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H.S. Shivakantappa Vs. Commissioner of Agricultural Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberIncome-tax Reference No. 72 of 1980
Judge
Reported in[1982]134ITR481(Ker)
ActsKerala Agricultural Income Tax Act, 1950 - Sections 5; Income Tax Act, 1922 - Sections 10(2); Income Tax Act, 1961 - Sections 37
AppellantH.S. Shivakantappa
RespondentCommissioner of Agricultural Income-tax
Appellant Advocate T.L. Viswanatha Iyer and; P.S. Narayanan, Advs.
Respondent AdvocateGovt. Pleader
Cases ReferredCommr. of Agrl. I.T. v. Nilambur Rubber Co.
Excerpt:
- - 3. the counsel for the assessee contended before us that the aforesaid dictum laid down by the division bench of this court cannot now be regarded as good law in view of the pronouncement of the supreme court in cit v......in law in holding that the fee paid to the auditors has been correctly disallowed in computing the agricultural income of the appellant for the assessment year 1972-73 ?.'2. the claim for deduction put forward by the assessee is under section 5(j) of the act which provides for deduction of any expenditure (not being in the nature of capital expenditure or personal expenditure of the assessee) laid out or expended wholly and exclusively for the purpose of deriving the agricultural income. the short question is whether the amounts expended by the assessee by way of charges paid to the auditors for the preparation of the assessee's return of income under the act would constitute expenditure allowable under section 5(j)., this question was considered by a division bench of this court in.....
Judgment:

Balakrishna Eradi, C.J.

1. In this reference made by the Kerala Agricultural Income-tax Appellate Tribunal, Additional Bench, Kozhikode, under Section 60 of the Agrl. I.T. Act (hereinafter called ' the Act'), the question of law referred to this court is :

' Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the fee paid to the auditors has been correctly disallowed in computing the agricultural income of the appellant for the assessment year 1972-73 ?.'

2. The claim for deduction put forward by the assessee is under Section 5(j) of the Act which provides for deduction of any expenditure (not being in the nature of capital expenditure or personal expenditure of the assessee) laid out or expended wholly and exclusively for the purpose of deriving the agricultural income. The short question is whether the amounts expended by the assessee by way of charges paid to the auditors for the preparation of the assessee's return of income under the Act would constitute expenditure allowable under Section 5(j)., This question was considered by a Division Bench of this court in Commr. of Agrl. I.T. v. Nilambur Rubber Co. : [1969]71ITR686(Ker) and it was held that the expenses incurred by the assessee for the preparation of the agricultural income-tax returns are not allowable in determining the assessable income under the Act.

3. The counsel for the assessee contended before us that the aforesaid dictum laid down by the Division Bench of this court cannot now be regarded as good law in view of the pronouncement of the Supreme Court in CIT v. Birla Cotton Spinning and Weaving Mitts Ltd. : [1971]82ITR166(SC) . In that decision, the Supreme Court has held that the expenses incurred by the assessee by way of law charges in connection with proceedings before the I.T. Investigation Commission could be deducted under Section 10(2)(xv) of the Indian I.T. Act, 1922, in computing the profits of the business of the assessee. The wording of Section 5(j) of the Act (Agrl. I.T. Act) is materially different from that of Section 10(2)(xv) of the Indian I.T. Act, 1922, (which corresponds to Section 37 of the I.T. Act, 1961) whereunder 'any expenditure laid out or expended wholly and exclusively for the purposes of the business or profession ' is deductible. Under Section 5(j) of the Act a deduction could be allowed only in respect of the amount expended by the assessee wholly and exclusively for the purpose of deriving the agricultural income. Only amounts expended in connection with the raising of the crops, for the proper management of the cultivation operations, the processing of the crop for rendering it in a condition to be taken to the market and transporting charges, etc., will legitimately fall within the scope of Section 5(j). The expenditure incurred by the assessee by way of fees paid to the auditors for the preparation of the return of agricultural income-tax cannot be regarded as expenditure, of the assessee laid out or expended wholly and exclusively for the deriving of agricultural income. The observations of the Supreme Court in the decision aforesaid relied on by the counsel for the assessee are not, therefore, attracted to the present case. We are in respectful agreement with the view expressed by the Division Bench of this court in Commr. of Agrl. I.T. v. Nilambur Rubber Co. : [1969]71ITR686(Ker) and, accordingly, we hold that the Tribunal was right in disallowing the assessee's claim for deduction of the aforesaid item of expenditure.

4. In the result, we answer the question refcrred in the affirmative, that is, against the assessee and in favour of the department. The parties will bear their respective costs.


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