same contentions as were raised at the time of the first appeal.
The division bench comprising of Justice Vinod K. Chandran and Justice Ashok Menon after perusing the contentions of both the parties, observed that toddy is a product which is extracted from a tree just as any other agricultural produce is extracted. The Assessing Officer (AO) also observed the same further reasoning that there was no activity of sawing and tilling and so on. Further, a mere fact of a particular agricultural activity having not been carried out would not be the sole ground for denying the exemption as available to the marketing of an agricultural produce when carried by a Society.
With respect to the second issue, it was found that 90% of the total of 19,85,461 litres of toddy traded by the assessee came from 498 members having 3845 trees on their own land. It is hence the Tribunal found that 100% of the assessee’s income from toddy marketing was eligible for deduction.
The Court hence upheld the orders of the Tribunal adjudicating in favor of the assessee.
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