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Issues:
Assessment under the Madras Agricultural Income-tax Act, 1955 - Method of computation of agricultural income - Consideration of stocks of coffee for assessment - Contention regarding when the crop was gathered - Applicability of two previous court decisions - Consideration of opening and closing stocks for assessment - Maintaining accounts on mercantile system - Correct principles for assessment. Analysis: The Supreme Court addressed the issue of assessment under the Madras Agricultural Income-tax Act, 1955, specifically focusing on the method of computation of agricultural income for the assessment years 1955-56 and 1956-57. The court highlighted that the primary dispute was regarding the consideration of stocks of coffee for assessment, particularly whether the department was entitled to include stocks gathered earlier but sold during the financial year. The assessee contended that only crops gathered and sold during the financial year should be considered. However, the court referred to previous decisions emphasizing that the agricultural income realized during the relevant previous year is crucial, regardless of when the crop was gathered. The court held that the price realized by the sale, under either the mercantile or cash system, should be assessed based on the accounting method maintained by the assessee. In a subsequent argument raised by the assessee's counsel, it was contended that the authorities had impermissibly considered both opening and closing stocks for assessment, which was deemed correct by the court. The court observed that while the authorities had indeed considered both stocks, it did not significantly impact the assessment when considering both assessment years. The court refrained from making a definitive decision on this matter but directed the Tribunal to reassess the assessee based on the correct principles of law, emphasizing that for an assessee maintaining accounts on the mercantile system, only the sales made during the relevant previous years are relevant for computation, rendering the consideration of opening and closing stocks irrelevant. Consequently, the Supreme Court allowed the appeals, remanding the cases to the Tribunal for reassessment of the assessee for the relevant assessment years based on the established principles. The court instructed the parties to bear their own costs in this matter, ultimately concluding that the appeals were allowed and the cases were remanded for further proceedings.
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