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Issues Involved:
1. Validity of the assessment orders for the years 1979-80 and 1980-81. 2. Constitutionality of Rule 9(c) of the Karnataka Agricultural Income-tax Rules, 1957. 3. Constitutionality of Section 26(4) of the Karnataka Agricultural Income-tax Act, 1957. Issue-wise Detailed Analysis: 1. Validity of the Assessment Orders for the Years 1979-80 and 1980-81: The petitioner, an assessee under the Karnataka Agricultural Income-tax Act, 1957, filed returns for the assessment years 1979-80 and 1980-81. He claimed that his agricultural estate had been impressed with the character of joint family property as of August 10, 1978, and thus he was not liable to pay tax. The Agricultural Income-tax Officer overruled this contention and assessed him to tax in his individual capacity until the date of partition, including supplementary coffee points declared for earlier seasons. The petitioner argued that he did not hold land for the entire assessment year and thus was not liable to pay tax under Section 3 of the Act. The court held that income derived in the previous year, even if from crops of earlier years, is taxable. The court referred to precedents, including the Supreme Court's decision in State of Kerala v. Bhavani Tea Produce Co. Ltd., which upheld that agricultural income-tax is payable even if the produce was of an earlier year and the sale took place in a later year. 2. Constitutionality of Rule 9(c) of the Karnataka Agricultural Income-tax Rules, 1957: The petitioner contended that Rule 9(c) was ultra vires Sections 3 and 7 of the Act, arguing that the supplementary points received for earlier years could not be taxed in the absence of specific provisions in the Act. The court held that Rule 9(c) is valid and within the scope of the Act. The rule prescribes the manner of computation of income, and the method of accounting adopted by the assessee determines the mode of computing taxable income but does not alter the range of taxable income. The court concluded that Rule 9(c) does not restrict or enlarge the nature, scope, or content of taxable income and is framed to carry out the purposes of the Act. 3. Constitutionality of Section 26(4) of the Karnataka Agricultural Income-tax Act, 1957: The petitioner challenged the constitutionality of Section 26(4), arguing that it was beyond the competence of the State Legislature. Section 26(4) provides that receipts after the discontinuance of business or profession can be treated as agricultural income in the year of receipt. The court held that Section 26(4) is a valid piece of legislation. The court reasoned that the income derived from the Coffee Board is agricultural income arising out of the sale of produce and is taxable in the year of receipt. The court rejected the petitioner's contention that Section 26(4) is applicable only to a company, firm, or association of persons, noting that the section does not specifically refer to such entities. Conclusion: The court partially allowed the petitions, dismissing the challenge to the validity of Section 26(4) of the Act and Rule 9(c) of the Rules. The court quashed the impugned assessment orders and remitted the matters to the assessing authority to redo the assessment in light of the court's order and in accordance with the law. The impugned assessment orders remain undisturbed except to the extent indicated.
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