1981 PLP (Trib (PTD)

2. Before entering into discussion of merits of the case, I deem it appropriate to reproduce the Notification relied by the appellant's A. R. in support of his plea of exemption. The first Notification on this issue is as under :‑‑ S. R. O. 142 (1)/70 dated 1‑7‑1970 "In exercise of powers conferred by subsection (1) of section 60 of the Income‑tax Act, 1922 (XI of 1922), the Central Government is pleased to exempt from the tax payable under the said Act so much of the income of an assessee as is derived by him during the period commenc ing on the first day of July, 1970 and ending on the thirtieth day of June 1975, from poultry farming dairy farming, fish catching and cattle breeding for purpose of beef or mutton." Thereafter this exemption was brought in the Statute by inserting following clause (xx) of subsection (3) of section 4 in the Act by Finance Act, 1975 whereby exemption was extended till 20th June, 1980‑ "any income derived by assessee after the 30th Day of June 1975, and before the 1st day of July, 1980, from poultry farming, dairy farming, fish catching and cattle or sheep breeding." At the time of inception of Income‑tax Ordinance, 1979, no such exemp tion was granted for the charge year 1978‑79 as the word "dairy farming" was deleted from clause 64 (b) of Schedule No. 2 of the Ordinance. However, the Law Makers, subsequently realized the omission and by virtue of Finance Ordinance, 1980, clause 64(b) was amended allowing exemption to dairy, farming w. e. f. 30‑6‑1975 to 1st July 1983.

3. Learned counsel for the appellant contended that both the officers below erred in taxing the appellant's income from "dairy farming" which was exempt for all the years under review originally by virtue of Notification issued under section 60 of the Act and thereafter by insertion of clause (xx) in subsection (3) of section 4 of the Act. It was further submitted on behalf of the appellant that the learned A. A. C. misdirected himself in holding that the appellant was not entitled to exemption because the income from keeping milch animals is not from agricultural sources. The learned A. A. C. 's view regarding essential existence of a farm for the business of dairy farming was contested to be misconceived one. Lastly, it was argued on behalf of the appellant that both the officers below misdirected themselves in not apprecia ting the distinction between "dairy farming" and "dairy" business. On the basis of Dictionary meanings of the word "dairy" and "Dairy Farming", it was stated on behalf of the appellant that the business conducted by the assessee fell under the definition of "dairy farming" and income therefrom was totally exempt from levy of income‑tax. The learned D. R. contended that for the purposes of availing exemption under the S. R. O. and the amendment in the Act (supra) prerequisite interlinked conditions are that a trader should have pastures or farm; he must own animals which should be pasture fed and not stall fed; the animals should be primarily fed on the produce of agricultural hands and the milk should be obtained from the milch animals.

4. After hearing the parties I have no hesitation in holding that the appellant's business is of "dairy farming" and both the officers below erroneously refused the claimed exemption. Admittedly, the appellant did not claim exemption of his income as an agricultural income. In the case of C.I.T., West Bengal v. Raja Benoy Kamar Sahas Roy ((1957) 32 I T R 466) as it was held as under :‑- "There is no warrant at all for extending the term "agriculture" to all activition which have some relation to the land or are in any way connected with the land, for the term agriculture cannot be disasso ciated from the primary significance thereof, which is that of cultivation of the land. The extension of the term "agriculture" to denote such activities as breeding and rearing livestock, dairy farming, butter and cheese‑making, and poultry farming is an unwarranted distortion of the terms." The learned A. A. C. went astray in holding that the appellant' claim of exemption was not admissible as an agricultural income. I have no doubts in my mind that this was not the appellant's case. The delicate distinction in a "dairy" and "dairy farming" has not been properly appreciated. The view of the learned A. A. C. that there can be no concept of "dairy farming" without there being a farm on which the animals can be pastured or fed is not erroneous but totally misconceived. As per Shorter Oxford English Dictionary, Vol. I "dairy" is a place where milk/butter is processed and prepared for sale. The dairy business can be conducted in a room or house wherein milk and cream are converted into butter. This business can be carried on at anti place without maintaining milch animals or any farm. Undoubtedly, the appellant's business does not fall in the category of "dairy" business. As per Shorter Oxford English Dictionary "dairy farm" is a farm which cheefly, produces milk, butter and cheese. The word "farming" connotes cultivating fostering, promoting the growth etc. A dairy farm is thus a farm which produces milk and milk products. It does not need keeping of milch animals on agricultural lands. Necessary outcome in a dairy farm is not the agricultural products; rather the essential requirement is production of milk with or without allied products. The appellant's activity of keeping milch animals for sale of milk could not obviously be identified as dairy in its ordinary meaning and parlance.

5. In the S. R. O. as well as in the amendment (supra) the words "dairy farming" occur immediately after the words "poultry farming". The interpretation thus will have to be ejusdem generis. Undoubtedly poultry farming does not need any agricultural land or grazing grounds. The word "farming" used in conjunction with poultry and "dairy" means promoting the growth of fostering or cultivating, The appellant's claim of exemption from tax was not on account of income being agricultural. The learned A. A. C. unnecessarily endeavoured hard in entering into discussion regarding cited decision of the Supreme Court of India which had no relevancy to the facts and circumstances of this case. The prerequisite inter‑linked conditions stated by the learned D. R. for interpretation of Notification and the amend ment of the Act are non‑entity having not been prescribed as such in the absence of any meaning prescribed for the words "dairy farming" in the Act ordinary dictionary meanings will have to be adopted. The submission of the learned D. R. regarding interpretation of the words "dairy farming" is wholly unwarranted. In dairy farming, animals may be stall fed or pasture fed. The activity of production of milk and milk products even in the case of stall fed animals will be that of "dairy farming". The S. R. O. as well as the amendment made in the Act do not attach any prerequisite conditions in dairy farming. In view of this discussion I hold that existence of any land or farm is not essentially required for dairy fanning. The appellant's business of sale of milk obtained from stall fed milch animals is an activity of dairy farming.

6. In this view of the matters the assessee's income being from dairy farming is exemption from levy of income‑tax for all the years under consideration. The impugned assessments are annulled and all the appeals succeed accordingly. Appeal accepted.