Law:

Section:

Section 28(i) of the Income-tax Act, 1961, read with rule 8 of the Income-tax Rules, 1962 and section 8(1A) of the Bengal Agricultural Income-tax Act, 1944 - Business income - Chargeable as - Whether income from 'tea grown and manufactured' business shall be computed in accordance with provisions of 1961 Act and thereafter 40 per cent of that income is taxable under 1961 Act and remaining 60 per cent income is taxable under 1944 Act by State, treating it as income from agriculture - Held, yes - Whether in case assessee directly sells green tea leaves resulting into an income from agricultural products, it cannot be taken as incidental income to business and whatever income is derived from sale of green tea leaves will be assessed by Agricultural Income-tax Officer under 1944 Act - Held, yes FACTS The assessee-company was carrying on the composite business of growing and manufacturing tea. It was selling the tea grown and manufactured in its tea gardens. The claim of the assessee was that its entire income should be assessed under the provisions of the 1961 Act and thereafter, the tax should be charged on 40 per cent of such income under the 1961 Act and on the balance 60 per cent, the State could charge tax under the 1944 Act. On writ, the Single Judge disposed of the same in terms of the of the Supreme Court in Tata Tea Ltd. v.State of West Bengal 1988 (Supp.) SCC 316 wherein the Court had directed that after assessment, the Assessing Officer can levy the tax on 40 per cent of the income in accordance with the provisions of the 1961 Act and balance amount may be assessed by the Agricultural Income-tax Officer to tax under the 1944 Act and that if any assessment order had already been passed contrary to the aforesaid directions, such order must stand quashed and a fresh assessment order should be passed in accordance with law. On appeal, the assessee, inter alia, submitted that the sale proceeds of green tea leaves be treated as incidental to business and income therefrom should be computed under the provisions of the 1961 Act. However, the revenue was of the view that the income from sale of green tea leaves was taxable as income from agriculture under the…

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