INCOME TAX

Tax on income from manufacture of Rubber and Coffee - Clarification regarding reassessment of income for the assessment years prior to assessment year 2002-03

Circular : No. 5/2003, dated 22-5-2003.

1. Rules 7A and 7B of the Income-tax Rules, 1962 inserted by the Income-tax (Second Amendment) Rules, 2001 w.e.f. 1-4-2002 provide that income from manufacture of rubber and coffee, as mentioned therein, shall be computed as if it were income derived from business and a specified percentage of such income shall be deemed to be income liable to tax.

2. Representations have been received in the Board seeking clarification as to whether proceedings under section 147 or under section 263 of the Income-tax Act, 1961 can be initiated for the assessment year(s) prior to the assessment year 2002-03 to determine the income liable to income-tax, even if the assessees had already paid agricultural income-tax on such income.

3. The Board have considered the matter and it is clarified that no proceedings under section 147 or under section 263 of the Income-tax Act, 1961 should be initiated for the assessment year(s) prior to the assessment year 2002-03 in the cases of assessees earning income from manufacture of rubber and/or coffee, for determining the income liable to income-tax, if the assessees had already paid agricultural income-tax on the whole of such income.

Circular : No. 5/2003, dated 22-5-2003.