1976 (3) TMI 219 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of Tribunal to permit additional grounds.
2. Taxability of turnover as agricultural produce.
3. Validity of rejection of accounts and addition of Rs. 17,172.09.

Issue-wise Detailed Analysis:

1. Jurisdiction of Tribunal to permit additional grounds:
The Tribunal allowed the assessee to raise additional grounds regarding the taxability of the turnover, which was not disputed before the Appellate Assistant Commissioner. The revenue contended that the Tribunal lacked jurisdiction to permit this. The court referenced the decisions in *India Pistons Limited v. State of Tamil Nadu* and *State of Madras v. Spencer and Co. Ltd.*, which held that the Tribunal cannot permit the raising of additional grounds not disputed before the Appellate Assistant Commissioner. The court concluded that the Tribunal erred in permitting the assessee to raise the question of taxability for the turnover of Rs. 49,876.63 disclosed in his accounts.

2. Taxability of turnover as agricultural produce:
The assessee contended that the turnover was exempt as agricultural produce under section 2(r) of the Act. The Tribunal had relied on decisions in *K. M. Jamal Mydeen v. State of Madras* and *Arumugha Vettian v. Angamuthu Nattar* to support this view. However, the court noted that a Division Bench in *Deputy Commissioner of Commercial Taxes v. Palaniappan Co.* and *P. V. Palaniappa Pillai v. Deputy Commercial Tax Officer* held that the sale proceeds of coconuts are taxable turnover and not agricultural produce. The court emphasized that the lease was for usufructs and not an agricultural lease, and spending money for nurturing plants did not amount to an interest in the land itself. Consequently, the entire turnover was liable for assessment.

3. Validity of rejection of accounts and addition of Rs. 17,172.09:
The rejection of the accounts was upheld as the assessee failed to produce proper accounts, including harvesting and commission accounts. The addition of 100% to the lease amount was based on the assumption that dealers in similar trades had turnovers more than twice the lease amount. The court found this assumption insufficient without specific evidence regarding the age and variety of the coconut trees. The court decided to reduce the addition by 50%, thus revising the assessment.

Conclusion:
The petition was allowed, and the assessment was revised to reduce the addition by 50%. The revenue succeeded on the substantial question and was entitled to costs.