AJIT K. SENGUPTA, J.

( 1 ) IN this reference under Section 256 (1) of the Income-tax Act, 1961, for the assessment year 1081-82, the following question of law has been referred to this court :"whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the hail damage insurance claim receivable by the assessee-company in the amount of Rs. 3,13,410 was a mixed receipt to which Rule 8 of the Income-tax Rules, 1962, is applicable ?"

( 2 ) SHORTLY stated, the facts are that from the director's report dated December 2, 1980, the Income-tax Officer found that, in this year, insurance claim receivable under hail damage insurance policy on account of severe hailstorm amounted to Rs. 3,13,410. There was a severe hailstorm in Darjeeling area on April 17, 1980, as a result of which the tea crop in the assessee's gardens was damaged. The assessee, on April 18, 1980, intimated the damage caused to the crop by the hailstorm to the insurance company, namely, Messrs. National Insurance (P.) Ltd. The insurance company admitted the claim of the assessee to the tune of Rs. 3,13,410. Before the Income-tax Officer, this amount was claimed by the assessee-company as an agricultural income. It was contended that this amount was not liable to income-tax. In support of this contention, reliance was placed on behalf of the assessee-company on the decision of the Calcutta High Court in the case of CIT v. B. Gupta (Tea) Pvt. Ltd. [1969] 74 ITR 337. The Income-tax Officer rejected the assessee's contention and found on a perusal of the three damage reports that the valuers in all cases evaluated the hail damage finally in terms of "made-tea". The Income-tax Officer was of the view that the claims admitted by the insurance company also covered a portion of an overall loss in each of the three gardens from the stage of growing of green leaves to that of manufacturing of tea and marketing of made-tea. The Income-tax Officer thus held that the receipt is liable to be assessed under Sub-rule (1) of Rule 8 of the Income-tax Rules, 1962. The matter was carried in appeal before the Commissioner of Income-tax (Appeals) before whom the assessee-company placed reliance on the decision of the High Court in the case of B. Gupta (Tea) Pvt. Ltd. [1969] 74 ITR 337. The Commissioner of Income-tax (Appeals), following the said decision of the Calcutta High Court, treated the amount of Rs. 3,13,410 as 100 per cent. agricultural income. Against the aforesaid order of the Commissioner of Income-tax (Appeals), the Department appealed to the Tribunal. It was submitted by the learned Departmental representative that the money receivable by the assessee-company from the insurance company covered agricultural as well as manufacturing operations as the amount in question was payable in respect of manufactured tea. So, the amount represented agricultural as well as business income arising out of manufacture of tea by the assessee-company. It was thus submitted that the receipt was not 100 per cent. agricultural in nature and that a part of it was income arising out of manufacture of tea and that the Income-tax Officer was right in applying Rule 8 (1) of the Income-tax Rules to this receipt. It was further contended that the decision of the Calcutta High Court in the aforesaid case was distinguishable on facts. The learned authorised representative for the assessee-company, on the other hand, fully supported the order of the Commissioner of Income-tax (Appeals ). Reliance was placed on the decision of the Calcutta High Court in the case of B. Gupta (Tea) Pvt. Ltd. [1969] 74 1tr 337. It was pointed out that the evaluation of damage caused by hailstorm was made in terms of "made-tea" simply to determine the damage caused. The Tribunal, after considering the rival contentions of the parties and the terms of the insurance policy, expressed the view that the amount receivable from the assessee-company under the insurance policy not only co

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