BISONFIELD A ESTATE Vs. INSPECTING ASSISTANT COMMISSIONER SPECIAL

JUDGEMENT

(1.) THE revision cases are at the instance of the assessee under the Kerala Agricultural Income-tax Act. THEy relate to the assessment years 1978-79 and 1979-80, respectively. THE following questions of law are raised in the revision petitions :

(2.) ACCORDING to the revision petitioner, the main income obtained is from the sale of coffee pooled. It is alleged that the assessee maintained books of account, following the mercantile system of accounting. The coffee obtained by the assessee is pooled with coffee curers, namely, Chamundi Curing Works, who effect payment for the coffee pooled in instalments, depending upon the payment declared by the Coffee Board. The assessee files returns on the basis of a reasonable estimate of the value depending upon the instructions given by the pooling agent. Therefore, even though a much lesser amount is received as part consideration for the coffee pooled during the particular year, the assessee valued the same at a much higher rate than what has been initially paid. If any further amounts are received in the subsequent years over and above the amount valued by the assessee, such excess amount received would be treated as income during the year in which it was received and declared before the agricultural income-tax authorities, This system was being followed by the assessee for the last several years. But, for the assessment years 1978-79 and 1979-80, the assessing authority took the view that the entire consideration received by the assessee for the crop pooled in each year had to be taken as income of the particular year in which the sale took place. The matter was taken in appeal by the assessee and the appellate authority (appeals) found that as per the consistent method of accounting followed by the assessee, the difference, if any, need be accounted only in the year in which it was received. The order passed by the appellate authority was taken in appeal by the Revenue before the Appellate Tribunal. Reliance was placed by the Department on the decision of the Supreme Court in State of Kerala v. Bhavani Tea Produce Co. Ltd. [1966] 59 ITR 254 as well as Sheveroy Estates Ltd. v. Government of Madras [1975] 100 ITR 14 (SC), in support of its contention. The Tribunal took the view that there is transfer of property in the accounting year. So, whatever amount is received subsequently also should be taken as income of the assessee for the assessment year in which sale was effected.

(3.) LEARNED counsel appearing on behalf of the revision petitioner submitted that in view of the fact that the revision petitioner had been following the mercantile system and it was accounting for the additional amount received only during the years in which it was actually received and since the Department had been accepting such returns and passing assessment orders on that basis, there was no justification at this distance of time to take a different view. Reliance was placed by him on a decision of the Karnataka High Court in Mrs. D. G. Graig Jones v. State of Karnataka [1984] 148 ITR 297 in support of his contention that the value as estimated by the assessee in the return as per the mercantile system of accounting should be taken as the basis for computing the income.