2011 (9) TMI 1270

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....e of amalgamation approved by the High Court of Kerala. The amalgamation was made effective from 1.1.2006 and consequently amalgamating company's first assessment under the Kerala Agricultural Income Tax Act, 1991 was made for the assessment year 2006-2007 covering income for three months for the financial year ending 31.3.2006. Besides very little income from minor crops, the main income earned by the assessee on acquisition of estate from the amalgamated company is income from rubber in the form of field latex which was processed in assessee's factory and sold as centrifuged latex. Even though the income from centrifuged latex was being assessed exclusively as agricultural income under the State Act until the assessment year 2001-....

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....artially business income by virtue of Rule 7A(1) of the Income Tax Rules, 1962 which is as follows: "Income from the manufacture of rubber. 7A. (1) Income derived from the sale of centrifuged latex or cenex or latex based crepes(such as pale latex crepe) or brown crepes (such as estate brown crepe, remilled crepe, smoked blanket crepe or flat bark crepe) or technically specified block rubbers manufactured or processed from field latex or coagulum obtained from rubber plants grown by the seller in India shall be computed as if it were income derived from business, and thirty-five per cent of such income shall be deemed to be income liable to tax". 65% of the income computed as above which was subjected to tax under the K....

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....s and lastly, the scheme of amalgamation approved by the High Court does not provide for any set off of carried forward loss of the amalgamated company in the computation of agricultural income of the amalgamating company under the A.I.T. Act. Both the appellate authorities including the Tribunal accepted the view taken by the Assessing Officer and declined relief claimed, the correctness of which is challenged before us. Senior counsel appearing for the assessee did not make an effort to convince us that the claim is allowable under Section 12 of the A.I.T. Act. Obviously the claim is not tenable under Section 12 because it does not provide for set off of unabsorbed carried forward loss of the amalgamated company against the agricultural i....

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.... 4. After hearing both sides, we are unable to accept the contention of the assessee because under the scheme of Rule 7 and Rule 7A even though income partially assessable under the A.I.T. Act and partially assessable under the Central Act have to be determined by applying the provisions of the Central Act, set off of carried forward loss is to be done after computation of income and allocation of the same for assessment both under the Central Act and under the State Act. In our view, the procedure to be followed for assessment of income from manufactured rubber, coffee or tea covered by Rules 7A, 7B and 8 respectively of the Income Tax Rules which are partially agricultural income assessable under the A.I.T. Act and partially business inc....