IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMAN MONDAY, THE 17TH MARCH 2008 / 27TH PHALGUNA 1929 OP.No. 7653 OF 2002(J) PETITIONER: M/S.RAJAGIRI RUBBER AND PRODUCE CO. LTD. PANAMPILLY NAGAR, KOCHI-682 036, REP. BY ITS VICE PRESIDENT(FINANCE), MR.R.VENUGOPALAN. BY ADVOCATES:- SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SMT.PRIYA MAHESH SMT.PRIYA MANJOORAN RESPONDENTS: 1. JOINT COMMISSIONER OF INCOME TAX (ASSMT), SPECIAL RANGE, KOTTAYAM. 2. COMMISSIONER OF INCOME TAX, KAWDIAR, THIRUVANANTHAPURAM. 3. UNION OF INDIA, REP. BY ITS SECRETARY, TO GOVERNMENT, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NEW DELHI. 4. INSPECTING ASSISTANT COMMISSIONER OF AGRICULTURAL INCOME TAX AND SALES TAX(SPECIAL), COMMERCIAL TAXES COMPLEX, PERUMANOOR, ERNAKULAM. 5. COMMISSIONER OF AGRICULTURAL INCOMETAX PUBLIC OFFICE BUILDING, THIRUVANATHAPURAM. 6. STATE OF KERALA, CHIEF SECRETARY TO GOVERNMENT, SECRETARIAT, THIRUVANANTHAPURAM. GOVERNMENT PLEADER SRI. TEK CHAND SRI.P.K.R.MENON(SR.),SC FOR IT SRI.GEORGE K. GEORGE, SC FOR IT THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 17/03/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: O.P. NO. 7653/2002 ORDER ON CMP NO. 13753/2002 IN O.P. 7653/2002 // DISMISSED // SD/-, P.R. RAMAN, JUDGE. 17.3.2008. APPENDIX PETITIONER'S EXHIBITS: EXT.P1TRUE COPY OF THE ASSESSMENT ORDER FOR 1989-90 TO THE PETITIONER DATED 31.3.1993 ISSUED BY 4TH RESPONDENT. EXT.P2 TRUE COPY OF THE ASSESSMENT ORDER FOR 1989-90 TO THE PETITIONER DATED 4.2.1992 ISSUED BY THE ASST. COMMISSIOENR OF INCOME TAX, ALLEPPEY. EXT.P3 TRUE COPY OF THE MODIFIED ORDER ISSUED BY THE ASST. COMMISSIONER OF INCOME TAX, ALLEPPEY TO THE PETITIONER DATED 19.1.1993. EXT.P4 TRUE COPY OF THE NOTICE ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER DATED 4.1.2000. EXT.P5 TRUE COPY OF THE ORDER OF THIS HON'BLE COURT IN O.P. 4939/1999 DATED 25TH FEBRUARY, 1999. RESPONDENTS' EXHIBITS: NIL. // TRUE COPY // P.S. TO JUDGE. KNC/- P.R. RAMAN, J. = = = = = = = = = O.P. NO 7653/2002 = = = = = = = = = = = = DATED THIS, THE 17TH DAY OF MARCH, 2008. J U D G M E N T Petitioner is a Public Limited Company engaged in the rubber plantation and manufacture of centrifuged latex etc. 2. Petitioner was assessed under the Agricultural Income Tax Act by the State, returning the entire income from rubber including the income from Centrifuged latex as agricultural income. Petitioner is also assessed under the Income tax Act. But there is no proposal to include the income derived from the items referred to above for the purpose of income tax under the Central Income Tax Act. In other words, petitioner was assessed to agricultural income alone under the Agricultural Income tax Act by the State. Subsequently, based on the decision of this Court in Kanam Latex Industries Pvt. Ltd. (221 ITR 1) the Income Tax Authorities proposed to assess the income from centrifuged latex as "Business Income". If this happens, the immediate result will be that the petitioner will be mulcted with the liability to pay tax on the same income both under the Agricultural Income Tax Act by the State as also by the Income Tax Authorities under the Income Tax Act. To over-ride the hardship that may be caused in this regard, the Central Board of Direct Taxes issued Circular No.5 of 2003 dated 22nd O.P. 7653/2002 2 May, 2003 which contained in 261 ITR 159 clarifying that no proceedings under Section 147 or under Section 263 of the Income-tax Act, 1961, should be initiated for the assessment year(s) prior to the assessment year 2002-03 in the cases of assessees earning income from manufacture of rubber and/or coffee, for determining the income liable to income-tax, if the assessees had already paid agricultural income-tax on the whole of such income. As such, the C.B.D.T. Circular No.5/2003 dated 22.5.2003 is squarely attracted in the case of the petitioner in this case. 3. Admittedly, the assessment orders produced by the petitioner would show that he was assessed for agricultural income and the income from centrifuged latex was also included. It was while so, notices were issued by the Joint Commissioner of Income-tax proposing to revise the assessment based on the decision in Kanam Latex Industries' case as stated supra and it was subsequently, that the clarification has been issued. As a result, the Joint Commissioner had no occasion to apply the circular before issuing notice. In view of the position as explained above, petitioner has to be given relief based on the circular. In similar matters, this court had earlier ordered that the proceedings will stand closed in view of the circular issued. O.P. 7653/2002 3 Accordingly, this writ petition is allowed and in view of the circular as referred to above, the matter will stand closed. P.R. RAMAN, (JUDGE) knc/- O.P. 7653/2002 4 P.R. RAMAN, J. = = = = = = = = O.P. 7653/2002 J U D G M E N T DATED: 17.3.2008.