TMI Blog1966 (10) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... bmit returns of income, but applied to compound the tax under section 65 of the Act, and paid the tax determined at the rates specified in Part II of the Act. Therefrom it cannot be inferred that the produce which was sold by him in the year of account to which these appeals relate had suffered tax in the earlier years. It has to be proved that the crop sold by the appellant related to the years in respect of which he had applied to compound the tax: and on that part of the case there is no evidence. Appeal dismissed. - - - - - Dated:- 26-10-1966 - Judge(s) : V. RAMASWAMY., J. C. SHAH., V. BHARGAVA JUDGMENT The judgment of the court was delivered by SHAH J.-- S. S. Rajalinga Raja-hereinafter called " the appellant"--owns a cardam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court was of the view that a part of the stock of cardamom sold in the year, though not the whole, was probably accumulated stock out of previous years' production, but since the appellant did not lay before the taxing authorities reliable evidence, his explanation was rightly rejected. The High Court also rejected the contention of the appellant that the income from sales of cardamom stock of previous years was not taxable in the year of account because it had been subjected to tax in those previous years under orders compounding the tax under section 65 of the Act. The High Court accordingly allowed the petition and restored the assessment made by the department. With special leave, the appellant has appealed to this court. It is claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii). . . ." Prima facie, section 3 of the Act read with the definition of " agricultural income " charges to tax the monetary return either as rent or revenue or agricultural produce from the plantation. The expression "income " in its normal connotation does not mean mere production or receipt of a commodity which may be converted into money. Income arises when the commodity is disposed of by sale, consumption or use in the manufacture or other processes carried on by the assessee qua that commodity. There is no reason to think that the expression " income " in the Act has any other connotation. A tax on income whether ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts for the purpose of its tea business. The claim of the income-tax authorities to tax the value of the produce was resisted on the plea that the produce was not sold. In rejecting that plea, the court observed at page 13 : " In terms the clause [section 2(1)(b)] takes in income derived from agricultural land by agriculture ; and, as we have already pointed out, giving the material words their plain grammatical meaning, there is no doubt that agricultural produce constitutes income under this clause. Is there anything in the context which requires the introduction of the concept of sale in interpreting this clause as suggested by the appellant ? In our opinion this question must be answered in the negative. Not only is there no indic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by operation of law as a result of which the assessee ceased to be the owner of the coffee, the moment it handed over the produce to the Coffee Board. This court held that, under the relevant provisions of the Act, as soon as the producer of coffee handed over the produce to the Coffee Board, it ceased to be the owner and income accrued to him at that point of time. That case does not Jay down the proposition that income accrues to a producer of agricultural produce before the date of disposal, use or sale. The second argument raised by the appellant has also no substance. For the years 1955-56 and 1956-57, the appellant did not submit returns of income, but applied to compound the tax under section 65 of the Act, and paid the tax dete ..... X X X X Extracts X X X X X X X X Extracts X X X X
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