Agricultural income from plantation produce accrues on sale, and prior compounding does not bar assessment without proof of earlier taxation.

Sale proceeds from cardamom stock are taxable as agricultural income in the year of sale under the Madras Plantations Agricultural Income-tax Act, 1955, because the charge attaches to the monetary return derived from the plantation when the produce is disposed of, not merely when it is harvested. Earlier-year accumulation does not by itself defer taxation, and the cited precedent only recognises that use of produce in the assessee's business may amount to agricultural income; it does not make income accrue before disposal. The compounding plea also fails where there is no proof that the cardamom sold in the relevant year had already been taxed in earlier compounding years.

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Issues: Whether the sale proceeds of cardamom stocks, claimed to represent accumulated produce of earlier years, were taxable as agricultural income in the year of account, and whether prior compounding of tax barred such assessment.

Analysis: The charging provisions of the Madras Plantations Agricultural Income-tax Act, 1955, read with the definition of agricultural income, fasten tax on the monetary return derived from the plantation, not on the bare existence or receipt of produce. Agricultural income arises when the produce is disposed of by sale, consumption, or use, and it is not exempt merely because the produce may have been harvested in an earlier year. The earlier decision relied on by the appellant only recognises that user of produce in the assessee's business may amount to agricultural income; it does not hold that income accrues before disposal. The plea based on compounding also failed because there was no proof that the cardamom sold in the relevant year had already suffered tax in the years for which compounding was sought.

Conclusion: The sale proceeds were taxable in the year of account, and the prior compounding plea did not bar the assessment.

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