ISSUE:
Whether the various processes that the tobacco leaves underwent, transformed the nature of the income received from their sales into agricultural income or general business income?
Whether the said income, if agricultural falls under Section 2(1) of the Income Tax Act, 1922?
RULE:
Basic Operations v. Subsequent Operations is the primary distinguisher that is applied in similar cases is the determining factor, in the sense that basic operations are those which are essential for the cultivation of land, and subsequent operations differ when acts are done to the produce after it is harvested to make it marketable. The basic relationship between agricultural produce and operations performed on land is of utmost importance.
The Principle of Agency Contracts governs the consent, fiduciary relationship, and binding effect on two or more parties to act on behalf of the other, processes such as terminations, ratifications, and remunerations are carried out using agency contracts.