Sales Proceeds From Silver Oak Tree To Be Treated as Agricultural Income: ITAT
The ITAT held that income from selling Silver Oak trees grown on a tea estate is agricultural income, not capital gains. Relying on the Madras High Court ruling, it set aside the CIT(A)’s order and deleted the addition made by the Assessing Officer.
The present appeal has been filed by Syed Mohamed Sathik Ali (Appellant) against the Income Tax Officer (Respondent) in the Income Tax Appellate Tribunal (ITAT) Bench ‘A’ Chennai, before Shri S.S. Viswanethra Ravi (Judicial Member) and Shri Jagadish (Accountant Member). The case is related to the assessment year 2017-18 and was decided on December 1, 2025. The present appeal is filed by the assessee against the final assessment order dated June 30, 2025 passed by the Addl/JCIT(A)-1, Nashik.
Background of the case:
The appellant had claimed Rs 12,08,520 earned from the sale of Silver Oak trees as agricultural income. However, the Assessing Officer treated the income as long-term capital gains, which was supported by the CIT(A). The aggrieved assessee then filed the appeal before the Tribunal.
During the hearing, the AR argued that Silver Oak trees grown by the assessee are agricultural income and not liable to tax. He further added that Silver Oak trees do not grow naturally like forest trees. Instead, the assessee planted and took care of them. The trees were later cut and sold as logs, and the money earned from this should be treated as agricultural income.
He also mentioned an earlier case of Madras High Court decision in United Nilgiri Tea Estates Company Ltd v. Tamil Nadu Sales Tax Appellate Tribunal & Ors (2022) to support the claim.
The ITAT said, “It is clear that the income derived from the sale of Silver Oak Trees, which are agricultural products, is undoubtedly ‘agricultural income’.” Following the Madras High Court precedent, the Tribunal ruled that income from their sale constitutes agricultural income. The ITAT set aside the order of the CIT (A) and deleted the addition made by the Assessing Officer and directed that the proceeds from Silver Oak tree sales be treated as agricultural income.
Citation: Syed Mohamed Sathik Ali Vs Income Tax Officer (ITAT Chennai); I.T.A. No.2362/Chny/2025; 2017-18; 01/12/2025.
