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2018 (11) TMI 1333 - HC - Income TaxApportionment of the agricultural income - whether Rule 7 of the Income Tax Rules, 1962 could be applied in the case of the assessee? - Income Tax Authorities applied Rule 7 and made an apportionment of the agricultural income and treated the balance as business income assessable under the Income Tax Act, 1961 - Held that:- The position is more or less same for income from crude palm oil, which is the product in the case of the assessee before it, for reason of the total income having been disclosed for assessment under the Agricultural Income Tax Act with prompt payment of tax. The Central Income Tax Authorities, though was aware of Rule 7 as stood under the rules from its inception, took proceedings for assessment under the Income Tax Act only in the year 2004. Hence, the Division Bench directed all agricultural income assessments completed from assessment year 2005-06 to stand set aside with a direction to the State Taxing Authority to modify the assessments in line with the assessments completed by the 1st respondent under the Central Income Tax. It was also directed that the agricultural income tax assessed for the assessment year 2004-05 and prior years would be treated as confirmed. The Income Tax Authorities were directed not to assess the income under Rule 7 of the Rules for the said years. For assessment years are 2005-06 and 2006-07 - direction of the First Appellate Authority to determine the income based on a formula, which the Senior Counsel for Government of India (Taxes) would submit is not a statutory formula - Held that:- We find force in the contention raised by the Revenue. Since the formula evolved by the First Appellate Authority is not a statutory one, it is only appropriate that the Assessing Officer consider the issue untrammeled by such directions issued by the First Appellate Authority to apply the formula so evolved. Rule 7 in fact gives sufficient guidelines on how to apportion the income and hence there is no requirement for a formula. The Tribunal refused to interfere in the order of the First Appellate Authority finding that it is an open remand. We clarify that it is in fact an open remand and the Assessing Officer will not employ the formula as evolved by the First Appellate Authority.
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