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TMI Blog1991 (1) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of actual points declared by the Coffee Board. A return under the Act was filed adopting the said basis, valuing the coffee crops for the relevant season at Rs. 4 per point ; this was the actual rate declared by the Coffee Board for the particular year. However, the respondent valued the coffee crops at Rs. 7 per point, stating that it was the average of the rates of the past 3 years ; by this process, the respondent adopted the first proviso to rule 9(c) of the Agricultural Income-tax Rules ("the Rules"). This method adopted by the respondent while assessing the petitioner's income is under challenge. The petitioner's contention, inter alia, has been that the first proviso to rule 9(c) could be applied only when the situation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing business or for distribution to labourers by way of wages in kind, the value of such produce at the average market rate prevailing for the previous year concerned shall be taken to represent the value of the crop : Provided that if no details are available relating to quantity of crops raised on the land or the cultivation expenditure incurred in raising such crops, the Agricultural Income-tax Officer or any other superior officer in passing or revising an order of assessment may, if considered necessary inspect the land and shall determine the agricultural income to the best of his judgment, taking into view the nature of the crop, extent of the land cultivated, method of cultivation employed, seasonal conditions and the compara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer can assess on any other reasonable basis provided in the case of a coffee crop. The Assessing Officer may compute on the basis of valuation of points declared by the Coffee Board in respect of such crop." At page 3530, it is said (at p. 169 of 184 ITR): "The method of accounting is relevant only for the purpose of computation of income, but it cannot restrict or enlarge the range or character or content of the taxable income. A regular method of accounting determines the mode of computing the taxable income but it does not determine or even alter the range of taxable income or ambit of taxation. Therefore, section 7 or rule 9 cannot control the charging section." Therefore, it is clear that, to compute the taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd "the manner" in which the officer, in such circumstances, may compute the income. The second proviso is not an entirely independent provision and not an exclusive and original field governing assessment of the income from coffee crops. "It is a fundamental rule of construction that a proviso must be considered with relation to the principal matter to which it stands as a proviso". Abdul Jabar Butt v. State of Jammu and Kashmir, AIR 1957 SC 281, 284. Section 7 was interpreted by a Bench of this court in Veerathradhya v. Commissioner of Agrl. I. T. [1973] 87 ITR 193; [1971] 2 Mys LJ 570. At 572 (of the Mysore Law Journal), the Court pointed out, after quoting section 7 (at p. 195 of 87 ITR) : "The above provision, except the second p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner as the assessing authority may determine. The basis of computation is thus left to the discretion of the assessing authority. But, in the case of a coffee crop, the legislature has not left the basis of computation to the discretion of the assessing authority but has provided that where action is taken under the first proviso, the computation of the income of the coffee crop shall be on the basis of valuation on points declared by the Indian Coffee Board in respect of such crop." The last sentence points out that the second proviso actually operates in the field of the first proviso ; but, while computing the income, the discretion of applying the basis and the manner are to be as per the second proviso. In other words, the conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The order assumes that the assessee-firm has been following the mercantile system of accounting and that the assessee has offered the rate of Rs. 4 per point for the 1983-84 season crop (assessment year 1984-85). This, the authority says, is too low a rate and values the points at Rs. 7.60, because the rate given by the assessee was too low when compared to the rates declared by the Coffee Board for three previous years ; hence he applied rule 9(c). In other words, the valuation given by the assessee was rejected solely because the said value did not satisfy the valuation under rule 9(c). This is clearly an erroneous approach. The assessing authority has not held anywhere that from the method employed by the assessee, the income cannot pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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