Charitable trust agricultural income exemption follows the extent of Central income-tax relief and cannot be denied for missing State procedure.

Section 4(b) of the Tamil Nadu Agricultural Income-tax Act was construed to grant exemption for agricultural income from trust property only to the same extent that the corresponding non-agricultural income is exempt under the Income-tax Act. The State authority must first determine the extent of Central Act exemption and apply the agricultural income exemption proportionately; if the trust is wholly exempt under the Central Act, no State assessment can be made for that year. Exemption also cannot be refused for failure to follow procedural requirements borrowed from the Income-tax Act when the State Act contains no corresponding rules, forms, or procedure.

---

---

Issues: Whether agricultural income derived from property held under trust for religious or charitable purposes is exempt under section 4(b) of the Tamil Nadu Agricultural Income-tax Act only to the same extent as the corresponding non-agricultural income is not included in total income under the Income-tax Act, and whether exemption can be denied for non-compliance with procedural requirements borrowed from the Income-tax Act in the absence of State rules or forms.

Analysis: The provision was construed on its plain language and in the setting of fiscal legislation requiring strict yet reasonable interpretation. The expression "to the same extent" was held to link the State exemption to the extent of exemption actually available under the Central Act for the corresponding non-agricultural income. The scheme of the provision was treated as one of harmonised operation between the two enactments, so that the Agricultural Income-tax Officer must first ascertain whether any portion of the trust's non-agricultural income has been subjected to tax under the Central Act. If the trust is wholly exempt under the Central Act for the relevant year, no assessment can be made under the State Act in respect of its agricultural income for that year. If only part of the non-agricultural income is taxable, the agricultural income is taxable only in the same proportion. It was further held that, since the State Act contained no rules, forms, or procedure for filing accumulation or application claims, exemption could not be denied on the footing that the trust had not complied with procedural requirements applicable under the Income-tax Act.

Conclusion: The exemption under section 4(b) operates only to the same extent as the corresponding Central Act exemption, and the trust cannot be denied relief for failure to follow non-existent State procedural requirements.

Ratio Decidendi: Where a State exemption provision ties agricultural income relief for charitable or religious trusts to the extent of exclusion under the Central income-tax law, the State authority must apply the exemption proportionately in accordance with the Central assessment and cannot insist on Central procedural compliance unless the State Act itself prescribes such procedure.

---