Case: Anglo American Direct Tea Tradinig Co. Ltd., &amp; Others Vs. CAIT, Kerala

1. The appellants carry on the business of cultivation, manufacture and sale to tea. They own tea plantations in the State of Kerala. Some of them own tea plantations both within and outside the State. They are assessed to non-agricultural as well as agricultural income tax. Civil Appeals Nos. 936 to 939 of 1966 arise out of the agricultural income tax assessments of the Anglo American Direct Tea Trading Co., Ltd. under the Kerala Agricultural Income Tax Act, 1950 for the years 1958-59, 1959-60, 1960-61 and 1961-62. Civil Appeals Nos. 585 to 588 of 1966 arise out of the agricultural income tax assessments of the Travancore Tea Estates Co. Ltd. for the years 1957-58, 1958-59, 1959-60 and 1960-61. Civil Appeals Nos. 589 to 591 of 1966 arise out of the agricultural income tax assessments of the Southern India Tea Estates Co., Ltd. for the years 1957-58, 1958-59 and 1959-60. For all the assessment years, the central income tax authorities computed the total tea income of the appellants and 40 per cent thereof representing the non-agricultural income was assessed to non-agricultural income tax and the balance 60 per cent was left unassessed as agricultural income. The appellants produced before the Agricultural Income Tax Assistant Commissioner, Kerala, the central income tax assessment orders, and requested him to take 60 per cent of the tea income computed by the central income tax authorities as the gross income derived from agriculture. The Agricultural Income Tax Assistant Commissioner disregarded the central income tax assessments, and on independent computation of the tea income determined to agricultural income of the appellants. The agricultural income so determined by the Agricultural Income Tax Assistant Commissioner was much higher than 60 per cent of the total tea income assessed by the central income tax authorities. On appeal, the Deputy Commissioner of Agricultural Income Tax and Sales Tax, South Zone, Quilon held that the Agricultural Income Tax Officer could make an independent computation of the tea income and was not bound to adopt the assessment made by the central income tax officer. On further appeal, the Kerala Agricultural Income Tax Appellate Tribunal, Trivandrum held that the Agricultural Income Tax Officer was bound to accept the computation of tea income by the central income tax authorities. On the application of the respondents, the Appellate Tribunal referred the following question of law to the High Court under S.60(1) of the Kerala Agricultural Income Tax, 1950 :"Whether the Agricultural Income Tax Officer is to follow the computation of income from tea made by the Central Income Tax Officer or whether he can find out the income from tea plantations applying the provisions of the Income Tax Act and make the assessment exercising his powers under the Agricultural Income Tax Act ? ".Following its earlier decision in Commissioner of Agricultural Income Tax, Kerala v. Perunad Plantations Ltd. ((1965) 56 I.T.R. 193), the High Court held that the agricultural Income Tax Officer was not obliged to accept the computation of the tea income made by the Income Tax Officer acting under the Income Tax Act, and it was open to hims to compute the income independently applying the relevant provisions of the Income Tax Act and the Agricultural Income Tax Act. From these orders, the present appeals have been filed by special leave.

Reasoning: We express no opinion on the construction of these Acts and Rules. For the purpose of these appeals, it is sufficient to say that the Kerala Agricultural Income Tax Act and Rules do not confer upon the Agricultural Income Tax Officer the power to disregard the assessment of the tea income already made by the central income tax authorities. We are unable to introduce by way of implication in a taxing statute a provision which requires explicit statementIn Civil Appeals Nos. 585 to 588 of 1966 and 589 to 591 of 1966, the Agricultural Income Tax Officer made a surcharged of 5 per cent for the assessment year 1957-58 underthe Kerala Surcharge on Taxes Act,. On appeal, the Deputy Commissioner held that the surcharge was rightly made. On further appeal, the Appellate Tribunal held that the levy of the surcharge was illegal. On the application of the respondent, the Appellate Tribunal referred the following additional question of law to the High Court : "Whether on the facts and circumstances of the case the Tribunal is justified in holding that surcharge on agricultural income tax cannot cannot be levied for the assessment year 1957-58 ?". The High Court answered this question in favour of the Revenue and against the assessee. This decision must be set aside. In Karimtharuvi Tea Estate Ltd. v. State of Kerala ([1966] 3 S.C.R. 93 : [1965] 60 I.T.R. 262), this Court held that no surcharge on agricultural income can be levied underthe Kerala Surcharge on Taxes Act,1957in respect of the assessment year. The second question is answered accordingly in favour of the assessee and against the Revenue