TMI Blog1937 (1) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... 10-0 has been demanded. The assessees claim that 60 per cent, of their assessed income is not liable to tax. The assessees rely on the principle laid down in the Killing Valley Tea Company Ltd. v. Secretary of State for India [1921] I.L.R. 48 Cal. 161 where it was held that when tea is grown and manufactured in British India a portion of the income, profits and gains derived from its sale in British India must be regarded as agricultural income and therefore, outside the scope of the Indian Income Tax Act by reason of Section 4(3)(viii) of the Indian Income Tax Act. This principle has subsequently been recognised by Rule 24 made under Section 59 of the Act. The material paragraph of the Rule is as follows: Income derived from the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itish India, shall, if they are received in or brought into British India, be deemed to have accrued or arisen in British India . As I have said, the assessees admit that these words prima facie cover the whole of the income, profits and gains, in respect of which they have been assessed, but they rely on the following proviso to sub-section (2) introduced into the Act by the Indian Income Tax Amendment Act, 1933: Provided further that nothing in this sub-section shall apply to income from agriculture arising or accruing in a State in India from land for which any annual payment in money or in kind is made to the State. The Commissioner of Income Tax has held that in the circumstances the income, profits and gains accrued or arose or w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income from agriculture. The assessees strongly rely on the decision of the Privy Council in the case of Commissioners of Taxation v. Kirk [1900] L.R. 1900 A.C. 588 and at first sight, this case appears to be of considerable assistance to them, but, if the language of the statute which was the subject matter of that decision is compared with the language of the Indian Income Tax Act, the differences are obvious. Under the New South Wales Land and Income Tax Assessment Act, 1895, Section 15, the following incomes are made liable to tax: Sub-section (1): Arising or accruing to any person wheresoever residing from any profession, trade, employment or vocation carried on in New South Wales whether the same be carried on by such person or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntable product, which is a manufacturing process;(3) the sale of the merchantable product; (4) the receipt of the moneys arising from the sale. All these processes are necessary stages which terminate in money, and the income is the money resulting less the expenses attendant on all the stages. The first process seems to their Lordships clearly within Sub-S. 3, and the second or manufacturing process, if not within the meaning of 'trade' in Sub-S. I, is certainly included in the words 'any other source whatever' in Sub-S. 4 . The assessees in the case before us attach great weight to the passage in which it is said that derived should be treated as synonymous with arising or accruing . It will be observed however, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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