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TMI Blog2012 (9) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... opening of assessment under Section 147 as well as under Section 263 of the Income Tax Act for any assessment year prior to the assessment year 2002-03 - Assessees who have paid agricultural income tax on 100% of the income from centrifuged latex, will not be reassessed under the Central Act for any year prior to the assessment year 2002-03 - assessee's case is covered by the circular and the assessee cannot be called upon to pay tax again under the Central Income Tax Act on that part of the income assessed under Rule 7 over which also tax was paid under AIT Act Charging provision of assessment of part of the income from the sale of items of rubber covered by Rule 7A should be deemed to have come into force only when Rule 7A was introduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee. However, thereafter the Assessing Officer took up the assessment as a scrutiny under Section 143(3) and assessed part of the income obtained from assessee's plantation on sale of centrifuged latex by applying Rule 7 of the Income Tax Rules (hereinafter referred to as the Rules for short), which provides for assessment of income obtained partly in the form of agricultural income and partly in the form of business income. The assessee challenged the assessment in appeal, which was allowed by the CIT (Appeals) cancelling the assessment. However, on Revenue's appeal, the Tribunal vacated the CIT (Appeals)'s order that was in favour of the assessee and restored the assessment under Rule 7 of the Rules. As a result of the confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reating the same as 100% agricultural income. The Central Income Tax Department never raised any claim for assessment of part of the income from sale of centrifuged latex as "business income" for several decades. For the first time, Rule 7A was introduced to the Rules specifically declaring 35% of the income from sale of processed rubber in the form of intermediary products like centrifuged latex as business income by the Income Tax (Second Amendment) Rules, 2001 with effect from 01/04/2002. Rule 7A is extracted hereunder for easy reference:- "7A : (1) Income derived from the sale of centrifuged latex or cenex or latex based crepes (such as pale latex crepe) or brown crepes (such as estate brown crepe, remilled crepe, smoked blanket crepe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibiting reopening of assessment under Section 147 as well as under Section 263 of the Income Tax Act for any assessment year prior to the assessment year 2002-03, if the assessees have returned 100% of the income from centrifuged latex and paid agricultural income tax for such income. By virtue of this circular the Income Tax Department is prevented from making any revision of assessment brining to tax any part of income on the sale of centrifuged latex during the assessment years prior to 2002- 03 as business income, and the only condition is that the assessee should have paid agricultural income tax for 100% of such income. 5. The assessment and demand in this case is for the assessment year 1996-97 and by virtue of the notification, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 147 or Section 263 of the Income Tax Act that too based on Rule 7A of the Rules, nothing prohibits the Assessing Officer for making regular assessment under Section 143(3) for brining to tax part of the income from sale of centrifuged latex as business income by applying Rule 7 of the Rules. To our specific request to the learned Senior Standing Counsel for the Revenue as to what was the need to introduce Rule 7A, if Rule 7 was sufficient to make assessment of part of income from centrifuged latex as business income, he contended that Rule 7A is only clarificatory in nature and its objective is to prevent litigation by fixing and apportioning 35% of the income from sale of items referred to therein towards business income and balance 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above circular is to prevent double assessment and demand of tax on the same income from the assessees. The circular makes it very clear that the assessees who have paid agricultural income tax on 100% of the income from centrifuged latex, will not be reassessed under the Central Act for any year prior to the assessment year 2002-03. This circular in our view applies to a category of assessees who have paid tax on 100% of the income from centrifuged latex to the Agricultural Income Tax Department, and so much so, in our view, even regular assessment under Section 143 is not permissible, if the AIT assessment on 100% of income from centrifuged latex has become final. We are therefore of the view that in order to have equal equitable and even ..... X X X X Extracts X X X X X X X X Extracts X X X X
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