# ff LTD v. COMMISSIONER OF AGRICULTURAL INCOME-TAX, KERALA STATE, TRIVANDRUM lanuary IO, 1968

- **Citation:** [1968] 2 S.C.R. 745
- **Court:** Supreme Court of India
- **Decided:** 1965-07-16
- **Bench:** K. N. Wanchoo
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ff-ltd-v-commissioner-of-agricultural-income-tax-kerala-state-trivandrum-4205
- **Pages:** 9

## Headnote

R. S. BACHAWAT,
J. M. SHELAT,
G. K. MI.TTER AND C. A. VAIDIALINGAM, JJ.j
Kera!a ARricultr1rr.l l11co111e-tax Act (20 Of 1950), ss.
2 and 5-Jnco1ne-tat Act (11 of 1922), s. 10 and lnco111e-tax Rules, 1922, r. 24--
lnco1ne derived by cultivation,
n1an11facture
and
sale
of
teG~Non
tlf?ricultural inco111e detennined under s. 10 of the lncon1e-tax Act and r.
24 of the lncon1e-tax Ru/es-Whether con1putation binding on At?ricultural
Income-tax Officer.
Kera/a Surcltar,;e on Taxes Act (11 of 1957), Surcharge on agricultural inco1ne for assess1nent year 1951-58-lf can be lei·ied.
The appellants "W'crc ·carrying on the business of cultivation, manufacture and sale of tea. Some of them owned tea plantations h<:°'th within and
outside the State of Kerala. Income derived from the sale of tea grown
and manufactured by the sell~r is derived partly from bu·siness and partly
from agriculture, and. has to be computed under r. 2.4
of the Indian
Income-tax Rules, 1922 (corresp011ding to r. 8 of the 1962 Rules) as if
it were income derived from business in accordance with the provisions
of s. 10 of the lncome,-tax Act, 1922. On the basis of r. 24, the. central
income-tax authorities Computed the total tea income of the appellants and
40% thereof, representing the non-agricultural income, was
as~esscd to
non-agricultural income-tax and the balance 60% was le'ft una~sesscd as
agricultural income. In proceedings under the Kerala Agricultural Incomctax Act, 1950, the agricultural income of the appcilants was determined
on an independent computation of their 1ca income.
The agricultural
income so determined was higher than that arrived at by th·: central
income-tax authorities.
In some of the ap~als, the Agricultural Income-tax Officer levied a
surcharge of 5% for the assessment year 1957-58
under
the
Kerala
Surcharge on Taxes Act, 1957.
On the questions : ( 1) whether the Agricultural Income-tax Officer was
bound to follow the computation of income from tea made by the Central
Income-tax Officer; and (2) whether the surcharge could be levied, the
High Court held against the a.ppellants.
In appeal to this Court,
HELD : There is no provision in the Kcrala Act authorising the Agricultural Income-tax Officer to disregard the computation of the tea income
made by the Central income-tax authorities acting under the Central Act,
and, the Agricultural Income-tax Officer, in making an
assessment of
agricultural income is bound to accept the computation of tea income
already made by the central income.tax authorities and to assess only 60%
of the income so computed, less allowable deductions,
~c:. agricultural income taxable under the Kerala Act.
[751 B-C]
746
SUPREME COURT REPORTS
(1968] 2 s.c.R.
(a) In view or Arts. 274(1) and 366(1) or the Constitution. the
power of the State Legislature to make a law in respect of taxes on agricultural income arising from tea plantations is limited to legislating with
respect to the agricultural income determined under s. 10 of the Incometax Act and r. 24 of the Income-tax Rules.
In fact, the E•planation to
s. 2(a) (2) of the Kerala Act adopts this rule of computation and therefore, the agricultural income tuable under tho Kerala Act is 60% of the
income so computed after deducting therefrom the allowances authorised
by s. 5 of the Kerala Act, in so far as the same has not already been
allowed in the assessment under the Central Income-tu Act.
Where the
agricultural income :s derived from lands panly within and partly without
the State the portion of the income attributable to lands within the State
is determined under s. 6 of the Kerala Act read with r. 15 of the Kerala
A8ficultural Incom...tax Rules. (750 B-D; 751 A, CD}
Karimthill'uvi Tea Estatts Ltd. Ko11a;·am v. State o/ K.trala,
[1963]
Supp. 1 S.C.R. 823, followed.
(b) It may be difficult to make an use.ument under •. 22 of the Kerala
Act or on the ba.sil of the ,previous year under 1. 2A of the Kerala N:t
in the absenee of any rule fixin1 the income for a broken par

## Text

A
ANGLO AMERICAN DIRECT TEA TRADING CO.
B
c
D
E
F
G
ff
LTD.
v.
COMMISSIONER
OF
AGRICULTURAL
INCOME-TAX,
KERALA STATE, TRIVANDRUM
lanuary IO, 1968
[K. N. WANCHOO, C.J.,
R. S. BACHAWAT,
J. M. SHELAT,
G. K. MI.TTER AND C. A. VAIDIALINGAM, JJ.j
Kera!a ARricultr1rr.l l11co111e-tax Act (20 Of 1950), ss.
2 and 5-Jnco1ne-tat Act (11 of 1922), s. 10 and lnco111e-tax Rules, 1922, r. 24--
lnco1ne derived by cultivation,
n1an11facture
and
sale
of
teG~Non
tlf?ricultural inco111e detennined under s. 10 of the lncon1e-tax Act and r.
24 of the lncon1e-tax Ru/es-Whether con1putation binding on At?ricultural
Income-tax Officer.
Kera/a Surcltar,;e on Taxes Act (11 of 1957), Surcharge on agricultural inco1ne for assess1nent year 1951-58-lf can be lei·ied.
The appellants "W'crc ·carrying on the business of cultivation, manufacture and sale of tea. Some of them owned tea plantations h<:°'th within and
outside the State of Kerala. Income derived from the sale of tea grown
and manufactured by the sell~r is derived partly from bu·siness and partly
from agriculture, and. has to be computed under r. 2.4
of the Indian
Income-tax Rules, 1922 (corresp011ding to r. 8 of the 1962 Rules) as if
it were income derived from business in accordance with the provisions
of s. 10 of the lncome,-tax Act, 1922. On the basis of r. 24, the. central
income-tax authorities Computed the total tea income of the appellants and
40% thereof, representing the non-agricultural income, was
as~esscd to
non-agricultural income-tax and the balance 60% was le'ft una~sesscd as
agricultural income. In proceedings under the Kerala Agricultural Incomctax Act, 1950, the agricultural income of the appcilants was determined
on an independent computation of their 1ca income.
The agricultural
income so determined was higher than that arrived at by th·: central
income-tax authorities.
In some of the ap~als, the Agricultural Income-tax Officer levied a
surcharge of 5% for the assessment year 1957-58
under
the
Kerala
Surcharge on Taxes Act, 1957.
On the questions : ( 1) whether the Agricultural Income-tax Officer was
bound to follow the computation of income from tea made by the Central
Income-tax Officer; and (2) whether the surcharge could be levied, the
High Court held against the a.ppellants.
In appeal to this Court,
HELD : There is no provision in the Kcrala Act authorising the Agricultural Income-tax Officer to disregard the computation of the tea income
made by the Central income-tax authorities acting under the Central Act,
and, the Agricultural Income-tax Officer, in making an
assessment of
agricultural income is bound to accept the computation of tea income
already made by the central income.tax authorities and to assess only 60%
of the income so computed, less allowable deductions,
~c:. agricultural income taxable under the Kerala Act.
[751 B-C]
746
SUPREME COURT REPORTS
(1968] 2 s.c.R.
(a) In view or Arts. 274(1) and 366(1) or the Constitution. the
power of the State Legislature to make a law in respect of taxes on agricultural income arising from tea plantations is limited to legislating with
respect to the agricultural income determined under s. 10 of the Incometax Act and r. 24 of the Income-tax Rules.
In fact, the E•planation to
s. 2(a) (2) of the Kerala Act adopts this rule of computation and therefore, the agricultural income tuable under tho Kerala Act is 60% of the
income so computed after deducting therefrom the allowances authorised
by s. 5 of the Kerala Act, in so far as the same has not already been
allowed in the assessment under the Central Income-tu Act.
Where the
agricultural income :s derived from lands panly within and partly without
the State the portion of the income attributable to lands within the State
is determined under s. 6 of the Kerala Act read with r. 15 of the Kerala
A8ficultural Incom...tax Rules. (750 B-D; 751 A, CD}
Karimthill'uvi Tea Estatts Ltd. Ko11a;·am v. State o/ K.trala,
[1963]
Supp. 1 S.C.R. 823, followed.
(b) It may be difficult to make an use.ument under •. 22 of the Kerala
Act or on the ba.sil of the ,previous year under 1. 2A of the Kerala N:t
in the absenee of any rule fixin1 the income for a broken part of the year
with reference to an assessmmt made under the Indian Income-tu Act.
In spite of these and other difllculties in the working of the Ac~ the Agricultural Income-tu Ofllcer cannot ignore the assessment of the tea income
already made by the cmtral income-ta. authorities. [752 B-D]
Commissioner of Agricultural Income-tax, Kerala v. Peruncd Pltmtations, (1965) 56 l.T.R. 193, overruled.
(2) No surcharge on agricultural income can be levied
under
the
Kerala Surchasge on Taxes Act, in respect of the assessment year 1957-58.
[753 DJ
Karimlilaruvi Tea Estates Ltd. v. Stair of Kera/a. [!966} 3 S.C.R. 93 :
(1965) 60 l.T.R. 262 (S.C.), followed.
CIVIL APPELLATE JURISDIC1'ION : Civil Appeals Nos. 9J6939 of 1966.
Appeals by special leave from the judgment and order dated
A
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D
July 16, 1965 of the Kerala High Court in Income-tax Referred
F
Cases Nos. 53 to 56 of 1964.
AND
Civil Appeals Nos. 585 to 588 of 1966.
Appeals by special leave from the judgment and order dated
August 18, 1964 of the Kerala High Court in Income-tax ReferG
red Cases Nos. 52 to 55 of 1953 (Agrl.).
AND
Civil Appeals Nos. 589 to 591 of 1966.
Appeals by special leave from the judgment and orders dated
August 14. 1964 and July 17, 1964 of the Kerala High Court
H ·
in Income-tax Referred Cases Nos. 50, 51
and 49
of
1963
( Agrl.) respectively.
A
B
c
D
E
F
G
H
ANGLO AMERICAN CO. V. C.A.I.T. (Bachawat, J,)
747
M. C. Setalvad, S. K. Dholakia, Joy Joseph and 0. C
Mathur, for the appellant (in C.As. Nos. 936-939, of 1966).
M. C. Setalvad, Joy Joseph, 0. P. Malhotra and 0. C. Mathur,
for the appellant (in C.As. Nos. 585 to 588 of 1966).
S. T. Desai, Joy Joseph, P. C. Bhartarl and O. C. Mathur for
the appellant (in C.As. Nos. 589 to 591 of 1966).
H. R. Gokhale and M. R. K. Pillai, for the respondent
(in
C.As. Nos. 936 to 939 of 1966).
M. J? K. Pillai, for the respondent (in C.As. Nos. 585 to
591 of 1966).
The Judgment of the Court was delivered by
Bacbawat, J. The appellants carry on the business of culti·
vation, manufacture and sale of tea. They own tea plantations
in the State of Kerala. Some of them own tea plantations both
within and outside the State. They are assessed to non-agricultural a8 well as agricultural income-tax.
Civil
Appeals Nos.
936 to 939 of 1966 arise out of the
agricultural income-tax
assessments of the Anglo American Direct Tea Trading Co.,
Ltd .. under the Kerala Agricultural Income-tax Act,
1950 for
the years
1958-59, 1959-60, 1960-61
and
1961-62. Civil
Appeals Nos. 585 to 588 of 1966 arise out of the agricultural
income-tax assessments of the Travancore Tea Estates Co. Ltd.
for the years 1957-58, 1958-59, 1959-60 and 1960-61. Civil
Appeals Nos. 589 to 591 of 1966 arise out of the agricultural
income-tax assessments of the Southern India Tea Estates Co.,
Ltd. for the years 1957-S-8, 1958-59 and 1959-60. For all the
assessment years, the central income-tax authorities computed
the total tea income of the appellants and 40 per cent thereof
representing the non-agricultural income was assessed to nonagricultural income-tax and the balance 60 per cent was
left
unassessed
as
agricultural
income.
The
appellants
produced
before
the
Agricultural
Income-tax
Assistant
Commissioner,
Kerala,
the
central
income-tax
assessment
orders, and requested him to take 60 per cent of the
tea income computed by the central income-tax authorities
as the gross· income derived from agriculture.
The Agricultural
Income-tax Assistant
Commissioner disregarded the
central
income-tax assessments, and on independent computation of the
tea income determined. the agricultural income of the appellants.
The agricultural income so
determined by
the
Agricultural
Income-tax Assistant Commissioner was m,uch higher than 60
per cent of the total tea income assessed by the central incometa,~ authorities.
On appeal, the Deputy Commissioner of Agri-
748
SUPRDIE COURT REPORTS
(1968] 2 S C.R.
cultural Income-tax and Sales Tax, South Zone,
Quilon
held
that the Agricultural Income-tax Officer could make an independent computation of the tea income and was not bound to adopt
the assessment made by the central income-tax officer.
On
further appeal, the Kcrala Agricultural
Income-tax Appellate
Tribunal, Trivandrum held that
the
Agricultural
Income-tax
Officer was bound to accept the computation of tea income by
the central income-tax authoritie,.
On the application of the
respondents, the Appellate Tribunal referred the following question of law to the High Court under s. 60(1)
of the Kerala
Agricultural
Income-tax,
1950 : "Whether the
Agricultural
Income-tax Officer is to follow the computation of income from
tea made by the Central Income-tax Ofliccr or whether he can
find out the income from tea plantations applying the provisions
of the Income-tax Act and make the assessment exercising his
powers under the Agricultural Income-tax Act?". Following its
earlier decision in Commissioner of Agricultural Income-tax,
Kera/a v. Perunad P/antatiom Ltd. ('), the High Court held that
the agricultural Income-tax Officer wo, not obliged to accept the
computation of the tea income made by the Income-tax Officer
acting under the Income-tax Act, and it was open to him to compute the income independently applying the relevant provisions
of the Income-tax Act and the Agricultural Income-tax Act.
From these orders, the present appeals have been filed by special
leave.
Before answering the aforesaid question, it is necessary to
refer to the relevant constitutional and statutory provisions. Under
Entry 46, List IL Seventh Schedule to 1hc Constitu1ion, 1he State
Legislature is competent to make laws with regard to "taxes on
agricultural income".
Under Enlry 82, List I,
Parliament
is
competent to make laws with respect to "taxes on income other
than agricultural income". In view of Art. 366(1 ), agricultural
income means "agricultural income as defined for the purposes of
the enact men ls relating to Indian income-tax." Article 274 (I)
pr?vides that a bill which seeks to vary this meaning requires 1he
pnor rccommenda1ion of the President.
These provision of lhe
Conslitution correspond to ss. 141 (I), 311 (2), Sch. Vil. List I
Entry 54, List II, Entry 41 of the Government of India
Acl,
1935. Section 2(1) of the Indian Income-tax Act, 1922 defined
agricultural income.
Section I 0 provided for computalion of
income derived from
business.
Scc1ion 59
empowered
the
Cenlral Board of Revenue to make rules which took effect as if
enacted in the Act.
Rules 23 and 24 of the Indian Income-tax
Rules, 1922, framed under s. 59 provided for computalion
of
(I) (1965) ~6 1.T.R. 193.
A
B
c
D
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F
G
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1
A
B
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D
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F
G
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ANGLO AMERICAN co. v. c.A.I.T. (Bachawat, 1.)
749
the business profits where the income was derived partly from
agriculture and partly from business.
Under r. 23, th_e n~arket
value of the agricultural produce used as
raw matenal m the
business was deducted in c.omputing the business profits.
Rule
24 provided that "income derived from the sale of tea grown and
manufactured by the seller in the taxable territ<?ries shall be computed as if it were income derived from bu.smess, and 40 ~er
cent of such income shall be deemed to be mcome, profits and
gains liable to tax, provided that in computing such !ncome an
allowance shall be made in respect of the cost of plantmg bushes
in replacement of bushes that have died or become permanently
useless i::. an area already planted, unless such area has previously
been
abandoned."
These
provisions
correspond Lo
ss. 2(1), 28 to 44 and 295.of the Income-tax Act, 1961 and
rules 7 and 8 of the Income-tax Rules, 1962. Section 2 (a) of
the Kerala Agricultural Income-tax Act, 1950 defines agricultural
income.
The Explanation to s. 2(a)(2) provides tl!at "agricultural income derived from such land by the, cultivation of tea
means that portion of the income derived from the cultivation,
manufacture and sale of tea as is defined w be agricultural income for the purposes of the enactments
relating to Indian
Income-tax."
Section 3 is the charging section.
Section 2(s)
read with ss. 4, 5, 9 and 10 defines total agricultural income.
Section 5 provides for
compu.tation
of
agricultural
income
after making certain deductions.
The proviso to s. 5. lays down
that "no deduction shall . be made under this section if it has already been made in the assessment under the Ihdian Income-tax
Act, 1922." Section 6 provides for assessment of income derived
from lands partly within the State and partly without.
Section 7
relates to the method of accounting.
Section 17 deals with return of income.
Section l 8 provides for assessment of income.
Sections 21 to 29, provide for assessments in special cases.
Section
3 5
provides
for
assessment
of
income
escaping
assessment.
Section
36
provides
for rectification
of mistakes.
Section 67 empowers the Government to
make rules.
R~le 9 of the Ke~ala Agricultural Income-tax Rules, 1951, prescribes the deductions allowable under s. 5 ( 1 ) for depreciation
of buildings, machinery, plant and furniture in respect of tea
factories.
Rule 15 prescribes the method of apportionment of
income derived from lands pa,rtly within the State and
part! v
without.
-
In Karimtharuvi Tea Estates Ltd.,
Kottayam
v.
State
of
Kera/a(
1 ), this Court held that Explanation 2 to s. 5 of the Kerala
Agricultural Income-tax Act added in 1961 disallowing certain
ded.uctions in the computation of agricultural income did not apply
(I) [J96JJ Supp. 1 s.c.~. gzJ.
LJ Sup Cl/61"'"'4
750
SUPRD1E COURT REPORTS
1968] 2 SCR.
10 compulation of agricultural income derived from 1ea plan1a1ions. The reasons for this conclusion may be summarised thus :
The defini1ion of agricultural income in !he Constitution and the
J ndian I ncome-1ax Ac1, 1922 is bound up with r. 24 of the Income
1ax Rules, 1922.
Inrome derived from the sale of 1ca gr<>Wn
and manufactured by the seller is to be computed under r. 24
as if it were income derived from business in accordance with
the provisions of s. IO of the Indian Income-lax Act.
The
Explanation to s. 2(a)(2) of the Kerala Ac1 adoplS !his rule of
computation.
Of the income so compured, 40 per cent is to be
1reat:ed as income liable to income-tax and the other 60 per cenl
only is deemed to be agricultural inco111e within the meaning of
!hat expression in !he Income-tax Act.
The power of the State
Legislature to make a law in respect of taxes on agricultural income arising from tea plant~.ion is limited to legislating wi1h
respect to the agricultural income so detennined.
The legisla·
ture cannot add. to the amount of the agricultural income so determined by disallowing any item of deductions allowable under
r. 24 read with s. 10(2) (xv) of the Indian Income-tax Ac1.
Explanation 2 to s. 5 of the Kerala Act if applied to income
from 1ea planta1ions would creale an agricultural income which
is no! conlernplated by the Income-tax Act and the Constitution
and would be void, and it should therefore be construed not to
apply IO 1he computation cf incvmc from lea plan1a1ions.
The question arising in these appeals is whether the agricul1ural Income-tax Officer making an assessment
of agricultural
income under 1he Kerala Agricultural Income-tax Act is bound
lo accept the assessment of the income which has already been
made by !he central income-tax authorities under r. 24 of the
Income-tax Rules. 1922 read with s. 10 of the Indian Incometax Act, 1922 or under r. 8 of the Income-tax Rules, 1962 read
with ss. 28 to 44 of the Income-lax Act, 1961.
We think that
this quesiion should be answered in the
affirmative.
Income
from sale of tea grown and manufactured by the seller is derived
partly from business and partly from agriculture.
This income
has to be computed as if it were income from business under
the Central Income-tax Act and Rules.
40 per cent
·)f the
income so computed is deemed to be income derived from business and assessable
to
non-agricultural
income-tax.
Having
regard to the decision in Karimtharuvi Tra Estates Ltd .. Kottayam v. State of Kera/a('), we are bound to hold that (a) the Explanation to s. 2 (a )(2) of the Kerala Agricultural Income-tax
Act adopts this rule of computation and (b) the balance 60 per
cent of the income so computed is aj!Ticultural income within the
meaning of the Central Income-tax Act and
the Constitution
(l) [196.1) Surp. I S.C.R. Sl'.
A
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A
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ANGLO AMERICAN CO. V. C.A.I.T. (Bachawat, J.)
751
The agricultural income taxable under the Kerala Act is 60 per
eent of the .income so computed lifter deducting therefrom the
allowances authorised by s. 5 of the Kerala Act in so far as the
same has . not already been allowed in the assessment under the
Central Income-tax Act.
There is no provision in the Keraia
Act authorising the Agricultural lncom(}-ta .. Officer to disregard
the computation of the tea income made by the incom(}-tax
authorities acting under the Central Incom(}-tax Acts.. The
Agricultural Income-tax Officer in making an assessment of
agricultural income is bound to accept the computation of the
tea income already made by the central income-tax authorities
and to assess only 60 per cent of the income so computed Jei;s
allowable deductions as agricultural income taxable under the
Kerala Act: Where the agricultural income
is
derived from
lands partly within the State of Kerala and partly outside the State,
the portion of the income attributable to lands within the State
is detennined under s. 6 of the Kerala Agricultural Income-tax
Act read with r. 15 of the
Kerala
Agricultural
Incom(}-tax
Rules.
Our attention was drawn to the provisions of (a) ss. 8(2),
24 ( 1) proviso, 24 (2) proviso, 25 ( 4) and 25 ( 5) of the Bengal
Agricultural Income-tax. Act, 1944 and rules 7 and 8 of the Bengal
Agricultural Income-tax Rules, 1944, (b) s. 8 of the Mysore Agricultural Incom(}-tax Act, 1957 and rule 6 of the Mysore Agrfoultural Income-tax Rules, 1957, (c) s. 8 of the Coorg Agricultural
Income-tax Act, 1951, ( d) the second proviso to s. 8 of the Assam
Agricultural Income-tax Act, 1939 and rule 5 of the Assam Agricultural Income-tax Rules, 1939, (e) Explanation 1 to s. 2(a) (2)
of the Madras Plantations Agricultural Income-tax Act, 1955 and
r. 7 (I ) of the Madras Plantations Agricultural Income-tax. Rules,
1955 and (f) r. 5 of the Bihar Agricultural Income-tax Rules,
1949. Under some Acts and Rules, the Agricultural Income-tax
Officer is bound to adopt the assessment of the tea income made
by the central income-tax authorities. But under some other Acts
and Rules, he is authorised in special cases to disregard this assessment and to make a fresh computation of the tea income. We
express no opinion on the construction of these Acts and Rules.
For the purpose of these appeals, it is sufficient to say that the
Kerala Agricultural Income-tax Act and Rules do not confer upon
the Agricultural Income-tax Officer the power to disregard the
assessment of the tea income already made by the central income-.
lax authorities. We are unable to introduce by way of implication
in a taxing statute a provision which requires explicit statement.
Difficulties may arise in making an assessment of agricultural
income under the Kerala Agricultural Income-tax Act on the basis
•
752
SUPREME COURT RF.PORTS
[1968) 2 SC.R.
of the assessment of the tea income made by the Central incometax authorities.
The previous year under s. 2(o)(i1
of
the
Kerala Act may be different from the previous year under the
Indian Income-tax Act.
This difficulty may be resolved by fixing the previous year for this class of income under s. 2(o)(ii)
m conformity with the previous year under the Indian Jncometax Act.
But the anificial
previous year under s. 2-A is not
subject to the provisions of s. 2(o) (ii). Moreover, s. 22 authorises the
assessment
of income for
the period
from
the
expiry of a previous year to the probable date of the depanure
qf the a~sessee from the State.
It may be difficult to make an
assessment under s. 22 or on the basis of the
previous
year
under s. 2-A in the absence of any rule fixing the income for
a broken part of the year with reference to an assessment made
under the Indian Income-tax Act.
In spite of the>e and other
difficulties in the working of the Act, -we are unable to agree
with the decision in Commissioner of Agricultural Income-tax
Keralo v. Pertmad Plantations Ltd. (') or to ho!'' that the Agricultural Income-tax Officer can
ignore the assessment of the tea
income already made by the central income-tax authorities.
On behalf of the appellants, it was argued that the power
to compute business income under r. 24 read with s. I 0 of the
Indian Income-tax Act having regard particularly to proviso (a)
to sub-s. (2)(vi), the proviso to sub-s. 2(\i-b), sub-clause (g)
of the second proviso to sub-s. 2(xiv), sub-s. (4-A) and the
first proviso to sub-s. 5 (a) of s. I 0 must be exercised by lhe
Central Income-tax Officer alone, that there is no provision in
the Kerala Act conferring this power on the Agricultural Incometax Officer and that therefore the assessment of agricultural income must wait until the assessment by the Central Income-tax
Officer under r. 24 read with s. I 0.
Thls wider question does
not arise for decision and is left open.
In all the cases before
us, the assessments by the Central Income-tax Officer were completed before the Agricultural Income-tax Officer proceeded to
assess the agricultural income. For the purpose of these appeals,
it is sufficient to say that the Agricultural
Income-tax Officer
acting under the Kerala Agricultural Income-tax Act.
1950 is
bound to follow the assessment of i.D.come b.J the Central Incometax Officer under r. 24 of the Income;taxllules, 1922 and r. 8
of the Income-tax Rules, 1962 where such assessment has been
made before the Agricultural Income-tax Officer proceeds to
make the assc.~sment under
the
Kerala
Act.
The question
referred to the High Court is answered accordingly. We must not
be understood to say that the assessment made by the Central
Income-tax Officer under r. 23 of the Income-tax Rules, 1922
(I) (19~) 56 l.T.a. 191.
A
B
c
D
E
F
G
H
)
A
B
c
D
ANGLO AMERICAN co. V. C.A.J.T. (Bachawat, J.)
753
or r. 7 of the Ir.come-tax Rules, 1962 is in any way binding on
the Agricultural Income-tax Officer.
In Civil Appeals Nos. 585 to .588 of 1966 and 589 to 591
of 1966, the Agricultural Income-tax Officer made a surcharge
of 5 per cent for the assesi;ment year 1957-58 under the Kerala
Surcharge on Taxes Act, 1957.
On appeal, the Deputy Commissioner held that the surcharge was rightly made.
On further
appeal, the Appellate Tribunal held that the levy of the surcharge was illegal.
On the application of the respondent,
the
Appellate Tribunal referred the following additional question of
law to the High Court : "Whether on the facts and circumstances of the case the Tribunal is justified in holding that surcharge
on agricultural income-tax cannot be levied for the assessment
year 1957-58 ?".
The High Court answered this
question in
favour of the Revenue and against the assessee.
This decision
must be set aside.
In Karimtharuvi Tea Estate Ltd. v. State of
Ker ala ( 1 ), this Court held that no surcharge on agricultural income
can be levied under the Kerala Surcharge on Taxes Act, 1957
in respect of the assessment year 1957-58. The second question
is answered accordingly in favour of the assessee and against the
Revenue.
In the result, the appeals are allowed with
costs
and the
judgments of the High Court are set aside. The questions referE
red to the High Court are answered in favour of the appellants
and against the Revenue as indicated in the body of this judgment. There will be one hearing fee.
V.P.S.
Appeals allowed.
(1) [1966] l S.C.R. 93 : [1965] 60 I.T.R. 262.