AI Drafter 
TaxTMI 
TaxTMI 
2024 (3) TMI 382
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....he Act of 1944) and not under Section 7 thereof. Facts : 3. Briefly stated facts of the present case are that the petitioner is engaged in business of producing green tea leaves and pays agricultural income tax on the income derived from the sale of such tea. Orders dated 26.12.2006 and 09.11.2010 were passed by the Agricultural Income Tax Officer, Siliguri and Assistant Commissioner, Agricultural Income Tax, Jalpaiguri Circle, respectively in respect of the assessment for the year 2002-03. Assessing Officer sought to levy tax on sale of saplings and computed depreciation in accordance with Section 7 of the Act of 1944 read with Rule 3 of the Bengal Agricultural Income Tax Rules, 1944 (hereinafter referred to as the Rules). According to the petitioner assessee "tea saplings" is not "tea" and as such in view of charging Section 3 of the Act of 1944, no tax could be levied on the income derived from sale of saplings. With regard to the depreciation, objection of the petitioner assessee is that specific provision Section 7A has been enacted for companies. Therefore Section 7A shall apply and Section 7 and Rule 3 of the Rules shall not apply. Aggrieved with the order of the Asses....
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....tural Income" in exercise of power so conferred, the Bengal State Legislature has enacted the Bengal Agricultural Income Tax Act, 1944 (Bengal Act IV of 1944). Section 3 of the Act of 1944 is the charging Section and Sections 7 and 7A provides for computation of tax and allowances under the head "Agricultural Income from Agriculture". Section 3 and Sections 7 and 7A are reproduced below : "3. (1) Agricultural income-tax shall be charged for each financial year in accordance with and subject to the provisions of this Act, at the rate or rates specified in the Schedule in respect of the total agricultural income of the previous year of every individual, Hindu undivided Family, company, firm or other (association of persons) and every Ruler of [a Part B State]: Provided that if the total world income of the previous year of any individual or Hindu undivided family consists of agricultural income as well, as other income, agricultural income-tax shall be chargeable under sub-section (1) on such part of the agricultural income as exceeds ten thousand rupees at the highest rate which would have been chargeable if the total world income were the agricultural income: ....
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.... upkeep of cattle for the purpose of such cultivation, process, or transport: Provided that in the case of an agricultural income derived from land possessed by an individual or a Hindu undivided family and cultivated by such individual or by the members of such family with or without the aid of servants or hired labourers or of both, the allowance admissible under this clause shall, instead of such cost be a sum equal to fifty per centun of the market value of the produce raised from such land: (2) any sum paid by him in the previous year on account of- (i) land revenue or rent, (ii) any local rate or cess including Education Cess, in respect of such land; (3) where his interest in such land is subject to a mortgage or other capital charge, the amount of any interest paid by him in the previous year in respect of such mortgage or charge and where such land has been acquired, reclaimed or improved by him by the use of borrowed capital, the amount of any interest paid by him in the previous year in respect of such capital: Provided that the interest allowable under this clause shall not exceed the interest which the assessee is l....
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....he method of accounting as aforesaid is such that, in the opinion of the Agricultural Income-tax Officer, the agricultural income cannot be computed, the computation shall be made on such basis and in such manner as the Agricultural Income-tax Officer may determine." 8. From bare reading of Section 3 of the Act of 1944 i.e. the charging Section, it is clear that agricultural income tax shall be charged for each financial year in accordance with and subject to the provisions of the Act, at the rate or rates specified in the schedule in respect of the total agricultural income of the previous year of every individual, Hindu undivided Family, company, firm or other association of persons and every Ruler of Part B State. Subsection 2 of Section 3 starts with a non-obstante Clause. It excludes chargeablity to tax to certain class of persons. By Clause (c) of Sub-Section 2 of Section 3 of the Act of 1944, the agricultural income of the previous year of any individual, Hindu undivided family, company, firm or other association of persons shall be excluded where such agricultural income is derived from land used for agricultural purposes other than those for producing tea, land by agric....
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....des for computation to tax and allowances under the head "Agricultural Income from Agriculture" derived from land referred to in Section 2(n)(b) of the Act of 1944. It is a general provision. Section 7A inserted by the State Legislature in the year 1980, has been made specifically applicable to a company or firm or other association of persons for computation of their agricultural income in accordance with the method of accounting regularly employed by such assessee for such computation. Therefore, the provision of Section 7A shall apply for computation of agricultural income of a company or firm or other association of persons. The petitioner is a company. Therefore, for computation of its agricultural income, the provisions of Section 7A shall apply and its agricultural income shall be computed in accordance with the method of accounting regularly employed by it. 12. Rule 3 of the Bengal Agricultural Income Tax Rules, 1944 provides that the allowances under Clause (5) of Section 6 or under Clause (6) of Section 7 in respect of depreciation of any irrigation or protective work or other capital asset shall be made in accordance with the statement of rates given in Part-I of Rule....