1997 (9) TMI 38

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....o arrive at the agricultural income of the assessee instead of the transfer value computed as per rule 7 of the Income-tax Rules. The petitioner owns and manages various tea estates and factories. It is an assessee under the Kerala Agricultural Income-tax Act as well as the Income-tax Act, 1961. While most of the green tea leaves from the estates owned by the assessee are used in such estates for the manufacture of black tea, a small portion thereof is transferred to an instant tea factory of the assessee for manufacture of instant tea for export. As per the provisions contained under rule 8 of the Income-tax Rules, the income from black tea is subjected to tax with 40 per cent. thereof being charged to Central income-tax and balance 60 pe....

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....profit margin, such cost of cultivation being the same cost which is added back in the estate account in connection with computation of income from black tea. For the accounting year 1979 relating to the assessment year 1980-81, a notional estimated value of Rs. 1,01,14,509 had, from time to time, been credited into the estate account and debited in the instant tea account in respect of green leaf transferred to the instant tea factory. At the end of the year, actual value was computed under rule 7 of the Income-tax Rules at Rs. 86,75,832 made up of cost of cultivation of Rs. 78,93,537 and a profit of Rs. 7,82,295. In the consolidated estate account, the said cost of cultivation was added back and the notional value of Rs. 1,01,14,509 incl....

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....dated March 7, 1991, was issued by the respondent under section 34 of the Agricultural Income-tax Act proposing to cancel the assessment order dated March 18, 1986, on the ground that value of green tea leaf transferred to instant tea unit ought to have been taken at the original notional value adopted in the assessee's account instead of the value computed as per rule 7. Objections were filed by the assessee. It is also alleged that the matter was discussed with the respondent. But, by order dated May 30, 1991, the respondent cancelled the assessment order dated March 18, 1986. The matter was taken up in revision before this court by the assessee under T. R. C. No. 102 of 1991. This court, by judgment dated March 30, 1992, set aside the or....

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....Income-tax Officer had accepted the figure of Rs. 86,75,832 computed as per rule 7 of the Income-tax Rules is the value of the tea leaves transferred to the instant tea division. A reference to the order passed by the Income-tax Officer copy of which is marked as annexure-B-1, would clearly show the difference between the notional value shown in the accounts and the value finally computed has per rule 7 and added to the business income of the assessee from the instant tea unit. Learned counsel pointed out that in the order passed by the Tribunal on its appeal against disallowance of the entire amount claimed as cost of cultivation, reference is made in paragraph 10 about adoption of notional transfer value. The Tribunal had stated as follow....