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TMI Blog1965 (2) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... e made. It follows that in respect of the assessment for the assessment year 1955-56, it is the agricultural income of the assessee during the period 1st of April, 1954, to 31st of March, 1955, that has to be ascertained, and the levy of tax is upon that agricultural income. In the case of coffee which is the agricultural produce realised by this assessee, the sale of coffee is controlled by other enactments, and, generally speaking, the producer of coffee has to surrender the produce to the Coffee Marketing Board and receive the value thereof. The question as to the mode of assessment in the case of coffee, with particular reference to the first year of assessment under the Act, came up for consideration before this court in certain writ petitions. In those cases, the position was that during the year of account April 1, 1954, to March 31, 1955, the assessee had received a certain sum from the Coffee Board relating to the coffee delivered in the years 1952-53 and 1953-54. The company was taxed on the basis of receipt of moneys from the Coffee Board during the year of account relevant to the first assessment year, though the produce itself related to years earlier than the first ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , then it should be equally well entitled to certain allowances of the cost of production, for otherwise the sale value of the coffee would not represent the income if the expenditure incurred for the raising of the coffee was not allowed. But the Appellate Tribunal took the view that whatever allowances the assessee was entitled to were governed by section 5 of the Act and that provision related to expenses incurred only during the previous year, that is, the year April 1, 1954, to March 31, 1955. Since in respect of this quantum of coffee the expenditure should have been incurred not in the previous year but in the account year prior to the previous year, that was not allowed. It would be sufficient to state that while the sale value of the coffee has been taken into account, no deduction relevant to the production of that coffee has been granted. The contention of the assessee as presented before us by Mr. Ramamani, its counsel, has accordingly been that while the charging section brings the income to tax, in the instant case, in relation to the 13,281 points of coffee, it is not the income that has been taken into account but the gross value of the produce itself. We have alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural income can be said to accrue. In Dooars Tea Co. Ltd. v. Commissioner of Agricultural Income-tax the question arose thus. The appellant-company carried on the business of growing, manufacturing and selling tea. The appellant also grew bamboos, thatching grass and fuel timber on a large tract of land held under a lease from the local Government. During the relevant year, it cut down some bamboos, thatching grass and fuel bamboo and used them for the purpose of its tea business. There was no dispute that the bamboos, etc., were grown by the appellant by pursuit of agricultural operations carried on by the service of labourers employed by the appellant. The market value of this produce was included as agricultural income by the Agricultural Income-tax Officer and such inclusion was disputed by the appellant. It was the contention of the appellant that unless the produce was converted into its money equivalent, or, in other words, unless such produce was sold, the produce could not in law be treated as its income. The department took the contrary view and that view was upheld by the Tribunal. There was a reference to the High Court, and one of the questions was, whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employment of the process falling under that clause would also be agricultural income. Even this clause does not refer to sale and does not require that income should be obtained from sale. The next clause of this part of this definition expressly refers to income derived from sale. They point out that this clause refers to the sale which must be the sale of the produce which has not been subjected to any process other than that contemplated in the earlier clause. The effect of these two latter clauses is thus set out in the judgment: " Thus it may be stated that reading clauses (ii) and (iii) together, they contemplate the sale of produce-clause (ii) indirectly inasmuch as it refers to the process employed for making the produce marketable and clause (iii) directly inasmuch as it refers to the price realised by the sale of the produce which has been subjected to the process contemplated by clause (ii). Therefore, it is clear that income derived from the sale of agricultural produce has been provided for by clauses (ii) and (iii) and, prima facie, that would show that clause (i) which does not refer to sale even indirectly cannot be intended to cover cases of income derived f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivered to the Coffee Board after April 1, 1954, the receipt of the income relevant thereto should be the point of time when the crop was harvested by the assessee, that is to say, on a date prior to April 1, 1954. It is not in dispute that if the receipt of income was prior to that date, then, that will not be a receipt within the previous year relevant to the assessment year and cannot be included. The question is whether this contention can be accepted even in the light of the principles laid down in the Supreme Court decision. We have given the matter careful consideration. We find ourselves unable to accept the argument of Mr. Ramamani that in all cases the raising of the produce itself and its harvest connotes a derivation of income by the cultivators. If that were so, it would not be logical to hold that the subsequent sale by the cultivator of the crop, whether the crop has been subjected to any process ordinarily employed to render the produce fit to be taken to the market or not, could again connote income derived from the land. There cannot possibly be two receipts of income, which is precisely what the above argument would indicate. While the first clause " any inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e produce raised fit to be taken to the market " meant. This decision only went to the extent of laying down that if a market is available for the produce in its raw state, then the process cannot be stated to be a process of the nature indicated. The learned judges emphasise that the process should be one such as is ordinarily employed to render it marketable. They also observe that it is implied in the language used that the process must not alter the character of the produce. We are unable to derive any assistance from this decision with regard to the particular point that is before us, viz., when the income was actually derived. Our attention has been drawn to the decision of this court in India Coffee Board v. State of Madras where the question arose whether the India Coffee Board, which is an authority created by the Coffee Market Expansion Act, is a dealer within the meaning of the Madras General Sales Tax Act. Reference was made to this decision only for the purpose of explaining that under the provisions of that Act, a person growing coffee has to get himself registered and has to surrender the quota fixed by the Coffee Board to the Coffee Board. It was pointed out by Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat are brought to tax. We are by no means convinced that the principle of taxation underlying the Agricultural Income-tax Act is the same as in the Income-tax Act. While section 3 brings to charge the total agricultural income of the previous year, "total agricultural income " is defined in section 4 to comprise of agricultural income derived from land situated within the State which is received or which accrues within or without the State. The computation of agricultural income is provided for in section 5, which requires a series of deductions to be made such as would be applicable in the instant case. The total agricultural income which is chargeable to tax by section 3 is the aggregate of all agricultural income mentioned in section 4 and computed in accordance with the provisions of section 5. In making such computation the assessee is entitled to a deduction of expenses such as sums paid on account of land revenue, local rates, etc., rent paid to the landlord or superior landlord, expenses on the maintenance of any work constructed for the benefit of the land, expenses on the maintenance and repairs of any capital asset purchased or constructed for the benefit of the land an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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