Tea business receipts from member sales are taxable as trading profit; mutuality does not exempt the agricultural income component.

The Assam Agricultural Income-tax Act, 1939 taxes the agricultural portion of tea income as determined under the income-tax framework and Assam rules. A co-operative society's sales of tea to its members are treated as real sales in the ordinary legal sense, not as a company dealing with itself. Member payments are purchase prices, not contributions to a common fund, so the resulting surplus is trading profit. The mutuality principle does not apply where the receipts arise from such commercial transactions, and the agricultural component of tea business income remains chargeable to Assam agricultural income-tax.

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Issues: Whether the receipts arising from the cultivation, manufacture and sale of tea by the society to its members constituted agricultural income chargeable to Assam agricultural income-tax, or whether the dealings were merely mutual transactions outside the scope of taxable profit.

Analysis: The charging scheme under the Assam Agricultural Income-tax Act, 1939, read with the definition of agricultural income and the special provisions for tea, brought within tax the agricultural portion of income from tea as determined under the Indian income-tax framework and the Assam rules. The society was a separate corporate entity, and sales of tea to its members were real sales in the ordinary legal sense, not transactions of a company with itself. The payments made by members were purchase prices for tea, not contributions to a common fund. The surplus generated from these sales was trading profit, distinguishable from the mutual fund-return principle applied in cases where subscribers merely receive back unused contributions.

Conclusion: The income derived from the tea business, to the extent it was agricultural income under the Assam Act, was chargeable to Assam agricultural income-tax, and the mutuality objection failed.

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