LexS. S. RAJALINGA RAJA versus STATE OF MADRAS
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S. S. RAJALINGA RAJA l'. STATE OF MADRAS October 26, 1966 (J.C. SHAH, V. RAMASWAMI AND V. BHARGAVA, JJ.] Madras Plantations Agricu/111ral l11come Tax Act (5 of 1955),- ''Agricultural Inconie"-Wliei!her GRricultura/ produce is itself income. The appellant owned a cardamom plantation. For tho assessment year 1957-58, he submitted a return under th<! Madra• Plantations ~gr:cultural Income-tax Act, 1955. The Agricultural lncome~ax Officer did not accept the return, and added to the income the value of stocks of cardamom sold in the accounting year. The High Court in revision, confirmed the assess- ment made by the Department. In appeal to this Court, it was contended that: ( t) the agricultural pro- duce itself wa• income and became charged to tax und-..i: the Act when it was received and not \\:hen it w:..is sold, used or con9Wllcd, and therefore, tho High c:ourt ought to have directed determination of the produce which wa. acb1ally derived from agriculture in the year of account and ought to have brought to tax only that quantity and excluded the value of the rest of the produce received in earlier years, from taxation; and (2) fmm the fact that the appellant applied to compound the tax for the earlier years, it must he inferred that the produce which was sold by him in the yea-r of account had already suffered tax in the earlier years. HF..LD : (I) Merely because the produce of the plantation was n:e<ived in the curlier years, income derived from sale of that produce in the year of account was not exempt from tax under the Act in that year. [953 BJ Section 3 of the Act read with the definition of "agricultural income" charges to tax the monetary return either as rent or revenue or agricultural produce from the plantation. The expression "income" in its norn1al con- notation does not mean mere production or receipt of a commodity which may be converted into money. Income arises when the commodity is dis- posed of by sale, consumption or use in the manufacture or other processes carried on by the assessce qua that commodity. It is not necessary, how- ever, for income to accrue that there must he a sale of a commodity : con- sumption or use of a commodity in the busines.s of the a55essce from which the assessee obtains benefit of the rommodity may be deemed to. give rise to income. [952 G..fl; 953 A-Bl Dooars 1'ea Cn. Lid. v. Commissioner of Agricultural /11co1;u:-1ax, West Bengal, [19621 3 S.C.R. 157, referred to. (2) It had to bo proved by evidence that the crop sold related to the years in respect of which the assessre had applied to compound the tax, but there was no such evidence. [954 Fl CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 979 and A B c I> E F G 980 of 1965. H Appeals by special leave from the judgment and orders dated November 12, 1962 and January I, 1964 of the Madras High Court RAJALINGA RAJA v. MADltAS (Shah,/,) 951 A in Tax Case Nos. 19 of 1961 and S.C. Petition No. !42 of 1963- respectively. S. Swaminathan and R. Gopa/akrishnan, for the appellant (in both the appeals). P. Ram Reddy and A. V. Rangam, for the respondent (in both B' the appeals). c D E F G H The Judgment of the Court was delivered by Shah, J. S.S. Rajalinga Raja-hereinafter cafted 'the appellant' --0wns a cardamom plantation on a fifty-acre estate. For the assessment year 1957-58 he submitted a return under the Madras Plantations Agricultural Income-tax Act 5 of 1955 disclosing a net income of Rs. 5,250/- from the plantation. On enquiry the Agricultural Income-tax Officer learnt that the appellant had sold stocks of cardamom of the value of Rs. 58,375-9-9 between April 1. 1956 and March 31, 1957. The appellant explained that those sales represented not the produce of the year of account, but accumulated stocks of the past 3 to 4 years. That explanation was rejected by the Agricultural Income-tax Officer and after allowing expenditure estimated at the rate of Rs. 120/- per acre, the balance was brought t<> tax, and a penalty of Rs. 3,000/- was levied under s. 20(1) (c) of the Act. The order was confirmed in appeal to the Appellate Assistant Conunissioner, both as to the levy of tax and penalty. But the Appellate Tribunal was of the view that the average production of cardamom per acre was 40 lbs. and that if the stocks of cardamom sold in the year of assessment be attributed to production of the year, the yield would approximately be 134 lbs
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