THE KARIMTHARUVI TEA ESTATES LTD., KOTTAYAM & ANR. versus STATE OF KERALA & ORS.

Citation: [1963] SUPP. 1 S.C.R. 823 · Decided: 01-11-1962 · Supreme Court of India · Bench: S.K. DAS · Disposal: Case Partly allowed
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Judgment (excerpt)

1 S.C.R. SUPREME COURT REPORTS 
823 
1962 
the District Co.irt, it should be so tried not in the 
District Court of Kurnool but in the District Court of 
Bellary. 
Official Assignee, 
High Co:irt, Bomha 
In the result, the appeal is allowed, the order 
passed by the High Court is set aside and that of the 
District Court restored with the modification iu res-
pect of the amount withdrawn by the respond en ts, as 
indicated above. The appellant will be entitled to 
his costs from the respondents throughout. 
Appenl' allowed . 
• 
THE KARIMTHARUVI TEA EST ATES LTD., 
KOTTAYAM & ANR. 
v. 
STATE OF KERALA & ORS. 
(S. K. DAS, ]. L. KAPUR, A. K. 
SARKAR, 
M. HIDAYATULLAH and RAGUUBAR DAYAL, JJ.) 
Agricultural Inconie 'l'a:r-7
1ea l'lantations-Computatinn 
of agricultural income-Dui'uctions-State h'trztute 
disoJ{o1"inr1 
exptnditure 
on 
-im.mature 
plnnfs-Jlalidity 
uf-.·l11ri-
cultural 
Income-7'ax (Ammdrncnt) Acl, l!IG/ (Ker./.\ of 
1961), s. 2-lndian Income-tax Act, 1922 (11 of 
111:'.~.!, 
s. 2(1)-lwlian 
Incorne-t.n.x 
Rulr>~'I, 
19:?2. 
IT. 2.'J, 
24-
Gonstitution of Ind·ia, L1rt. 3GG, Seventh Schrr{uJe, List If /tern 
i\
10. 46. 
Entrv 46, List II of the Seventh Schedule to the Consti-
tution e1nPowers the State to ~rgislatc \\·ith respect to taxes on 
agricultural inrome. Article 366( l) provides th:1t the cxpres-
sir'n "agricultural income" in the f.!onstilution Uicans ar:rirul-
tural incon1e as defined in the Indian Tncome-tax /\ct. 
Under 
the Agricultural Income-tax Act, 1950, agricultur,ql income fron1 
tea plantations was to be computed in the same m;·,nncr as it 
was done under the Indian Income-tax Act, 
I 922 
read ,vi th 
tr. ~3 and 24 of the Indian Income-tax Rules. Section 5 of the 
v. 
Ha1ad.~gi1i Basa· 
vanna G(,wd 
G11jendra_!!,adk11r, l 
1962 
November, L 
1962 
Karimlharuvi Tea 
Estates Ltd.,Kottayam 
v. 
Stale of Kcrala 
Raghubar Dayal, I. 
824 SUPREME COURT REPORTS [1963] SUPP. 
Agricultural Income-tax Act provided for certain deductions 
and cl. (j) pruvided for deductions corresponding to s. 10(2)(xv) 
of the Income-tax Act. 
The · ;\gricultural 
Income-tax 
(Amendment) Act, 1961, introduced Explanation 2 to s. 5 
which provided that no deduction shall be allowed of any ex-
penditure laid out or expended for the cultivation, upkeep, or 
maintenance of immature plants from which no agricultural 
income was derived during the previous year. The petitioner, 
an owner of certain tea estates, contended that the amendment 
was beyond the competency of the State Legislature. 
HeUl, that Explanation 2 to s. 5 of the Agricultural 
Income-tax Act added by the Amendment Act did not extend 
to the computation of agricultural income derived from tea 
plantations. 
If Explanation 2 was applied to agricultural 
income from tea plantations it would make such income diffe-
rent and higher than such income calculated in accordance with 
Income-tax Act and r. 24 and would make it void. For the 
purpose of agricultural income one had to look not !nerely to 
the definition in the Income-tax Act but also to the rules made 
thereunder. 
The rules v.·ere in existence when the Constitution 
incorporated the definition of "agricultural income" from the 
Income-tax Act by reference; the definition of the term was 
bound up with the ·rules. 
0RTGINAL JumsDICTION: Petitions Nos. 234 
to 236 of 1961. 
Petition under Art. 32 of the Constitution of 
India for enforcement of Fundamental Rights. 
M. C. Setalvad, Attorney-General for India, 
C. K. Daphtary, Solicitor General of India, S. T. 
Desai, Vellapaly, .J.B. Dadachanji, 0. C. Mathur 
and Ravinder NMain, for petitioners. 
V. P. G. Nambiar, Advocate-General for the 
State of Kerala, 
A. V. Viswanatha Sastri and V. A. 
Seyid Muhammed, for respondents. 
1962. November 1. The Judgment of the 
Court was delivered by 
RAGHUBAR DAYAL, J.-These are three petitions 
under Art. 32 of the Constitution by the Karimtharuvi 
1 s.c.R. 
SUPREME COURT REPORTS 
825 
Tea Est~tcs Ltd., Kottayam and one of its directors 
and members praying for a declaration that the 
Agricultural Income Tax (Amendment) Act, 1961 
(Ker. IX of 19til ), hereinafter called the Amendment 
Act, enacted by the Kerala State Legislature, is null 
and void and that the State's power to tax income 
from tea to agricultural income-tax is limited to 
taking 60% of the income computed for the purpose 
of the Indian Income-tax Act (hereinafter referred to 
as the Income-tax Act) as if it were income derived 
from business
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