1966 (9) TMI 4 - HC - Income Tax

Application u/s 67 of the Mysore Agrl. IT Act, 1957, for composition of the agricultural income-tax payable by him was rejected by the Agrl. ITO on the ground that he had learnt that the assessee had reaped and derived an income from pepper and cardamom which are plantation crops as defined by s. 2(1)(q) - held that Agrl. ITO should proceed to allow composition under s. 67 according to law

Issues Involved:
1. Eligibility for composition of agricultural income-tax under Section 67 of the Mysore Agricultural Income-tax Act, 1957.
2. Interpretation of Sections 66 and 67 regarding the classification and composition of agricultural income-tax.
3. Impact of growing subsidiary crops like pepper and cardamom on eligibility for composition.
4. Effect of the amendment to the definition of "plantation crop" in Section 2(1)(q) on the eligibility for composition.

Issue-wise Detailed Analysis:

1. Eligibility for Composition of Agricultural Income-tax under Section 67:
The petitioner, owning 8 acres and 21 guntas of agricultural land, applied for composition of agricultural income-tax under Section 67. The Agricultural Income-tax Officer refused the application, citing that the petitioner derived income from pepper and cardamom, which are plantation crops as defined by Section 2(1)(q) of the Act. The officer's view was that no classification of land for composition was possible under Section 66 due to the presence of these plantation crops.

2. Interpretation of Sections 66 and 67:
Section 66 pertains to the classification of land for composition of agricultural income-tax, specifying that lands used for growing commercial crops other than plantation crops, ganja, or timber shall be classified into eight classes. Section 67 allows a person deriving agricultural income from land not exceeding 150 acres of the eighth class or equivalent extents of other classes to apply for composition. The court noted that the petitioner's land, primarily used for growing areca (a commercial crop), fell within the second class, and its extent was well within the prescribed limit.

3. Impact of Growing Subsidiary Crops like Pepper and Cardamom:
The court examined whether the presence of subsidiary crops like pepper and cardamom disqualified the petitioner from seeking composition. The main crop grown by the petitioner was areca, with pepper and cardamom being subsidiary crops. The court held that the land's main or dominant use for growing a commercial crop (areca) should determine eligibility for classification under Section 66 and composition under Section 67. The court emphasized that the legislative intent was to benefit small landholders who might not maintain detailed accounts.

4. Effect of the Amendment to the Definition of "Plantation Crop":
Before April 1, 1963, the definition of "plantation crop" excluded cardamom or pepper when grown on land where areca was the main crop. The amendment removed this exclusion, leading to the argument that such land could no longer be classified under Section 66. The court reasoned that the amendment aimed to tax income from subsidiary plantation crops, not to exclude such land from classification. The court maintained that the primary or dominant use of the land for growing a commercial crop should still allow for classification and composition.

Conclusion:
The court concluded that the refusal of composition by the Agricultural Income-tax Officer was based on a misinterpretation of Sections 66 and 67. The court set aside the impugned order and directed the Officer to allow composition under Section 67 according to law. The appeal was allowed, with no order as to costs.

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