Agricultural tea income must follow the revised central assessment, requiring rectification of the State tax computation.

Agricultural income from tea under the Karnataka Agricultural Income-tax framework is computed by reference to the income determined under the Income-tax Act, and Rule 6 of the Karnataka Agricultural Income-tax Rules, 1957 makes the State assessment dependent on that central assessment. When the Commissioner of Income-tax reduced the tea income in the appellate order, the basis of the State assessment stood altered. The assessing authority was therefore required to give effect to the revised central assessment and invoke rectification under section 37 of the Karnataka Agricultural Income-tax Act, 1957; refusal to rectify was unsustainable.

---

---

Issues: Whether the assessing authority was bound to rectify the agricultural income-tax assessment when the Income-tax appellate order reduced the tea income on which the State assessment was based.

Analysis: Agricultural income from tea has to be computed with reference to the assessment made under the Income-tax Act. Rule 6 of the Karnataka Agricultural Income-tax Rules, 1957 governs the assessment of tea income under the State Act and makes the State computation dependent on the income determined for central tax purposes. Once the Commissioner of Income-tax modified the original assessment and reduced the tea income, the basic document relied upon for the State assessment stood substituted. In that situation, the assessing authority was required to give effect to the altered central assessment and exercise the rectification power under section 37 of the Karnataka Agricultural Income-tax Act, 1957.

Conclusion: The refusal to rectify the assessment was unsustainable and was rightly set aside in favour of the assessee.

---