Compounding eligibility under agricultural income tax turns on maximum land held during the year, not later reduction.

Entitlement to compounding under the Tamil Nadu Agricultural Income-tax Act depends on whether the assessee held land in excess of the exempted extent at any time during the financial year. Section 10(1) denies the benefit once the maximum extent held during the year crosses the limit, and Section 65 does not require continuous holding throughout the assessment year. Because the year is the unit of assessment, a later reduction in landholding does not restore eligibility after the exempted limit has been exceeded. On these principles, the claim for compounding was correctly rejected.

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Issues: Whether the assessee was entitled to the benefit of compounding for the assessment year 1984-85 when the maximum extent of land held during the financial year exceeded the exempted limit.

Analysis: Section 10(1) of the Tamil Nadu Agricultural Income-tax Act denies the benefit of compounding where a person holds or has held land during any part of the financial year in excess of the exempted extent. The relevant test is the maximum extent held during the financial year, not whether the holding was below the limit at some other point in the year. Section 65, which refers to land held by the assessee, does not require continuous holding throughout the assessment year. Since composition operates for the year and the Act treats the year as the unit of assessment, a later reduction in holding does not restore eligibility once the exempted limit has been crossed during the year.

Conclusion: The assessee was not entitled to the benefit of compounding, and the rejection of the claim was correct.

Ratio Decidendi: For purposes of compounding under the Act, eligibility is determined by the maximum extent of land held at any time during the financial year, and crossing the exempted limit during that year disentitles the assessee to the benefit.

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