Composite tea estate assessment must follow central computation where the estate is treated as one operational unit.

A composite tea estate operating as a single unit, with one factory and common accounts, was held to be assessable on the basis of the Central Income-tax Officer's computation for the estate as a whole. The State Agricultural Income-tax Officer could not separately recompute the Madras portion by isolating acreage and yield, because the statutory scheme under the Madras Agricultural Income-tax Act and rules 7 and 8 did not clearly authorise that departure. Rule 7 was directed to tea grown and manufactured in Madras, which was not the position here, and the absence of separate accounting for the Madras portion left no sufficient basis to recast the assessment.

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Issues: Whether agricultural income from a tea estate spread over two States had to be computed on the basis of the Central Income-tax Officer's computation for the entire estate, and whether the State Agricultural Income-tax Officer could recompute the Madras portion separately by applying the acreage and yield of that portion.

Analysis: The estate was an integrated tea unit with one factory, common accounts, and no separate accounting for the Madras portion. The statutory scheme under section 6 of the Madras Agricultural Income-tax Act, 1955, and rule 7 recognised tea as a special category and indicated that the computation made under the Income-tax Act should ordinarily be accepted. Rule 7 applied to tea grown and manufactured in Madras, which was not the present case because manufacture took place in Kerala. Rule 8 also did not govern tea in the circumstances, since tea leaves alone had no separate value and the tea estate had to be assessed as a whole. The State officer had no sufficient basis to disregard the Central computation and recast the assessment by isolating the Madras acreage.

Conclusion: The agricultural income had to be computed on the basis of the Central Income-tax Officer's computation for the estate as a whole, and the State Agricultural Income-tax Officer was not justified in making a separate recomputation of the Madras portion.

Final Conclusion: The assessees succeeded, and the State's challenge to the High Court's view failed.

Ratio Decidendi: Where a composite tea estate is treated as a single operational unit and the statutory rules indicate that the income computed under the Income-tax Act should ordinarily be accepted, the State agricultural income-tax authority cannot recast the assessment by artificially segregating one territorial portion of the estate unless the governing rules clearly authorise such a departure.

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