Law: Income Tax Act, 1922

Section: 10(2)(vib)

Law: Income Tax Act, 1922

Section: 10(2)(vib)

Section 33 of the Income-tax Act, 1961 [Corresponding to section 10(2)(vib) of the Indian Income-tax Act, 1922] - Development Rebate - Assessment year 1959-60 - Relevant rule provided that a part of income derived from sale of tea grown and manufactured would be deemed to be income from business while there was no such provision for coffee which meant income from sale of coffee would be agricultural income - Whether where assessee commonly used assets for production of both tea and coffee, it was entitled to proportionate development rebate - Held, yes Words and phrases : Expression "wholly used for the purpose of the business carried on by the assessee" as occurred in section 10(2)(vib) of the Indian Income-tax Act, 1922 FACTS The assessee company was engaged in the cultivation of tea and coffee. It contended that it was entitled to development rebate in respect of certain assets which were used not merely in the cultivation of tea but also in the cultivation of coffee. The department disallowed the assessee's claim. However, on appeal the Tribunal held that when the assets were commonly used for the production of both tea and coffee, the assessee was entitled to proportionate development rebate under section 10(2)(vib). On reference: HELD Rule 24 of the Indian Income-tax Rules, 1922, provides that 'income derived from the sale of tea grown and manufactured by the seller in the taxable territories shall be computed as if it were income derived from business, and forty per cent of such income shall be deemed to be income, profits and gains liable to tax' under the 1922 Act. There is no similar provision regarding coffee; and as a result income derived from the sale of coffee grown and manufactured by the seller in the taxable territories has to be considered as agricultural income exempt from taxation under the 1922 Act. The expression in section 10(2)(vib ) of the 1922 Act is 'wholly used for the purposes of the business carried on by the assessee' and not 'exclusively used for the purposes of the business carried on by the assessee'. That the legislature is familiar with the expression 'wholly and exclusively' and uses that expression when necessary is clear…

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