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Issues involved: Assessment of income u/s rule 7 of Karnataka Agricultural Income-tax Rules, method of apportioning gross receipts, relevance of judgment of Madras High Court in CIT v. Manjushree Plantations Ltd.
Assessment of income u/s rule 7 of Karnataka Agricultural Income-tax Rules: The Supreme Court upheld the High Court's decision, stating that the Agricultural Income-tax Officer was justified in assessing the income of the assessee to the best of his judgment as per rule 7 of the Karnataka Agricultural Income-tax Rules. The method of apportioning gross receipts between agricultural and non-agricultural operations was deemed reasonable, even though a different apportionment method could have been used if all relevant particulars were provided by the assessee. The Court emphasized that the High Court correctly applied the judgment of the Madras High Court in CIT v. Manjushree Plantations Ltd., which highlighted the need for expenditures to be clearly related to agricultural or non-agricultural activities. Method of apportioning gross receipts: The Agricultural Income-tax Officer adopted a method of apportioning gross receipts from the assessee's agricultural and non-agricultural operations. The Supreme Court found this method to be acceptable and not perverse. While acknowledging that a different apportionment based on net income from these sources could have been considered if all relevant particulars were provided, the Court concluded that there was no justification for interference in the present cases. The Court's decision was in line with the principle that expenditures should be directly linked to either agricultural or non-agricultural activities, as established in the judgment of the Madras High Court in CIT v. Manjushree Plantations Ltd. Relevance of judgment of Madras High Court in CIT v. Manjushree Plantations Ltd.: The Supreme Court endorsed the High Court's reliance on the judgment of the Madras High Court in CIT v. Manjushree Plantations Ltd. The Madras High Court's ruling emphasized the importance of expenditures being clearly attributable to either agricultural or non-agricultural activities. The Supreme Court agreed with this interpretation and found it to be applicable in the present cases. Consequently, the civil appeals were dismissed, and no costs were awarded.
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