Double taxation barred where interest already fully assessed under Central income tax cannot be taxed again under State agricultural income-tax.

Where partners' interest income had already been fully assessed under the Central Income-tax Act, the Madras HC held that the same receipt could not again be brought to agricultural income-tax under the Tamil Nadu Agricultural Income-tax Act, 1955. Rule 7 of the Tamil Nadu Agricultural Income-tax Rules, 1955 permits State assessment only of the portion of tea income left unassessed under the Income-tax Act. As the entire interest had already been taxed centrally, nothing remained available for State taxation, and the attempted levy on the same receipt was without jurisdiction and not exigible to tax under the State Act.

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Issues: Whether interest received by partners from a registered firm, having already been assessed under the Central Income-tax Act, could again be assessed to agricultural income-tax under the Tamil Nadu Agricultural Income-tax Act, 1955.

Analysis: The decisive consideration was rule 7 of the Tamil Nadu Agricultural Income-tax Rules, 1955, which permits assessment under the State Act only of that portion of tea income left unassessed under the Income-tax Act. The court found, on the record, that the entire interest had already been brought to tax by the Central income-tax authorities and therefore nothing remained unassessed under the head of interest. In these circumstances, no part of that interest was available for assessment under the State agricultural income-tax law, and the statutory authorities could not validly levy tax again on 60 per cent. of the same receipt.

Conclusion: The assessment of the partners' interest income to agricultural income-tax was without jurisdiction and not exigible to tax under the State Act.

Ratio Decidendi: Where a receipt has already been fully assessed under the Central Income-tax Act, the State agricultural income-tax authorities cannot assess the same receipt again unless the governing rules leave some part of that income unassessed for State taxation.

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