TMI Blog2024 (3) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... llowances under the head Agricultural Income from Agriculture . The findings of the tribunal in the impugned order holding that saplings are included in tea for the purposes of tax under the Act of 1944, is wholly erroneous and baseless. In paragraph 19 of the impugned order the tribunal has held that non-obstante Section 7A, being silent about the allowances to be made from such income for computation of tax; the deduction on account of depreciation is required to be made as per stipulation of Section 7 of the Act of 1944 - The tribunal has incorrectly held that Section 7A does not provide for allowances or depreciation for computation of agricultural income of an assessee which is a company or a firm or other association of persons. Bare reading of Section 7A of the Act of 1944 makes it clear that agricultural income of such assessee (a company or a firm or other association of persons) shall be computed in accordance with method of accounting regularly employed by such assessee for such computation. Therefore, agricultural income of the petitioner company is liable to be computed in accordance with the method of accounting regularly employed by it provided that, if, in any case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot tea and as such in view of charging Section 3 of the Act of 1944, no tax could be levied on the income derived from sale of saplings. With regard to the depreciation, objection of the petitioner assessee is that specific provision Section 7A has been enacted for companies. Therefore Section 7A shall apply and Section 7 and Rule 3 of the Rules shall not apply. Aggrieved with the order of the Assessing Officer, as aforesaid, the petitioner filed the aforesaid Case No. RN-63 of 2011 which was dismissed by order dated 08.08.2012 passed by the West Bengal Taxation Tribunal, Kolkata. Aggrieved with the aforesaid order of the Tribunal the petitioner has filed the present writ petition. Submissions : 4. Learned counsel for the petitioner submits as under : (i) as per charging Section 3 of the Bengal Agricultural Income Tax Act, 1944, only income from tea is taxable and, therefore, the tribunal has committed a manifest error of law to uphold the imposition of tax on tea saplings. The word tea has not been defined under the Act, although it is defined under the Tea Act, 1953 (Central Act) which also does not include tea saplings. Therefore, the imposition of tax on income derived from tea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dual or Hindu undivided family consists of agricultural income as well, as other income, agricultural income-tax shall be chargeable under sub-section (1) on such part of the agricultural income as exceeds ten thousand rupees at the highest rate which would have been chargeable if the total world income were the agricultural income: Provided further that in such cases increase in the quantum of tax in view of the application of the highest rate shall not exceed fifty per centum of the amount by which the total world income exceeds the agricultural income. (2) Notwithstanding anything contained in sub-section (1), agricultural income tax shall not be charged in respect of - (a) the total agricultural income of the previous year of any individual or Hindu undivided family where such total agricultural income does not exceed ten thousand rupees: (b) the total agricultural income of the previous year of Central Government or any State Government or any local authority: (c) the agricultural income of the previous year of any individual, Hindu undivided family, company, firm or other association of persons where such agricultural income is derived from- (i) land which is used for agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the previous year in respect of such capital: Provided that the interest allowable under this clause shall not exceed the interest which the assessee is liable to pay in respect of such mortgage, charge or capital as a borrower under section 30 of the Bengal Money-lenders Act, 1940; (4) any sum paid by him in the previous year as interest on any loans taken by him under the Agriculturists' Loans Act, 1884, or the Land Improvement Loans Act, 1883, in respect of such land; (5) in respect of the maintenance of any irrigation or protective work or other capital assets the amount paid in the previous year on account thereof. Explanation.- : Maintenance includes current repairs and includes also in the case of protective dykes and embankments all such work as may be necessary from year to year for repairing any damage or destruction caused by flood or other natural causes; (6) depreciation at the prescribed rate in respect of any irrigation or protective work or other capital asset constructed or acquired after the commencement of this Act for the benefit of the land from which such agricultural income is derived or for the purpose of deriving such agricultural income from such land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r producing tea, land by agriculture other than producing tea, land by the performance by cultivator or receiver of rent-in-kind of any process ordinarily employed by cultivator or receiver of rent-in-kind to render the produce, other than tea raised or received by him fit to be taken to market, or land by the sale by a cultivator or receiver of rent-in-kind of the produce, other than tea, raised or received by him in respect of which no process has been performed other than a process of the nature described in Sub-Clause (iii). Thus, mainly tea has been made liable to tax under the charging Section 3 of the Act of 1944. 9. The word tea has not been defined under the Act of 1944. Therefore, to find out the meaning of the word tea as used in Section 3 of the Act of 1944, common parlance test may be applied. It is a matter of common knowledge that saplings are neither treated as tea nor saplings are bought and sold as tea nor the saplings can be used as tea. If a buyer asks for tea he shall not be given saplings and vice-versa. Even as per dictionary meaning tea does not include saplings. The provisions of Tea Act, 1953 was enacted by Parliament for the control by the Union of the Te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om bare reading of the Rule 3 of the Rules, 1944 it is evident that it has not been made applicable for the purposes of Section 7A of the Act of 1944. Therefore, the agricultural income of a company incorporated under the Companies Act shall be computed under the Act of 1944 in accordance with the method of accounting regularly employed by such assessee for such computation. 13. The findings of the tribunal in the impugned order holding that saplings are included in tea for the purposes of tax under the Act of 1944, is wholly erroneous and baseless. In paragraph 19 of the impugned order the tribunal has held that non-obstante Section 7A, being silent about the allowances to be made from such income for computation of tax; the deduction on account of depreciation is required to be made as per stipulation of Section 7 of the Act of 1944. We find that this interpretation given by the tribunal is in disregard to the provisions of Section 7A which starts with a non-obstante Clause and thus has an overriding effect over Section 7 of the Act of 1944. The tribunal has incorrectly held that Section 7A does not provide for allowances or depreciation for computation of agricultural income of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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