Composite tea income requires provident fund contribution disallowance to be apportioned, limiting addition to taxable business income.

For tea-growing and manufacturing businesses, income is computed under Rule 8 as composite income, with 60% treated as exempt agricultural income and 40% as taxable business income. A disallowance for delayed employees' provident fund contributions under section 36(1)(va), where related to that composite income, must be apportioned in the same ratio rather than wholly added to taxable income. The disallowance is therefore restricted to the taxable 40% component, with recomputation required accordingly.

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Issues: Whether disallowance of delayed employees' provident fund contribution under section 36(1)(va), in the case of a tea-growing and manufacturing company, must be restricted to the taxable 40% component of its composite income.

Analysis: Income from growing and manufacturing tea is computed under Rule 8, under which 60% is agricultural income exempt from tax and only 40% is taxable business income. A disallowance relating to such composite income must correspondingly be apportioned in the same ratio and cannot be wholly added to taxable income.

Conclusion: The disallowance of delayed employees' provident fund contribution is restricted to 40% of the amount; the issue is restored for recomputation in favour of the assessee.

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