THE DOOARS TEA CO., LTD. vs. COMMISSIONER OF AGRICULTURAL INCOME-TAX, WEST BENGAL

CIVIL APPEAL No. 381/1960Supreme Court[1962] 3 S.C.R. 15718 August 1961Bench: 3 JudgesAuthor: P.B. GAJENDRAGADKAR, K. SUBBA RAO, M. HIDAYATULLAH15 pages
AI SummaryDismissed

What did the Supreme Court hold?

The Supreme Court held that bamboos, thatching grass, and fuel timber utilized by the assessee for its own business constituted agricultural income under Section 2(1)(b)(i) of the Bengal Agricultural Income-tax Act, 1944. The Court reasoned that the provision clearly states that agricultural produce used by the assessee for its own business itself constitutes income, and no sale is contemplated or required. The Court further held that Rule 4(2) of the Rules framed under the Act is applicable to cases where agricultural produce has not been sold at all. Rule 4(2) is a residuary rule that covers all cases not falling under Rule 4(1) (market sales). Therefore, the market value of the produce used for the business could be computed under Rule 4(2). The High Court's affirmative answers to both questions were upheld. The appeal was dismissed.

What were the facts?

The assessee, The Dooars Tea Co., Ltd., carried on the business of growing, manufacturing, and selling tea. For the assessment year 1949-50, the Agricultural Income-tax Officer increased the assessee's returned agricultural income by Rs. 39,849, representing the market value of bamboos, thatching grass, and fuel timber grown on the assessee's land. These items were utilized by the assessee for its tea business and were not sold in the market. The assessee contended that such produce, not being sold, did not constitute agricultural income. The tax authorities and the Tribunal disagreed, holding that the produce used for the business itself constituted income. The assessee also argued that the market value could not be computed as no rule applied. The Tribunal affirmed the addition, and the case was referred to the High Court.

What were the issues?

1. Whether bamboos, thatching grass, and fuel timber grown by the assessee company and utilized for its own tea business constitute agricultural income within the meaning of the Bengal Agricultural Income-tax Act, 1944, as per Section 2(1)(b)(i)? Assessee's contention: The agricultural produce in question did not constitute agricultural income because it had not been sold or converted into money's worth. Income arises only upon sale. Revenue's contention: The agricultural produce utilized by the assessee for its own business itself constituted agricultural income, and tax could not be avoided simply because the produce was not sold. 2. If the answer to question (1) is in the affirmative, can such income be computed under Rule 4 of the rules framed under the Act? Assessee's contention: Rule 4(2) is inapplicable as it assumes the produce has been sold, and no other rule provides for computation of income from produce used for own purposes. Revenue's contention: Rule 4(2) covers cases where produce has not been sold and allows for computation of income.

Which sections of the Income-tax Act were involved?

Section 2(1)(b)(i),Section 57

AI-generated summary — verify with the full judgment below

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3.

S.C.R. SUPREME· COURT REPORTS 157 of an enlarged meaning the same concept might ~ttract with · the march of time and with the revolutionary·. changes brought ft bout in social, economic, political and scientific ·~ml other fields of human activity. Indeed, unless a contrary intention appears, an interpretation should be given to the words used to take in new fact~ and situations, if the words are capable of comprehend- ing them. We cannot, therefore, agree with the learned Judges of the High Court that the maxim contemporanea expositio could be invoked in constrn- fag the word "telegraph line" in the Act. For the' said reasons, we hold that the expres. sion "telegraph line" is sufficiently comprehensive t.o take in the wires used for the purpose of the apparatus of the Post and Telegraph Wireless Station. In the result, we set aside the order of the High Court and dismiss the petition filed by the first respondent. The appeal is allowed, bnt, in tht• eircumstances of the case, without costs. Appeal allowed. THE DOOARS TEA CO., LTD. 'V. COMMISSIONER OF AGRICUL'TURAL INCOME-TAX, WEST BENGAL (P. B. GAJENDRAGADKAR, K. SunnA RAo and M. HIDAYATU

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