ASSISTANT COMMISSIONER OF AGRICULTURAL INCOME TAX & ORS. versus MIS. NETLEY B ESTATE & ORS.

Citation: [2015] 3 S.C.R. 630 · Decided: 17-03-2015 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Case Allowed
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Judgment (excerpt)

[2015] 3 S.C.R. 630 
A 
ASSISTANT COMMISSIONER OF AGRICULTURAL 
B 
c 
INCOME TAX & ORS. 
v. 
MIS. NETLEY 'B' ESTATE & ORS. 
(Civil Appeal Nos. 8617-8635 of 2003) 
MARCH 17, 2015 
[A.K. SIKRI AND ROHINTON .FALi NARIMAN, JJ.] 
KamatakaAgriculturallncome Tax Act, 1957-s. 26(4) 
explanation - Validity of an explanation added retrospectively 
to s. 26(4)-Assessment of agricultural income - Received 
0 
by a firm after it is dissolved insofar as the income of the firm 
pertaining to actual cash receipts after the firm is dissolved 
but relating to income earned prior to dissolution - In L.P. 
Cardoza, case, High Court held that a dissolved firm could 
not be assessed to agricultural income tax after the date of 
E its dissolution in respect of income received for supply of 
goods made by the firm prior to its dissolution, since after 
dissolution firm has no existence and s.26(4) refe"ed to only 
discontinuance of business of a firm and not to dissolution 
of a firm -
Subsequently amendment of s. 26(4) 
F retrospectively wef, 01.04.1975- Challenge to- Single Judge 
of the High Court upheld retrospective amendment- Division 
Bench following D. Cawasji case held that the object of the 
amendment was to undo the Cardoza's case, thus, was 
unconstitutional -
On appeal, held: With effect from 
G 01.04.1975, dissolved firms will by legal fiction, continue to 
be assessed, for the purposes of levy and collection of 
agricultural income tax, insofar as they receive income post 
dissolution but relating to transactions pre-dissolution -
H Legislature has not sought to directly nullify the judgment in 
630 
ASSISTANT COMMR. OF AGRICULTURAL INCOME TAX 631 
v. NETLEY'B' ESTATE 
Cardoza's case - Legal foundation on which the Cardoza's A 
case was built is retrospectively removed, which is well within 
the legislative competence of the legislature - Judicial 
decision in Cardoza's case has been rendered ineffective 
by enacting a valid law on a topic within the legislative field 
which fundamentally alters or changes the character of B 
legislation retrospectively - Changed or altered conditions 
are such that the previous decision would not have been 
rendered by the court if those conditions had existed at the 
time of declaring the Jaw as invalid - Legislature did not C 
directly overrule the decision but has only rendered, such 
decision ineffective by removing the basis on which the 
decision was arrived at- Thus, order passed by the Division 
Bench df High Court set aside. 
D. Cawasji and Co., Mysore v. State of Mysore and 
another 1985 SCR 825: 1984 (Supp) SCC 490; 
Panchi Deviv. State of Rajasthan and others 2008 (17) 
SCR 1325: (2009) 2 SCC 589; Tata Motors Ltd. v. State 
of Maharashtra and others 2004 (2) Suppl. 
SCR 452:(2004) 5 SCC 783; Hardev Motor Transport 
v. State of M. P and others 2006 (7) Suppl. SCR 766: 
(2006) 8 sec 61.3 - distinguished. 
LP Cardoza and others v. Agricultural Income Tax 
Officer and others (1997) 227 ITR 421; Sri Ranga 
Match Industries and others v. Union of India and others 
1994 (Suppl.) 2 SCC 726; Indian Aluminium Co. and 
others v. State of Kera/a and others 1996 (2) 
SCR 23: (1996) 7 SCC 637 - referred to. 
Case Law Reference 
(1997) 227 ITR 421 
1985 SCR 825 
referred to. 
distinguished. 
Para 4 
Para 16 
D 
E 
F 
G 
H 
632 
SUPREME COURT REPORTS 
[2015] 3 S.C.R. 
A 
1994 (Suppl.) 2 sec 726 referred to. 
Para 17 
1996 (2) SCR 23 
referred to. 
Para 18 
2008 (17) SCR 1325 
distinguished. 
Para 21 
B 2004 (2) Suppl. SCR 452 distinguished. 
Para 22 
2006 (7) Suppl. SCR 766 distinguished. 
Para 23 
c 
CIVILAPPELLATE JURISDICTION: Civil Appeal Nos. 
8617-8635 of 2003 
From the Judgment and Order dated 03. 07 .2002 of the 
0 
Division Bench of the High Court of Karnataka in Writ Appeal 
Nos. 3795 to 3809 of 1998 and C.R.P. Nos. 633 & 634 of 
1997 
E 
F 
G 
V. N. Raghupathy, Parikshit P. Angadi, Sanjay R. Hegde 
for the Appellants. 
· 
G Sarangan, Sanjay Kumar, R. N. Keshwani for the 
Respondents. 
The Judgment of the Court was delivered by 
R. F. NARIMAN, J. 1. The present set of appeals are 
concerned with the validity of an explanation added 
retrospectively to Section 26(4) of the KarnatakaAgricultural 
Income Tax Act (hereinafter referred to as 'Act'). 
2. On facts, the present appeals are concerned with 
the assessment of agricultural income received by a firm after 
it is dissolved insofar as the income of the firm pertains to 
actual cash receipts after the firm is dissolved but relating to
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