Agricultural income accrual principle barred tax on later coffee dividend receipts and prevented double taxation after composition.

Coffee dividend receipts realised later were not taxable as agricultural income in the year of receipt, because under the Mysore Agricultural Income-tax Act, 1957 the charge arose when the income was derived from land and, for a mercantile assessee, later payment did not create a fresh taxable accrual. Prior composition under the Mysore Agricultural Income-tax Act, 1955 also prevented the same crop income for the compounded years from being taxed again, as that would amount to double taxation. Relief was therefore available against the attempted assessment.

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Issues: Whether the coffee dividends received in a later previous year could be treated as agricultural income taxable in the year of receipt under the Mysore Agricultural Income-tax Act, 1957, and whether prior composition under the Mysore Agricultural Income-tax Act, 1955 barred taxation of the same crop receipts.

Analysis: The charge under the Mysore Agricultural Income-tax Act, 1957 applies to agricultural income derived from land during the previous year. On the facts, the value of coffee delivered to the Coffee Board had already been derived when the produce was delivered, and the later payment of dividends was only realisation of that earlier income. Where the assessee maintained mercantile accounts, the subsequent cash receipt could not be treated as income newly derived in the year of receipt. The prior compounding under the Mysore Agricultural Income-tax Act, 1955 also meant that the same crop income for the compounded years could not again be brought to tax, as that would result in double taxation. The saved rights under the repealed Act could not override this position, and the tax could not be levied on receipts referable to periods before the relevant statutory charge applied.

Conclusion: The coffee dividends received later were not taxable as agricultural income of the year of receipt, and the assessee was entitled to relief against the attempted assessment.

Ratio Decidendi: Under the agricultural income-tax scheme, income from coffee becomes taxable when it is derived from the land and, for a mercantile assessee, later receipt of the sale proceeds does not create a fresh taxable income of the year of receipt; the same income cannot be taxed again after valid composition for the relevant year.

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