THE KARIMTHARUVI TEA ESTATES LTD., KOTTAYAM & ANR. vs STATE OF KERALA & ORS.

The Supreme Court held that Explanation 2 to Section 5 of the Agricultural Income-tax Act, 1961, which disallows deductions for expenditures on immature plants, does not apply to agricultural income derived from tea plantations. The Court reasoned that such an application would conflict with the computation methods established under the Indian Income-tax Act, 1922, and its rules. Consequently, the Amendment Act was deemed beyond the legislative competence of the State, affirming the petitioners' challenge against the validity of the Amendment Act.