D C BHANSALI Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) A common question of law is involved in all these tax cases. While T. C. No. 1073 of 1982 relates to the assessment year 1974-75, all the other cases relate to the assessment year 1979-80. In all these cases, the interest received by the partners from the registered firm was sought to be brought to tax by initiating action under section 35 of the Tamil Nadu Agricultural Income-tax Act, 1955 (hereinafter called "the Act"). After considering the objections of the assessee, the Agricultural Income-tax Officer proceeded to assess 60 per cent. of the total salary and interest received by the assessee from the firm. The assessees questioned in appeal only the inclusion of the interest received from the firm on the ground that the entire interest had been assessed to tax by the Central income-tax authorities. The appellate authority confirmed the assessment made by the Agricultural Income-tax Officer. On further appeal, the Tribunal rejected the plea of the petitioner that there is any subtle distinction between salary and interest due from the firm. Accordingly, the assessment on 60 per cent. of the interest was confirmed by the Tribunal In the revision before us, Mr. Janardhana Raja, learned counsel for the petitioners, argued the following points. (1) The amount of interest received by the partners is on the capital provided by the partners to the firm. Therefore, the interest earned on such investment is liable to be taxed only under the Central Income-tax Act. The contention is that the income by way of interest cannot constitute agricultural income in the hands of the partners. 12) Rule 7 of the Agricultural Income-tax Rules prescribes the manner in which the income from tea is to be computed.