ASSAM COMPANY LIMITED Vs. STATE OF ASSAM

JUDGEMENT

(1.) THIS is an appeal against the common judgment of the learned single Judge dt. 7th Nov., 1994 in Civil Rule Nos. 2094/92 and 2580/94 filed by the petitioners in Civil Rule No. 2094/92.

(2.) THE relevant facts are that the appellant No. 1 is a public limited company incorporated under the Companies Act, 1956, carrying on the cultivation, manufacture and sale of tea inside and outside India and the appellant No. 2 is one of the directors of appellant No. 1. For cultivation of tea, the appellant is liable to pay tax under the Assam Agrl. IT Act (for short 'the Agrl. IT Act') and for manufacture and sale of tea, it is liable for income -tax under the INCOME TAX ACT, 1961 (for short the IT Act).

(3.) FOR the asst. year 1986 -87 pertaining to accounting period ending 30th June, 1985, the Dy. CIT (Assessment), Special Range -II, Gauhati, assessed the appellant No. 1 under the IT Act and in the assessment order dt. 23rd Aug., 1994 as rectified under S. 154, the Dy. CIT first applied r. 8 of the IT Rules and determined 40% of the income from tea as income from business and thereafter allowed deduction of Rs. 99,11,473 under S. 80HHC of the IT Act from such business income. Aggrieved, the appellant No. 1 preferred an appeal before the CIT(A), Dibrugarh who following the decision of the Madras High Court in the case of CIT vs. Periakaramalai Tea & Produce Co. Ltd. (1972) 84 ITR 643 (Mad) held that the amount deductible under S. 80HHC of the IT Act should have been determined with reference to the composite income from the tea business before applying r. 8 of the IT Rules and directed the Assessing Officer (AO) to take necessary action in the matter. On receipt of the aforesaid appellant order, the appellate No. 1 filed a revised computation showing 60% of such income from tea as agricultural income before the Agrl. ITO, Assam.