Commissioner of Income Tax, West Bengal, Calcutta v. M/S. Hantapara Tea CO., LTD., Calcutta
HEGDE, J.-This is an appeal by special leave. It relates to
!he assessment of the assessee for the; assessment year 1961-62,
for which the relevant previous year was the calendar year 1960.
The assessee is a Tea Company, Upto the assessment year
\950-51 the Agricultural Income-tax Officer was accepting th~
computation of the total income from the growth, manufacture
and sale of tea made by the Income Tax Officer and taking 60 per
cent of the income dete1mined as the agricu)tural income under
Rule 24 of the Income-tax Rules. On and from the assessment
year 1951-52 the agricultural income-tax authorities !tarted talcing
the market value of !hatch, bamboo and fuel etc. grown in the
tea estate and used in the tea business as 100 per cent aiJ:icultural
income and aHer deducting the cost of cultivation thereof, taxed
the whole cJ the resulting income on the basis of the market value
of those articles. So, from that assessment year the computation
of the total income from tea by the Income-tax authorities was
varied by the Agricultural Income-Tax Officer and the assessee
had to pay on a total income which was more than the income
disclosed in the Profit and Loss Account.
For the assessment year 1961-62, the assessee company was
assessed to Income-tax under Rule 34 of the Income·tax Rules,
on Its proms as per its Prom ana Loss Accounr witn certain mocft
fications, by the Income-tax Officer. In the expenses debited in
Its accounts, only the expenses for raising thatch, bomboo, fuel
etc. grown in the tea estate and useq in the tea business were in
cluded.
Before the Appellate Assistant Commissioner, the asse;see
raised the contention that the market value of agricultural produce
grown in the tea estate and utilised biy the assessee in the 19a
business, which had been assessed at 100 per cent to agriculimal
income-tax, must be talcen into consideration in lhe computation
ot allowable expenditure. In support of that contention reliance
was placed on the decision of this Court in the case of Dooars Tea
Co. Ltd. v. Commissioner of Agricultural Income-tax, West
Bengal('). The Appellate Assistant Commissioner accepted that
contention and directed the Income-tax Officer to modify the
assessment accordingly. In appeal by the Revenue the finding of
the Appellate Assistant Commissioner w.~s accepted by the Tri
bunal. Thereafter at lhe instance of the Revenue the following
question was re{erred to the High Court for its opinion :
"Whether, on the fact& and in the circumstances of
lhe case, the Tribunal wa~ right in holding that the
(I) [1962] XLlV I. T. R. 601.
C.I.T. v. HANTAPARA TEA CO, LTD. (Hegde, J.) 891
A decision of the Supreme Court in Dooars Tea Co. Ltd.
( 1962) 44 I.T.R. 6, was applicable to the computation
c~ the assessee's total income under the provisions of the
Indian Income-tax Act, 1972 and in directing the In
come-tax Officer to make a fresh assessment according:
to law in the light of the · aforesaid decision of the
B Supreme Court."
The High Court answered that question in the aflinnativc :ind in
fa\'our of the asses see. Hence this appeal by lhe Revenue.
!t i, true that, 1he questi0n formulated by 1.hc Tribunu! does
not accur"tely bring out the real contention between the parties.
The real con!entioa between the parties is whether the assessee is
entitled to. the market value of the agrici.:1tur~l produce grown
by it but utilised for the purpose of tea business. Dooars Tea Co's.
case related to the levy of agricultural income-tax. Ti1e .facts
of that case are as follows :
The assessee, who is a tea grower, grew in its estate hJmboo,
thatched grass, fuel timber etc. and utilised tlle same for tea busi
ness. At the time of the assessee's assessment under the Bengal
'Agricultural Income-tax Act the assessee contended that only the
cost of growing the produce in question should be taken into con
sideration and r.ot its market value as the same was used for the
purpose of assessee's tea business. This contention was rejected
by the Revenue and this Court upheld the decision of the Revenue.
This Court came to the conclusion that the agricultural income
should be computed on the basis of the market value of bamboos,
thatched grass and fuel timber etc. in accordance with rule 4(2)
of the Bengal Agricultural Income-tax Rules. The ratio of that
decision is that in the matter of computing the agricultural income
it was not necessary that 'the agricultural produce should be sold
and profit or gain made from such sale before it is considered as
agricultural income. It is sufficient if the assessee gets any benefit
from the same, and what is to be taxed is the market value of the
benefit received by the assessee and not !he costs incurred by the
assessee for raising the agricultural produce in question. lf the
assessee has to pay agricultural income-tax on the market value
of the agricuitural produce raised in his estate and used in his tea
business it stands to reason that while determining the deductible
expenditure incurred for the purpos<: of his business, the same
rule viz. the market value of the produce used for the tea business
should be taken into consideration, because in terms of money
what he expended was the market value of the produce used in
connection with his business. The fact that he used his own goods
is immaterial.
892 SUPREME COURT REPORTS (1973] 3 S.C.R:.
Now, tµrning back to the question referred to the High Court,
even though the question is not properly framed, the question is
sufficiently wide to decide the real point in issue. The later part
of the question covers the point that calls for decision. In that
view there is no need either to reframe the question or to direct
th.e Tribunal to·submit a separate statement of case.
For the reasons mentioned above this appeal fails and the same
is dismissed with costs.
V.P.S. Appeal dismissed.
R