COMMISSIONER OF INCOME TAX, WEST BENGAL, CALCUTTA versus M/S. HANTAPARA TEA CO., LTD., CALCUTTA

Citation: [1973] 3 S.C.R. 889 · Decided: 03-04-1973 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Dismissed

Judgment (excerpt)

889 
A 
COMMISSIONER OF INCOME TAX, WEST BENGAL, 
B 
c 
D 
E 
F 
G 
CALCUTTA 
V. 
M/S. HANTAPARA TEA CO., LTD., CALCUTTA 
April 3, 1973 
[K. S. HEGDE AND H. R. KHANNA. JJ.] 
Jnco111e-te1x-Assessee's agricultural produce used in assessee's bUsi-
ness-Mc.rket value of p1oduce if deductible expenditure for purposes of 
i11con1e·tµx. 
For the assessment year 1961-62 the assessee-a tea company, was 
assessed to income-tax under r. 24 of the Income-tax Rules on its profits 
as per its Profit and Loss Account with c.ertai:a modifications. 
In 
the 
expenses debited in its accounts only the expenses for 1·aising th~tch. 
bamboo, fuel etc .. grown in the tea estate and u.ed 1n the tea business 
\vere included. 
The assessee contended that .the mark.et value of 
the 
agriC'ultural produce grown in the tea estate a:nd utilised by the assessec 
in the tea business, which had been assessed at lOOo/o 
to 
Ctgricultural 
income-tax, must he taken into consid~ration in the computation of tile 
allo\vable expenditure. 
The Appel1ate Assistant Commissioner, the, Tri-
bunal 
and 
the 
High Court, on reference, 
held 
in favour 
of 
the 
ass,zsse~. 
Di .. n1issing the appeal to this Vourt, 
HELD : In the matter of computing the agricultural income 
it was 
not necessary that the agricultural produce should be sold and profit of 
gain made from such sale, before it is considered as agricultural income. 
It is sufficient if the assessee gets any· benefit from the produce, 
and 
\Vhat is to be taxed is the mark~t value of the benefit received by the 
assl.!Ssce and not the costs incurred by the assessee 
for raisitig the agri-
cultural produce in. question. If the assessee has to 
pay 
agricultural 
i.ncom·.e-tax on the market value of the 
agric~ltural produce raised in 
hi-. est?te and used in his tea business, it stands to reason, that while 
determining the deductible expenditure inc·urred for the purpose of his 
business, the same rule, namely, 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 conneclion with his business. 
The fact that he used his own goods 
is immaterial. 
[891F-H] 
Dooc.rs Tea Co. Ltd. v. Conunissioner of Agricultural" Incon1e-tax, 
West Bengal, [1962] XLIV I.T.R. 6, referred to. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 79 of 
1970. 
Appeal by special leave from the judgment and order dated 
February 26, 1969 of the Calcutta High Court in Income->tax 
Reference No. 37 of 1965. 
H 
N. D. Karkhanis and S. P. Nayar, for the appellant. 
V. S. Desai, T. A. Ramachandran and D. N. Gupta, for the 
respondent. 
9-L797Sap, CI/73 
890 
SUPREME COURT REPORTS 
[1973] 3 S.C.R. 
The Judgment of the Court was delivered by 
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 mar

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