# J(arimtharuvi Tea Estates Ltd., Kottayam v. State of Kera/a

- **Citation:** [1963] Supp. 1 S.C.R. 836
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Bench:** S. K. Das, J. L. Kapur, A. K. Sarkar, M. Hidayatullah, Raghubab- Dayal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/j-arimtharuvi-tea-estates-ltd-kottayam-v-state-of-kera-a-2750
- **Pages:** 9

## Headnote

Agricultural Income Tax-Rubber Plantation-Computation of agricultural income-Deductions-Statute disallowing
expenditure on immature plants-Validity of-If discriminatoryAgricultural Income Tax (Amendment) Act, 1961 (Ker. IX of
1961), s. 2-Constitution of India, Art. 14.
Under the Agricultural Income Tax Act, J 950, agricultural income from rubber plantations was to be computed in
the same manner as ·under the Indian Income-tax Act, 1922.
In December 1960, the Supreme Court held that the petitioners
were entitled to deduct the expenses incurred in the upkeep
and maintenance of itnn1ature rubber plants in the assessment
of their agricultural income under the Agricultural Income Tax
I
t
I S.C.R.
SUPREME COURT REPORTS
837
Act. Thereafter, by the Agricultural Income Tax (Amendment)
Act, 1961 an Explanation 2 was added to·;. 5 of the 01·i~inal
Act which provided that no deduction shall be allowed of any
expenditure laid out or expended for the cultivation, upkeep
or maintenance of immature plants from which no agricultural
income was derived during the previous year. The petitioners
contended that Explanation 2 was ultra vires and discriminatory.
Hel,d, that Explanation 2 to s. 5 was validly enacted.
The State Legislature had full power to tax "agricultural
income" as defined in the Agricultural Income Tax Act, which
definition was in conformity with the definition in the Indian
Income-tax Act, 1922. It was for the State Legislature to
provide for such deductions from such income as it considered
fit.
The word "income" had a very wide meaning. The word
"income" in Entry 46, List lI. Seventh Schedule of the Constitution which empowers a State Legislature to legislate with respect
to taxes on agricultural income could not be confined to gross
receipts after deduction of necessary expenses incurred to get
those receipts.
Travancore Rubber & Tea Co. Ltd. v. Commissioner of
Agricultural Income-tax, Kerala, [1961] 3 S. C.R. 279 and
Navinchandra Mafatlal v. Commissioner of Income-tax, Bombay,
(1955] I S. C. R. 829, referred to.
Hel,d, further, that Explanation 2 to s. 5 was not discriminatory and did not contravene Art. 14. Though Explanation 2 was applicable to rubber plantations and not to tea
plantations, the distinction was based upon the special ·provisions of the Income-tax Act and the rules made thereunder.
The income derive from the sale of tea was partly derived from
land by agriculture and partly from business.
Such is not the
case with income derived from sale of rubber.
The Karimtharuvi Tea Estates Ltd., Kottayam v. State of
Kerala, [1963] Supp. I S. C.R. 823, referred to.
ORIGINAL juRJSDICTION: Petitions Nos. 237 to
239 of 61.
Petition under Art. 32 of the Constitution of
India for enforcement of Fundamental Rights.
S. T. Desai, J.B. Dadachanji, 0. C. Mathur,
p.IJ.d Ravindar Narain, for the petitioners.
'
' .
.
1962
Travancore Rubber
& 1 ea Co. Ltd.
.
v.
Stale 'lj Kerala
838 SUPREME COURT REPORTS [1963] SUPP.
1962
A. V. Viswanathr1 Sristri and V.A .8. illnhainmed,
Trnvancort /lubber
for the respondents.
.
(.f T,a Co, Ltd.
v.
Stattof Kera/a
1962. November l. The .Judgment of' the Court
was delivered by
Raghnbar Dayal, J.
R.\(11/GBAR D,1 ¥AL, .J.-Thc Travancore Rubber
and T"a Cu .. Ltd., hereinafter clkd the company,
and one of its dirrctors and members, have filed
these petitions praying for a <lecbration that the Agricultural Income Tax (Amendment) Act, 1961 (Act
IX of 1961), hereinafter called the Amendment Act,
enacted bv the Kcrala State Legislature, is null and
void and iiir the issue of appropl·iate orders to the
respondents viz .. the State of Kerala and the Assistant Commissioner of Agricultural Income-tax. Kotta·
yam, restraining them, their
agent~ and servants
from enforcing or acting upon the provisions of the
aforesaid Amendment Act agaimt tlw company and
for refund of tax i llegallv assessed and collected from
the company.
c
•
The hmincss of the company consists of owning
and managing rubber and tea estates situate

## Text

1962
.J(arimtharuvi Tea
Estates Ltd.,
Kottayam
v.
State of Kera/a
~aghubar Doyal, J.
196~
Novemb1r, 1.
836 SUPREME COURT REPORTS [19fi3]SUPP.
Agricultural Income-tax Act added by the Amendment Act does not cover the expenses incurred in the
upkeep or maintenance of immature tea plants from
which no income has been derived during an account·
ing year and that the agricultural inrnme derived
from tea plantations will be computed in accordance
with the provisious of the Income· tax Act and the
Income-tax Rules. We order that a writ be issued to
the respondents restraining them, their agents and
servants from enforcing or acting upon the provisions
of Explantation 2 to s. 5 of the Agricultural Incometax Act against the Karimtharuvi Tea Estate Ltd.,
Kottayam, viz., petitioner No. J.
We direct the respondents to pay the costs of petitioner No. 1, on eset.
Pet·i#o11s allowed in part.
TRAV ANCORE RUBBER & TEA
CO. LTD. & ANR.
v.
STATE OF KERALA & ANR.
(S. K. DAS, J. L. KAPUR, A. K. SARKAR, M.
HIDAYATULLAH and RAGHUBAB- DAYAL, JJ.)
Agricultural Income Tax-Rubber Plantation-Computation of agricultural income-Deductions-Statute disallowing
expenditure on immature plants-Validity of-If discriminatoryAgricultural Income Tax (Amendment) Act, 1961 (Ker. IX of
1961), s. 2-Constitution of India, Art. 14.
Under the Agricultural Income Tax Act, J 950, agricultural income from rubber plantations was to be computed in
the same manner as ·under the Indian Income-tax Act, 1922.
In December 1960, the Supreme Court held that the petitioners
were entitled to deduct the expenses incurred in the upkeep
and maintenance of itnn1ature rubber plants in the assessment
of their agricultural income under the Agricultural Income Tax
I
t
I S.C.R.
SUPREME COURT REPORTS
837
Act. Thereafter, by the Agricultural Income Tax (Amendment)
Act, 1961 an Explanation 2 was added to·;. 5 of the 01·i~inal
Act which provided that no deduction shall be allowed of any
expenditure laid out or expended for the cultivation, upkeep
or maintenance of immature plants from which no agricultural
income was derived during the previous year. The petitioners
contended that Explanation 2 was ultra vires and discriminatory.
Hel,d, that Explanation 2 to s. 5 was validly enacted.
The State Legislature had full power to tax "agricultural
income" as defined in the Agricultural Income Tax Act, which
definition was in conformity with the definition in the Indian
Income-tax Act, 1922. It was for the State Legislature to
provide for such deductions from such income as it considered
fit.
The word "income" had a very wide meaning. The word
"income" in Entry 46, List lI. Seventh Schedule of the Constitution which empowers a State Legislature to legislate with respect
to taxes on agricultural income could not be confined to gross
receipts after deduction of necessary expenses incurred to get
those receipts.
Travancore Rubber & Tea Co. Ltd. v. Commissioner of
Agricultural Income-tax, Kerala, [1961] 3 S. C.R. 279 and
Navinchandra Mafatlal v. Commissioner of Income-tax, Bombay,
(1955] I S. C. R. 829, referred to.
Hel,d, further, that Explanation 2 to s. 5 was not discriminatory and did not contravene Art. 14. Though Explanation 2 was applicable to rubber plantations and not to tea
plantations, the distinction was based upon the special ·provisions of the Income-tax Act and the rules made thereunder.
The income derive from the sale of tea was partly derived from
land by agriculture and partly from business.
Such is not the
case with income derived from sale of rubber.
The Karimtharuvi Tea Estates Ltd., Kottayam v. State of
Kerala, [1963] Supp. I S. C.R. 823, referred to.
ORIGINAL juRJSDICTION: Petitions Nos. 237 to
239 of 61.
Petition under Art. 32 of the Constitution of
India for enforcement of Fundamental Rights.
S. T. Desai, J.B. Dadachanji, 0. C. Mathur,
p.IJ.d Ravindar Narain, for the petitioners.
'
' .
.
1962
Travancore Rubber
& 1 ea Co. Ltd.
.
v.
Stale 'lj Kerala
838 SUPREME COURT REPORTS [1963] SUPP.
1962
A. V. Viswanathr1 Sristri and V.A .8. illnhainmed,
Trnvancort /lubber
for the respondents.
.
(.f T,a Co, Ltd.
v.
Stattof Kera/a
1962. November l. The .Judgment of' the Court
was delivered by
Raghnbar Dayal, J.
R.\(11/GBAR D,1 ¥AL, .J.-Thc Travancore Rubber
and T"a Cu .. Ltd., hereinafter clkd the company,
and one of its dirrctors and members, have filed
these petitions praying for a <lecbration that the Agricultural Income Tax (Amendment) Act, 1961 (Act
IX of 1961), hereinafter called the Amendment Act,
enacted bv the Kcrala State Legislature, is null and
void and iiir the issue of appropl·iate orders to the
respondents viz .. the State of Kerala and the Assistant Commissioner of Agricultural Income-tax. Kotta·
yam, restraining them, their
agent~ and servants
from enforcing or acting upon the provisions of the
aforesaid Amendment Act agaimt tlw company and
for refund of tax i llegallv assessed and collected from
the company.
c
•
The hmincss of the company consists of owning
and managing rubber and tea estates situate in Kerala
State. The company was assessed to agricultural incometax under the Agricultural Income-tax Act 1950 (original\y the Travancorc-Cochin Agricultural Income-tax
Act XXII of l 9ii0, amended
as the Agricultural
Income-tax Act. I !lliO bY Act VIII of 195i of the
Kerala Legislature), hereinafter called the Agricultural Income-tax Act, with respect to its income derived from its rubbrr plantations in the accounting
years 1950, 195I and 1952, corresponding to the
assessment years 1951-1952, l!li52-53 and 1953-54.
The assessing authority did not deduct the expenses
incurred in the upkeep and maintenance of the immature rubber plants fo the assessment of the income for
the assessment vear 1953-54, but allowed it in the
assessment with· respect to the other two years.
At
the request of the Income-tax Department and of the
,
l S.C.R.
SUPREME COURT REPORTS
839
company, cases were referred to the High Court. of
Kerala in accordance with s. 60 of the Agricultural
Income-tax Act.
The High court decided against
the company holding that such expenditure was not
to be deducted in computing the agricultural income.
The company came to this Court against the order of
the High Court ancl this Court held, by its judgment
dated December 15, 1960
The 'Travancore R1ibber
and Tea Co. Ltd. v. The Commissioner of Agricnltural Income-t1ix, Keralri (') that such expenses were
allowable under s. 5(j) of the Agricultural Income·
tax Act in computing the assessable income.
Thereafter, the Governor of Kerala State promLtlgatcd an
ordinance which was subsequently repealed by the
Amendment Act of 1961. The Amendment Act was
deemed to have come into effect from April 1, 1951.
By its s. 2, Explanation 2 was added to s. 5 of the
Agricultural Income-tax Act.
That Explanation
reads:
"Nothing contained in this section shall be
deemed to entitle a person deriving agricultural
income to deduction of any expenditure laid
out or expended for the cultivation, upkeep or
maintenance of immature plants from which no
agricultural income has been derived during the
previons year."
By s. 3, assessments previously made on the basis that
such expenses were not to be allowed. in computing
agricultural income were deemed to be valid.
On February 22, l!l61, the company, on the
basis of the judgment of this Court, wrote to the
Income-tax Commissioner for refunding the excess
tax which had been realised. It got the reply, dated
June 20, 1961, that its claim for refund was not
maintainable so long as the orders of assessment were
not varied or reversed by any competent authority
and that the claim was dso not tenable in view of the
provisions contained in the Amendment Act.
(I) (1961] S S.0.R, 279.
1962
Travancore tubb~r
& Tea Co. Ltd.
v.
State of Kerala
Ra:hubar DcJ.J al, J.
Travancore Ti'ubbtr
Iii 1 ea Co. Ltd.
v.
St:1te of Kerala
Rc:hubsr Day•l, J.
840 SUPREME COURT REPORTS [1963] SUPP.
The effect of the impugned Explanation is that
expenses incurred on the upkeep and maintenance of
immature rubber plants from which no agricultural
income is derived during the accounting year are not
to be deducted in computing the agricultural income.
The State Legislature derives power ·to tax
agricultural income by virtue of Entry no. 46, List II,
Seventh Schedule, of the Constitution.
Article
366(1) defines 'agricultural income' to mean 'agricultural income as defined for the purpose of the enactments relating to Indian income-tax.' The definition in the Income-tax Act is incorporated by
reference in the Constitution and serves to demarcate
the bounds of 'agricultural income'. The relevant
portion of the definition of 'agricultural income' in
the Agricultural Income-tax Act is -also in the same
terms as the corresponding definition of 'agricultural
income' in the
Indian Income-tax Act, 1922.
Section 5(j) of the Agricultural Income-tax Act
provides that the agricultural income of a person shall
be computed after making deductions of any expenditure (not being in the nature of capital expenditure
or personal expenses of the assessee) laid out or ex·
pended wholly and exclusively for the purpose of
deriving the agricultural income.
The State Legislature has full powers to tax
such income as income within the expression 'agricultural income' as defined in the Agricultural Incometax Act, the definition being in conformity with the
definition of 'agricultural income' in the Income-tax
Act. It is for the State Legislature to provide such
deductions from such income as it considers fit.
Section 5 of the Agricultural Income-tax Act makes
provisions for the deductions considered necessary by
the Legislature. Explanation 2 added to s. 5 by the
Amendment Act makes it clear that the Legislature
was of opinion that no deduction should be allowed
for the expenses incurred in the
upkeep and
l S.C.R.
SUPREME COURT REPORTS
8H
of immature
plants. Such an intention of the
Legislature is manifest as Explanation 2 was enac·
tcd after the decision of this Court in the Trrrnuncore Rubber And Tm Co. Ltd., case(') to the effect
that such expenses arc to be deducted in view of the
provisions of cl. (j) of s. 5 of the Agricultural Incometax Act.
We are therefore of the opinion that the State
Legislature was competent to enact Explanation 2 to
s. 5 and thereby provide for the non-deduction of the
expenses incurred in the upkeep or maintenance of
immature plants from which no income has bern derived in thr accoimting year.
It is however rnntended that apart from the
provisions of cl. (j) of s. r;, the word 'income' does
not mean the gross receipts of a prrson but such
receipts after deducting the necessary expenses incurred for the purpost> of getting those rrceipts and that
such had been the concept of the Constitution makers
when they used the word 'income' in Entry No. 82 of
List I and Entry >lo. 4fi of List IT, of the Seventh
Schedule to the Constitution.
In support of this
c~mt~ntion referen.ce was ma~e to the legislative pract'.ce m the law of mcomc-tax m England, to the dictionary meaning of the word 'income' and to certain
meanings mentioned in Strond's Judicial Dictionary
and 'Words & Phrases' by Burrows.
vVc do not consider it
nec~ssary to deal with this contention ~t
length as this Court had occasion to consider thi<
aspect thoroughlv in Xm·inchn.ndrn Jfajritlal v.
Th~
Commi8sio.ncr of Income-tni·, Bomb((.!J City(').
Das
J., as he then was, said at p. 833 :
"Our attention has not, however, been drawn
to any enactment other than fiscal statutes like
the Finance Act and the Income-tax Act where
the word 'income· has been used and, therefore-,
it is not possible to say that the critical word
(I) [1961)3 s.c.a.1' 9,
(2J [ 1955] 1 s.CJ.l. 829.
1962
l ravanrAt Rubb11
& T1• Co. Ltd.
v.
State vf Kerula
Raghu/iar J)nyal, J.
1962
Travancore Rubber
& Tea Co. Ltd.
v.
State of Kerala
Raghubar Da_y1Jl, J.
842 SUPREME COURT REPORTS [1963] SUPP.
had acquired any particular meaning by reason
of any legislative practice. Reference has been
made to several cases where the word 'income'
has been construed by the Court. W'hat is,
therefore, described as legislative practice is
nothing but judicial interpretations of the word
'income' as appearing in the fiscal statutes men·
tioned above............ These guarded observa·
tions quite clearly indicate that they relate to
the term 'income' or 'profit' as used in the
Income-tax Act. There is no warrant for say·
ing that these observations cut down the natural
meaning of the ordinary English word 'income'
in any way."
In discussing the natural and grammatical meaning
of the word 'income', reference was made to its dictionary meaning and to the interpretation of the word
in a wide sense in the United States of America and
in Australia and then it was said at p. 837 :
"The relevant observ;itions of learned Judges
deciding those cases which have been quoted
in the judgment of Tendolkar J., quite clearly
indicate that such wide meaning was put on the
word 'income' not because of any particular
legislative practice either in the United States
or in the Commonwealth of Australia but
because such was the normal concept and con·
notation of the ordinary English word 'income'.
Its natural meaning embraces any profit or
gain which is actually received."
It is therefore clear that the word 'income' in. the
relevant provisions of the Constitution has a very
wide meaning and is not restricted in its meaning as
suggested for the petitioner.
The next contention· for the appellant is that
Explanation 2 is discriminatory and contravenes the
l S.C.R.
SUPREME COURT REPORTS
843
provisions of Art. 14 of the Constitution. There is
nothing discriminatory in the provisions of Explanation 2 to s. 5.
It is applicable to agricultural income
derived from all crops except tea.
The question of the applicability of Explanation
2 to s. 5 to the agricultural income derive from tea
plantations was before us for determination in The
Karimtharuv·i Tea E.qf,afes Ltd., Kottayam v.
7'hr
State of Kerala(1).
We have held in that case tlwt
Explanation 2 to s. 5 does not apply to the agricultural income from tea plantations.
It was argued
that if such be the view of this Court, the Explanation would bring about discrimination between agricultural income arising from rubber plantatiom and
similar income arising from tea plantations and that
therefore the Explanation would contravene the provisions of Art. 14 of the Constitution. It was, however, fairly conceded that in case the decision that
this Explanation does not apply to
agricultural
income from tea plantations is baseJ on the special
provisions in the Income-tax Act and the rules made
thereuncler in connection with the computation of
agricultural income from tea plantations,
there
would be no such discrimination.
Our decision in
The Karimtharnr1: Ten /1'states Case(1) is based on such
special provisions.
The income derived from the sale of tea grown
and manufactured by the seller is partly derived from
land by agriculture and rartly from business.
Such
is not the case with the income derived from the sale
of rubber.
The provision for the computation of
agricultural income from tea plantations has to be
different and is to be found in the rules made under
s. 59(3) of the Income-tax Act for determining the
proportions of agricultural income and income from
business in the entire income from the sale of tea.
The difference in the provisions for the compu•atic•n
(I) [1963] Supp. I S.C.R. 323.
1962
Travaucore Rub~,,
& Tea Co. ltd.
v.
State of Kerala
Raghubar Dayal, J
1962
T ravancCJre Ruibtr
r/ Tt11 C6. Ltd.
v
::i·t~te of J(~!nla
Raghubar Dt1yal, /.
191;2
.Novtmlcr, 2.
844 SUPREME COURT REPORTS [1963] SUPP.
of agri.cultural income from tea plantations and from
rubber plantations is therefore based on good reasons.
Vve hold that the provisions of Explanation 2
are not discriminatory against agricultural income
from rubber plantations.
W c therefore see no forcr in these petitions and,
accordingly, tlismiss the>n with costs, one set.
Petition8 dinm:ssed.
/\NAN f PRASAD LAKSHMINIV AS
GENERIWAL
1),
ST A TE OF ANDHRA PRADESH AND OTHERS
(With connected Petition)
(B. P. SINHA, C. ]., P. B. GA.!ENJJRAGAJ>KAn,
K. N. '"' ANCH(JO, K. c. D.\S GUPTA
and]. C. SHAH, .JJ.)
Religiow; Public Trust-Regisl<at:on-Notice on tra8tee~
F'ailure of trustee to app~a.r-Orfkr of remfJval, 1f ultra v1resConstitutional
t'alidity of cnactu1,fnt-Trust in one ,')
1taiel)roperty in unother-l'enue of regi8frat/on-H11de1«1hol liJndowmr.nts Regulation, 1.940, ss. 3, 9.
'fhe appellant, who was also the petitioner in the \Vrit
petition, clairned to be the sole hereditary trustee and mut\valli
of the ancient temple of Shri Sitararn Maharaj i:1 Hyderabad.
For the n1aintenance of that temple certain village:; in 13e-rar
had beed granted by the N1zam.
The appellant's father had
g-Ot the temple registered as a public trust nnder s. 7(1) uf the
Madhya Pradesh Public Trusts Act, 1951, in June, J9:i:i.