STATE OF KERALA AND ORS V. BHAVANI TEA PRODUCE CO. LTD. INSC 202; AIR 1966 SC 580; 1966 SCR 63

Supreme Court Case Analysis

Name of the case: State Of Kerala And Others vs Bhavani Tea Produce Co. Ltd

Date decided: 7 October, 1965

Facts: appeals arose from section 226 of the constitution and the appellants were the state of Kerela and others and the respondents were Bhavani tea produce and co. The appeals questioned the assessment of income tax on the respondent under the Madras Plantations Agricultural Income-tax Act, 1955 in the financial year of 1955-56 and 1956-57. the net agricultural income of the respondent for the first year was Rs. 1,32,198/- and a tax amount of Rs. 45,443 was demanded by the department for that year, in the succeeding year a net income of Rs. 1,24,339 was assessed and a tax amount of Rs. 42,810 was demanded by the department. however, The Company contended that these payments were in respect of coffee delivered by the Company to the Coffee Board under s. 25 of the Coffee Market Expansion Act 1942, in the years 1952-53 and 1953-54, that is to say, prior to April 1, 1954 when the Madras Plantations Agricultural Income Tax Act came into force and were not assessable, as the accounts were maintained on the mercantile system and the amounts were shown in 1952-53 and 1953-54. hence an amount of Rs.97,090/- in the first year and Rs. 10,095/- in the second year was not taxable. these appeals were dismissed by the Agricultural Income-tax Officer, Coimbatore. the respondent filed a petition under article 226 of the constitution against Agricultural Income-tax Officer, Coimbatore, Appellate Assistant Com- missioner of Agricultural Income-tax, Kozhikode and Agricultural Income-tax Appellate Tribunal, Trivandrum. The high court decided that Rs. 97,090/- in the first year and Rs. 10,095/- in the second year were not taxable as they were prior to April 1 when the Madras Plantations Agricultural Income-tax Act, 1955 came into effect. Challenging the decision of the high court the current appeals were filed in supreme court.

Issue: whether the two amounts were rightly excluded from the assessable Agricultural income for the two assessment years.

Decision: it was held that the high court was right in holding that there was no sale in the years relevant to the assessment years for which the tax was demanded. The sales had taken place in the earlier years where the agricultural income tax act did not operate. The appeal was hence dismissed.