Trust income exemption follows Central notification and extends to State agricultural income-tax under the linked statutory scheme.

Section 4(b) of the Tamil Nadu Agricultural Income-tax Act, 1955 ties State agricultural income-tax exemption for trust income to the extent that such income is excluded from total income under the Income-tax Act, 1961. A religious or charitable trust notified by the Central Government under section 10(23C)(v) was therefore treated as exempt for the relevant assessment year, and its agricultural income could not be brought to State agricultural income-tax to the same extent as the Central exemption applied. The exemption was held to follow the Central notification without requiring a separate State notification, and the State assessment could not be sustained to that extent.

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Issues: Whether a religious or charitable trust notified by the Central Government under section 10(23C)(v) of the Income-tax Act, 1961 is entitled to exemption from assessment of agricultural income under section 4(b) of the Tamil Nadu Agricultural Income-tax Act, 1955, and whether the exemption operates to the same extent as under the Central Act.

Analysis: Section 4(b) of the Tamil Nadu Agricultural Income-tax Act, 1955 links the State exemption to the extent to which income from trust property is not included in total income under the Income-tax Act, 1961. The notification issued by the Central Government exempted the assessee-mutt from tax for the relevant assessment year under section 10(23C)(v). On that footing, and following the construction of section 4(b), the agricultural income derived by such trust could not be subjected to State agricultural income-tax for that year. The exemption is not confined to a formal State notification, but follows the Central exemption to the same extent and in the same proportion.

Conclusion: The assessee was entitled to exemption from agricultural income-tax for the relevant assessment year, and the State assessment could not be sustained to that extent.

Final Conclusion: The revision succeeded and the assessee obtained exemption on the entire income for the assessment year.

Ratio Decidendi: Where section 4(b) of the Tamil Nadu Agricultural Income-tax Act, 1955 adopts the Central exemption applicable to trust income under the Income-tax Act, 1961, a trust notified by the Central Government is not liable to agricultural income-tax under the State Act to the same extent as the Central exemption applies.

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