Sapling is not tea hence not chargeable to tax under Bengal Agricultural Income Tax Act: Calcutta HC

Gouranga Parbati Tea Co. Pvt. Ltd. Vs. Agricultural Income Tax Officer & Ors. (Calcutta High Court)

Calcutta High Court held that Sapling is a young plant which is neither known nor is used as “tea”. Thus, sapling are not “tea” and thus are outside the scope of charging section 3 of the Bengal Agricultural Income Tax Act, 1944 and hence not liable to tax.

Facts- The petitioner is engaged in business of producing green tea leaves and pays agricultural income tax on the income derived from the sale of such tea.

AO sought to levy tax on sale of saplings and computed depreciation in accordance with Section 7 of the Act of 1944 read with Rule 3 of the Bengal Agricultural Income Tax Rules, 1944. According to the petitioner assessee “tea saplings” is not “tea” and as such in view of charging Section 3 of the Act of 1944, no tax could be levied on the income derived from sale of saplings.

With regard to the depreciation, objection of the petitioner assessee is that specific provision Section 7A has been enacted for companies. Therefore Section 7A shall apply and Section 7 and Rule 3 of the Rules shall not apply.

Please become a Premium member. If you are already a Premium member, login here to access the full content.