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TMI Blog1971 (6) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... sment years prior to 1964-65 had computed the assessee's income from coffee crop on the basis of valuation on points declared by the Indian Coffee Board in respect of such crop under the 2nd proviso to section 7 of the Act. For the assessment years 1964-65 and 1965-66 the assessee submitted returns of his income on the cash basis of accounting but the assessing authority, while accepting the income in respect of areca and mangoes on the cash basis, computed the income from coffee crop in accordance with the 2nd proviso to section 7 as in the earlier assessments. The reason given is that since the assessment for the previous year was concluded on mercantile basis of accounts, it has to be continued as such. In the appeals preferred, the Depu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been concluded after obtaining the consent of the party thereto, we are of the opinion that the learned assessing officer has rightly concluded that the assessments should properly be made even in the present years by adopting mercantile basis of computation whereby the incomes assessable would properly be arrived at, the assessee being one whose income for the prior years have been deduced on the mercantile basis alone despite the fact that the accounts have been or might have been maintained on cash basis." If the assessing authority had stated in his order that in his opinion the income from coffee cannot properly be deduced on the basis of the method of accounting adopted by the assessee, the order of the Tribunal could have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second proviso, is in pari materia with section 13 of the Indian Income-tax Act, 1922. It is settled law that under section 13 of the Indian Income-tax Act, 1922, the assessing authority cannot reject the income computed in accordance with the method of accounting regularly employed by the assessee unless he is of the opinion that the income cannot properly be deduced therefrom. That is the condition precedent to the exercise of jurisdiction to reject the income computed in accordance with the method of accounting regularly employed by the assessee. In the instant case, as stated earlier, the assessing authority has not expressed his opinion that the agricultural income of the assessee derived from his coffee crop cannot properly be deduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e upon such basis and such manner 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 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. This mode of valuation is commonly known as the valuation on " point basis ". This interpretation of section 7 finds ample support from rule 9 of the Mysore Agricultural Income-tax Rules, 1957 (hereinafter called " the Rules "), made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered as the income of the previous year. " Clause (c) of rule 9 elaborately provides for the method of computing the income derived from coffee crop of an assessee, but the provisions of clause (c) of rule 9 can be employed only where no method of accounting has been regularly employed by the assessee or where the method employed is such that, in the opinion of the Agricultural Income-tax Officer, the agricultural income cannot properly be deduced therefrom. The Deputy Commissioner as also the Tribunal are wholly in error in stating that the assessee had consented for the valuation on " point basis ". The learned High Court Government Pleader, at our request, placed the records of the assessment proceedings. All that is seen is that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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