Chennai: The Madras high court has stayed all further proceedings against former Union minister P. Chidambaram and his family members, pursuant to the demand notice issued by the income tax department.
Justice Rajiv Shakder granted the interim stay on the petitions filed by P.Chidambaram, his wife and advocate Nalini Chidambaram and his son Karti, challenging the demand notice dated March 31, 2016 and the consequential order for reassessment of income tax returns for the assessment year 2009-10. The judge posted to March 16, 2017, further hearing of the case.
In her petition, Nalini Chidambaram submitted that she receives income from the coffee estate she owns in Karnataka. She sells the coffee grown in her estate as raw coffee after pulping and drying the raw coffee. She does not do curing of the coffee.
Pulping and drying was necessary to prevent deterioration before sale of coffee to curing houses. Under Rule 7B (1) of the Income Tax Rules, income derived from the sale of coffee grown and cured by the seller in India shall be computed as if it were income derived from business and 25 percent of such income shall be deemed to be income liable to tax.
Since she did not cure the coffee before sale Rule 7B (1) was not attracted and hence she claimed exemption of the entire income derived from sale of coffee and pepper amounting to Rs 15.26 lakh during the accounting year 2008-09 as agricultural income in the return filed for the assessment year 2009-10. Chidambaram and Karti Chidambaram filed similar petitions.
