Tax on composite income of tea cos

The Supreme Court has stated that when a tea company has composite income from agriculture and manufacture, both the Income Tax Act and the agricultural tax law of the state would apply. The court was dealing with the tax assessment of a public ltd tea company in Darjeeling, Belgachi Tea Co Ltd. It had tea gardens as well as a factory for manufacture of tea. It also sold leaves. The Supreme Court ruled that the income from ‘tea grown and manufactured' business shall be computed in accordance with the Income Tax Act and 40 per cent of the income is taxable under that Act. However, 60 per cent of the income will be taxable under the Bengal Agriculture Income Tax Act by the state government treating it as income from agriculture. The income derived from the sale of green tea leaves is agriculture income assessable under the agricultural tax law. If expenses on the tea grown are already allowed to be deducted, there shall be no double deduction of the expenses, the court clarified. By Ms.Bobby Aanand, Metropolitan Jury.

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