High Court ruled that Section 8B of the Agricultural Income Tax Act applies to income from the 2008-09 financial year.
Meetu Kumari | Mar 20, 2026 |
HC Upholds Validity of Section 8B for Assessment Year 2009-10
The petitioner, McLeod Russel India Limited, challenged the applicability of Section 8B of the Assam Agricultural Income Tax Act, 1939. This section was introduced via an amendment notified in the Assam Gazette on February 12, 2009, and came into force on April 1, 2009. The Revenue sought to apply this provision to the assessment of agricultural income for the Financial Year 2008-09 (relevant to Assessment Year 2009-10).
The petitioner argued that since the income was earned in the 2008-09 financial year prior to the date the law came into force the application of Section 8B would amount to an impermissible retrospective levy. The matter was referred to a Full Bench to resolve the conflict regarding whether the law extant on the first day of the assessment year governs the taxability of the preceding year’s income.
Main Issue: Whether Section 8B of the Assam Agricultural Income Tax Act, which came into force on April 1, 2009, can be legally applied to the assessment of agricultural income earned during the Financial Year 2008-09 for the Assessment Year 2009-10.
HC’s Decision: The Full Bench of the Gauhati High Court, comprising Hon’ble Mr. Justice Michael Zothankhuma, Hon’ble Mr. Justice Manish Choudhury, and Hon’ble Mr. Justice Soumitra Saikia, answered the reference in the affirmative. Relying on the Supreme Court’s landmark ruling in Karimtharuvi Tea Estate Ltd. vs. State of Kerala, the Court held that while tax is levied on the income of the previous year, it is the law in force on the first day of the Assessment Year that governs the assessment. Since Section 8B was already in force on April 1, 2009, it was the substantive law applicable for the Assessment Year 2009-10.
The Court clarified that this is not “retrospective” application but the standard operation of tax statutes where the “assessment year” is the unit of taxation. The Court found no infirmity in the previous Division Bench decision in M/s Kanoi Estates Private Limited and dismissed the petitioner’s contentions.
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