Dividend income agricultural character rejected under binding precedent; statutory time limit treated as directory without altering outcome.

Whether sixty per cent of dividend receipts from tea companies constitute agricultural income was decided against the assessee: the HC applied binding precedent from the Supreme Court in the Bombay appeal and answered the question negatively. The court also addressed whether the ninety day time limit under the relevant income tax provision is mandatory or directory, holding it to be directory; this did not affect the substantive outcome. The Commissioner was awarded the costs of the reference.

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Issues: Whether 60 per cent of the income from dividends received by the assessee from tea companies can be deemed to be agricultural income.

Analysis: The Court held that the question is concluded by the decision of the Supreme Court in the Bombay appeal and therefore must be answered in the negative. The Court also considered a subsidiary contention regarding the mandatory or directory character of the ninety-day time-limit in section 66(1) of the Income-tax Act, concluding that the provision is directory and not mandatory; however this determination did not alter the answer to the substantive question which was governed by the Supreme Court's decision.

Conclusion: The question is answered in the negative; 60 per cent of the dividend income cannot be deemed to be agricultural income. The Commissioner is entitled to the costs of the reference.

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