TMI Blog2005 (12) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... sed, may take up the matter before the Central Officers if they seek any variation of the computation already made by the Central Officers under the Income-tax Act, 1961, in accordance with law. - - - - - Dated:- 16-12-2005 - Judge(s) : K. S. RADHAKRISHNAN., K. T. SANKARAN. JUDGMENT The judgment of the court was delivered by K.S. Radhakrishnan J.- Tata Tea Limited, a public limited company, along with another are the petitioners in O.P. No. 6075 of 1995 which was filed seeking a declaration that section 4(2) of the Agricultural Income-tax Act, 1991, in so far as it assesses tax on deemed agricultural income is arbitrary, illegal and unreasonable and violative of article 265 of the Constitution of India. The petitioners submit that by sub-clauses (ii) and (iii) of section 4(2) of the Agricultural Income-tax Act the rule-making authority seeks to enlarge the meaning of "agricultural income" by deeming certain receipts which are otherwise not agricultural income within the meaning of section 2(1A) of the Income-tax Act. The petitioners point out that in view of article 366 of the Constitution of India the rule-making authority has no legislative competence, to tax as agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been replaced by an even wider provision as sub-section (1) of section 41 of the Income-tax Act, 1961. No provision of that nature finds place in the Kerala Agricultural Income-tax Act." We notice that the new Agricultural Income-tax Act, 1991, was enacted by the Legislature presumably on the basis of the above observation of the apex court with regard to the deeming provision. For easy reference we may extract section 4 of the Agricultural Income-tax Act, 1991 in its entirety. "4. Total agricultural income.-(1) Subject to the provisions of this Act, the total agricultural income of the previous year of any person comprises of all agricultural income derived from land situated within the State and received by him within or outside the State, but does not include,- (a) any agricultural income derived from land situated outside the State; (b) any agricultural income derived by cultivation of paddy, tapioca, plantain, ginger, ragi, pulses, sesamum, vegetable, sweet potato, tubers, sugarcane, jack, mango, pineapple, orchid, (or other flowers), vanila, turmeric and guava; (c) share income received by a partner from any firm on which tax has been paid by the firm. (2) The f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re described in any of the clauses (i) to (xiv) inclusive and not being in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly and exclusively for the purpose of such business, would be deducted. Of the income so computed, 40 per cent, is, under rule 24, to be treated as income liable to income-tax and it would follow that the other 60 per cent, only will be deemed to be 'agricultural income' within the meaning of that expression in the Income-tax Act. It follows, therefore, that the power of the State Legislature to make a law in respect of taxes on agricultural income arising from tea plantations will be limited to legislating with respect to the agricultural income so determined. The State Legislature is free in the exercise of its plenary legislative power to allow further deductions from such computed agricultural income as it considers fit, but it cannot add to the amount of the agricultural income so computed by providing that certain items of expenditure deducted in the computation of the income from a business under the provisions of the Income-tax Act be not deducted and be considered to be a part of the taxable agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the State Officers to make computation of agricultural income contrary to what is computed by the Central Officers under the Central Act. We have noticed that by virtue of the provisions made by the Legislature in the Explanation to section 2(a)(2), the second proviso to section 8 and section 20D; it is clear that the State Legislature intended to adopt the computation of agricultural income made under the provisions of the Central Act. Having specifically said so in the above sections of the Act, if the Legislature wanted to deviate from that scheme of the Act, it could have in clear terms provided for a power being vested with its Officers in any given case to recompute the income keeping in mind the revenue of the State but the Legislature has not thought it necessary to do so. Even under section 50, we do not see any provision which specifically authorises the State Government to make any such rules in the nature of the proviso to rule 5 of the State Rules. It is an established principle that the power to make rules under an Act is derived from the enabling provision found in such Act. Therefore, it is fundamental that a delegate on whom such power is conferred has to act wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erned, in the event of which it is unnecessary to examine the constitutional validity of sub-section (2) of section 4 of the Kerala Agricultural Income-tax Act, 1991. Sri Raju Joseph, Special Government Pleader for Taxes appearing for the State, highlighted the reasons for introduction of the deeming provision in sub-section (2) of section 4 of the Act. Counsel submitted such a provision was introduced in line with the corresponding provisions in the Income-tax Act, 1961. It is under such circumstances the State Officers had to recomputed the income. Admittedly by recomputing the income the assessing authority has added more than what was computed by the Central Officers. We are of the view, the State Officers have no jurisdiction to vary the computation made by the Central Officers. If there is any necessity of varying the computation made by the Central Officers due to any omission in applying the various provisions of the Income-tax Act, 1961, or any new facts have to be brought to the knowledge of the Central Officers, the State Officers could bring it to the knowledge of the Central Officers. The State Officers cannot tinker with the computation already made by the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X
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