Judgement

BACHAWAT, J. :- The appellant carry on the business of cultivation, manufacture and sale of 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 incometax. 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 l961-62. 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 the 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 Section 60 (1) of the Kerala Agricultural Income-tax Act, 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 Commr. of Agricultural Income-tax, Kerala v. Perumal Plantations Ltd., (1965) 56 ITR 193 (Ker), 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 him 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.

2. Before answering the aforesaid question it is necessary to refer to the relevant constitutional and statutory provisions. Under Entry 46, List II, Seventh Schedule to the Constitution, the State Legislature is competent make laws with regard to "taxes on agricultural income" Under Entry 82, List I, Parliament is competent to make laws with respect to taxes on income other than agricultural income In view of Article 366 (1) agricultural income means "agricultural income as defined for the purposes of the enactments relating to Indian Income-tax." Article 274 (I)