Integrated tea estate computation cannot be split artificially for tax assessment without a legally sustainable basis.

Where tea is grown and manufactured as a single integrated commercial unit with common management, labour, accounts and processing facilities, the agricultural income attributable to it cannot be recomputed by artificially splitting expenses and receipts for a minor territorial segment on an acreage basis. The court held that the higher yield from one portion of the estate did not justify treating that portion as a separate profit-making unit, and the taxing authority had no legally sustainable basis to depart from the composite computation. The reassessment and remand were set aside, and assessment was directed to proceed on the basis of the Central Income Tax computation.

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Issues: Whether the Agricultural Income Tax Officer was justified in recomputing the agricultural income attributable to tea grown and manufactured as part of a single estate unit, and whether the Central Income Tax Officer's computation had to be accepted as the proper basis for assessment.

Analysis: The estate was run as one integrated unit with common management, labour, accounts and manufacturing facilities. The Court found that the agricultural authority's method of splitting expenditure and receipts for a small territorial portion of the estate on an acreage basis, and then recomputing profit separately, was arbitrary and impractical. The higher yield of the Madras portion did not justify treating that portion as a separate profit-making unit for tax computation. The Court further held that the statutory scheme and the relevant rules favoured adoption of the Central Income Tax computation in the circumstances, and that the agricultural authority had no satisfactory basis for departing from it.

Conclusion: The reassessment and the Tribunal's remand order were set aside, and the Agricultural Income Tax Officer was directed to complete assessment on the basis of the Central Income Tax Officer's computation.

Ratio Decidendi: Where tea is grown and manufactured as a single integrated commercial unit, the agricultural income attributable to it cannot be recomputed by artificially dissecting expenses and receipts for a minor territorial segment unless the taxing authority shows a legally sustainable basis for departing from the accepted composite computation.

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