The main legal point established in the judgment is that income derived from the Coffee Board is agricultural income and is liable to tax, even if the sale took place in a later year after the crop was gathered. The court also upheld the validity of section 26(4) of the Act and rule 9(c) of the Rules, but remitted the matter to the assessing authority to redo the assessment in the light of the order and in accordance with the law.

S. Rajendra Babu, J.

1. The petitioner in these two petitions is an assessee under the Karnataka Agricultural Income-Tax Act, 1957 ("the Act" for short). For the assessment years 1979-80 and 1980-81, the petitioner filed his returns accompanied by a letter which, inter alia, stated that he was, prior to the said letter, assessed to tax in his individual capacity, but on August 10, 1978, he having impressed his agricultural estate known as "Cotacadu and Jeynacadu Coffee Estates", with the character of joint family property, he was not liable to pay any tax. In these circumstances, he requested the authority to conclude the assessment holding the petitioner as not liable to pay tax.

2. The petitioner was the karta of his undivided Hindu joint family consisting of himself, his wife, Banumathi, minor son, Vishwanathan, and a minor daughter. On August 14, 1978, the petitioner affected a partial partition which was registered on August 17, 1978, in which no share was allotted to the wife or the daughter with the result that his status after the partition in question was that of a member of a joint Hindu family. He stated that the act of impressing the estate with the character of joint family property came about only on August 10, 1978, and the coffee points declared in respect of the coffee crop delivered by him during 1977-78 coffee season and prior thereto were collected by him in the status of an individual. He contented that impressing the property with the character of joint family property and the subsequent partition would absolved him of the liability to pay tax in respect of the receipts which came to him in the form of coffee points, according to him, he no longer held the property as an individual, but held it only as an Hindu undivided family. During the previous year relevant to the assessment years in question, he had no income in his status as Hindu undivided family, and in his individual capacity or status he owned or held land only for a part of the accounting year between April 1, 1978 and August 9, 1978, and, therefore, he was not exigible to pay agricultural income-tax as he had not held land during the entire assessment year under section 3 of the Act. It was also contented that the income could not be subjected to tax once the source was not in existence. The Agricultural Income-tax Officer overruled the contentions raised by the petitioner and assessed him to tax in the status of an individual till date of partition, bringing to tax the supplementary points declared for the coffee season referred to above and raised a demand accordingly. For the assessment year 1980-81, the petitioner filed returns on the supplementary coffee points received relating to the earlier season preceding the party, when his status was that of an individual. The total receipts for 1975-76 to 1977-78 seasons, on cash basis. Amounted to Rs. 79,644. The Agricultural Income-tax Officer, on a consideration of the matter and finding that the net income was taken to be at the same figure, held that there was no expenditure since the estate had been portioned between the father and his minor son, as for the contention of the assessee that the supplementary coffee points received in the year in question are not liable to tax as the same were not the income of the previous year, the assessing authority rejected the same and brought the said points also to tax.

3. Aggrieved by these two assessment orders, the petitioner has filed these petitions and has, inter alia, sought for the following reliefs

(i) Quash the assessment orders dated May 14, 1982, and May 16, 1981, for the assessment years 1979-80 and 1980-81 and the demand made thereon ACIX;

(ii) To strike down rule 9(c) of the Karnataka Agricultural Income-Tax Rules, 1957 ('the Rules' for short), as being ultra vires sections 3 and 7 of the Act; and

(iii) To strike down section 26(4) of the Act holding the same uncon-stitutional and beyond the competence of the state legislature."

4. W