Deemed agricultural income applies to insurance compensation received for an earlier loss in the year of receipt.

Insurance compensation received during the previous year was treated as agricultural income under section 4(2)(ii) of the Kerala Agricultural Income-tax Act, 1991, because the provision deems as income any amount received in respect of a loss, expenditure or liability for which an allowance or deduction had already been made. The deeming fiction applies in the year of receipt, even if the underlying loss arose earlier. Compensation for insured loss in rubber latex stock therefore fell within the statutory language and was assessable in the relevant assessment year.

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Issues: Whether insurance compensation received during the previous year is deemed agricultural income under section 4(2)(ii) of the Kerala Agricultural Income-tax Act, 1991, and assessable in the relevant assessment year.

Analysis: Section 4(2)(ii) deems as agricultural income any amount received during the previous year in respect of a loss, expenditure or liability for which an allowance or deduction had earlier been made. The provision creates a deeming fiction under which the receipt is taxed in the year of receipt, even though the underlying loss arose in an earlier year. The compensation received towards the insured loss in rubber latex stock therefore falls within the statutory language and cannot be excluded from assessment merely because the loss occurred in an earlier period.

Conclusion: The receipt was correctly treated as agricultural income for the assessment year in question. The issue is answered against the assessee and in favour of the Revenue.

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