Kalyan Jyoti Sengupta, J. - (1.) The writ petitioner No. 1 being the tea company has filed this writ petition challenging the vires of Sections 115-O(1) and 115-O(3) of the Income-tax Act, 1961, in so far as it relates to levy of additional income-tax on the profits which are distributed as dividend amongst the shareholders to the extent the same represents agricultural income of the petitioner and also refund of the tax already levied and realised as above with interest at the prevailing rate from the respective dates of payment up to the date of refund and further to withdraw and/or rescind and/or cancel all the levies of additional income-tax for the financial years 1996-97, 1997-98, 1998-99 and 1999-2000. So, it is clear that in the event first relief is granted to the writ petitioner then other reliefs prayed for therein are automatically to be granted by the court. Thus, the controversy in this case is as to whether the aforesaid Sections 115-O(1) and 115-O(3) of the Income-tax Act, 1961, are partially ultra vires the Constitution as questioned by the writ petitioner or not.
(2.) It appears that the writ petitioner No. 1 has been carrying on business of growing tea leaves by its agricultural process and manufacturing black tea out of the same and selling the same, and also manufacturing and selling chemicals and fertilizers, plywood, etc. This apart petitioner No. 1 has also business of warehousing and real estate development. The petitioner-company is limited by shares. Therefore, the shareholders of the petitioner-company are paid dividend out of the profits earned by petitioner No. 1.
(3.) Dr. Debi Prosad Pal, the learned senior advocate, appearing in support of the writ petition, submits that in the case of a tea company whose income is derived from sale of tea grown and manufactured it is not the entirety of the profits or income which is liable to income-tax, and by virtue of rule 8 of the Income-tax Rules, 1962, the income derived from sale of tea grown and manufactured by the seller is computed as if it is income derived from business and of the income so computed 40 per cent, is to be deemed as non-agricultural income (business) liable to income-tax and the balance 60 per cent, of the income so computed is to be treated as agricultural income in respect of which the State Legislature has power to enact suitable legislation for imposition and realisation of tax on agricultural income under entry No. 46 of List II read with article 246(3) of the Constitution of India. In this context, he relies on a decision in Tata Tea Ltd. v. State of West Bengal.;