Judgment:
1. Common question arise for consideration in both these original petitions and hence they are disposed of by this common judgment.
2. Petitioners approached before this Court, challenging the justifiability of assessment under section 143(3) of the Income Tax Act, 1961 and raising demands pursuant thereto. According to the petitioners, as per a circular issued by Central Board of Direct Taxes, contained in 261 ITR Statute 158 to the effect that no proceedings under section 147 or under section 263 of the Income Tax Act, 1961 could be initiated for the assessment years prior to the assessment year 2002-03 in the case of assessees earning income from manufacture of rubber/coffee for determining the income liable to income-tax if the assessee has already paid Agricultural Income tax on the whole of such income. However, in the present case, the assessment is under section 143(3) of the Income Tax Act. Petitioners claim the benefit of the Circular to be extended to such cases as well.
3. In a batch of writ petitions filed before this Court, a leamed Single Judge, by judgment dated 2-7-2004 in O.P. No. 9810/1999 and connected cases, considered this question and held that if as a matter of fact, petitioners have already paid agricultural income-tax in respect of the income sought to be assessed under section 143(3) of the Act and any demand is raised, it will certainly cause prejudice to the petitioners particularly when payments were made to the Agricultural Income-tax department with reference to the legal position as understood then. However, this court also took notice of the decision of a Division Bench in CIT v. Kanam Latex Industries (P.) Ltd. : [1996]221ITR1(Ker) , wherein it was held that when there is a manufacturing process involved in rubber and the income on account of such manufacturing process is exigible to income-tax. But in view of the Circular as noticed above, a direction was given to the assessing authority to verify whether the petitioners had paid Agricultural Income-tax in respect of the entire income pursuant to the assessment order passed under the Agricultural Income Tax Act and if the petitioner had paid the entire amount, no further action is called for against the petitioners. Even in such cases, it was held that it is open to the Central Government or to the Commissioner of Income-tax, if so authorised in that regard, to take up the matter with the State Government in the light of the decision in Mahanagar Telephone Nigam Ltd. v. Chairman, CWT : [2004]267ITR647(SC) , so that the said Government can consider the same and take a decision with regard to the apportionment of tax paid by the petitioner.
4. In the present case, there is however, a slight difference. Apportionment has already taken place by virtue of an interim order passed by this court in these two cases. The interim order passed in O.P. 9351/1999 is produced as Ext.P5 in O.P.4207/2000. Interim stay was granted on condition that a sum of Rs. 2 crores will be paid to the Central Government and another 3 crores to the Agricultural Income-tax department out of the 5 crores liable to be paid by the petitioner. Thus, 40 per cent was directed to be paid to the Central Government and 60 per cent to the State Government. In the same manner, an interim direction was issued in O.P. 4207/2000 as well. There is no dispute that the petitioner has already complied with the above interim direction.
5. In the factual situation arising in the present two cases, it can be seen that the petitioner is entitled to the benefit of the circular as noticed above even in the proceedings initiated under section 143(3), but he has necessarily to show that he has already paid income-tax to the Agricultural Income-tax department. But in this case, though the petitioner did not pay the said amount before filing this original petition, by virtue of the interim order, he has already paid the amount to the Agricultural Income-tax department as well as to the Central Government. In the judgment in O.P. 9810/ 1997 and connected cases the apportionment question was left to be decided after taking up the matter with the State Government. In view of the interim order passed by this court apportioning the amount between the two departments it will not be, in the interest of thing, fair to keep the dispute to be resolved by any other agency. As regards the petitioner's liability is concerned he has discharged the same by paying the amount to the Agricultural department as well as the Income-tax department, as the case may be.
In such circumstances, the interim order passed by this court is made absolute and there will be no further proceedings either under the Agricultural Income Tax Act or under the Central Sales-tax Act, as regards the assessees concerned in these two original petitions. The proceedings under section 143(3) will stand closed and no further recovery be made as the amount already paid will stand adjusted as the amount due to the respective authorities. The original petitions are disposed of as above.