Strict construction of tax law controls agricultural income, deductions and depreciation; no implied notional computation is allowed.

Agricultural income had to be computed on the actual income derived and received during the previous year, not by apportioning it across accounting years, so the market value of sugarcane crushed in that year plus other agricultural income and only the permitted deductions was the correct basis. The disputed expenditure was allowable where it fell within the statutory allowance for agricultural expenditure, and the agricultural income-tax authority could not reopen the common-charge treatment already accepted in the income-tax assessment. Depreciation had to be worked out on actual cost, because the Act did not authorise a notional written down value based on hypothetical prior-year depreciation. The interpretation was strict and against implied retrospective fictions.

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Issues: (i) Whether the agricultural income of the assessee for the relevant previous year was to be computed on a time-apportionment basis across two accounting years or by taking the actual market value of sugarcane crushed during the previous year together with other agricultural income and allowable deductions; (ii) Whether the disputed items of expenditure were allowable as deductions, including on the footing of a common charge under the Act and the effect of the income-tax assessment on that question; (iii) Whether depreciation under the Act was to be calculated on the actual cost of the assets or on a notional written down value by assuming prior years' depreciation.

Issue (i): Whether the agricultural income of the assessee for the relevant previous year was to be computed on a time-apportionment basis across two accounting years or by taking the actual market value of sugarcane crushed during the previous year together with other agricultural income and allowable deductions.

Analysis: The charging scheme under the Act taxed total agricultural income of the previous year, and the statutory language focused on income derived and received during that year. The Act did not adopt an accrual-based or time-apportionment method, and there was no warrant to import the income-tax concept of accrual or arise. The correct basis was the market value of the actual tonnage crushed during the previous year, together with other agricultural income for that year, subject to deductions permitted by the Act.

Conclusion: The time-apportionment method was rejected. The correct computation was to take the market value of sugarcane crushed during the previous year, add other agricultural income, and deduct only the allowances permissible for that year.

Issue (ii): Whether the disputed items of expenditure were allowable as deductions, including on the footing of a common charge under the Act and the effect of the income-tax assessment on that question.

Analysis: The deductions claimed fell within the statutory allowance provisions governing agricultural expenditure laid out wholly and exclusively for deriving agricultural income. In a composite business, where an item had already been treated as a common charge under the income-tax assessment, the agricultural income-tax authority could not reopen that determination and had to give effect to the statutory treatment of the remaining portion. The expenditure in question was held to be within the ambit of the allowance provisions.

Conclusion: The disputed expenditure was allowable, and the agricultural income-tax authority could not re-determine the common-charge character already accepted in the income-tax assessment.

Issue (iii): Whether depreciation under the Act was to be calculated on the actual cost of the assets or on a notional written down value by assuming prior years' depreciation.

Analysis: The definition of written down value under the Act referred to actual cost less depreciation allowable under the Act, but the statute did not authorise the fiction that depreciation for years when the Act was not in force should be notionally deducted. In a taxing statute, nothing can be read in by implication, and retrospective effect cannot be extended beyond the clear language used. The proper basis for assets acquired before the previous year was actual cost, without a notional reduction for depreciation not legally allowable in earlier years.

Conclusion: Depreciation had to be computed on the actual cost of the assets, not on a notional written down value reduced by hypothetical prior depreciation.

Final Conclusion: The reference was answered substantially in favour of the assessee on the computation of agricultural income, deductions, and depreciation, with the relevant questions answered against the revenue where they conflicted with the Act.

Ratio Decidendi: A taxing statute must be construed strictly according to its express language, and a retrospective fiction cannot be implied to deny an allowance or create a notional computation mechanism not clearly enacted.

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