1. These are two revision petitions filed under Section 54(1) of the Madras Agricultural Income-tax Act, 1955 (hereinafter called ' the Act'), in respect of two assessment years 1963-64 and 1964-65.The assessee-petitioner is a public limited company owning both coffee and tea estates. Certain items of expenditure of the company were disallowed in determining the total agricultural income by the Additional Agricultural Income-tax Officer, Coonoor. This disallowance was confirmed by the Assistant Commissioner of Agricultural Income-tax, Ootacamund and the Tribunal. The items of expenditure in question for the assessment years 1963-64 and 1964-65 are as follows :
1. Subscriptions paid to Ross Institute of Tropical Hygiene and the Sports Club of UPASI.
2. Secretarial and general charges of the company.
3. Legal expenses incurred in connection with the various matters relating to the day-to-day carrying on of the business of the company.
2. For the assessment year 1963-64 under the heading 'General and secretarial charges ' the assessee claimed three items of deductions:
1. Purchase of a book called ' Introduction to Investor '.
2. Subscriptions to a Gazette and printing of share certificates ; and
3. Expenses for obtaining the sale deed of Veniel Estates.
3. For the assessment year 1964-65, under the above heading, the assessee claimed the following deductions:
1. Accountancy charges paid to Fraser and Ross.
2. Travelling expenses incurred by Mr. Low for visiting Bangalore in connection with Mahajan's suit.
3. Charges on one application to Government under Section 34 of the Companies Act.
4. The legal expenses included some expenditure incurred in connection with a suit filed by one of the shareholders against one of the directors of the company. The shareholder who filed the suit was one Mahajan and the suit was in connection with the election of one Srinivasan as director of the company by the annual general meeting of the company. The majority of the Tribunal members held that all these expenses now in dispute are not allowable as deductions under Section 5(e) of the Act, while the second member who gave a dissenting order held that, except the legal and traveling expenses incurred in connection with the suit and the printing of share certificates, the rest of the items are proper deductions falling under Section 5(e). The question, therefore, for consideration in these two revisions is as to whether the above-said items of expenditure are admissible deductions under Section 5(e) of the Madras Agricultural Income-tax Act, 1955.
5. Section 5(e) of the Act is as follows :
' Any expenditure incurred in the previous year (not being in the nature of a capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of the land.'
6. The majority view of the Tribunal was that the expression 'for the purpose of the land ' is narrower in its scope than that of the expressions ' the land from which the agricultural income is derived ' or ' the benefit of the land from which the agricultural income is derived ' which are found in some of the sub-sections in Section 5 itself and that, therefore, unless the expenditure is ' directly connected ' and ' closely related ', the expenditure cannot be brought under Section 5(e). This view of the Tribunal is sought to be supported by the learned counsel for the respondent.
7. We are unable to accept this view of the Tribunal. We are of the view that the expression ' for the purpose of the land ' is much wider in scope than the expression ' for the purpose of deriving the agricultural income from the land '. Section 5(e) is in the nature of a residuary clause and would take in not only those expenditure incurred for the purpose of earning the agricultural income but also very many expenses involved in carrying on the agricultural activity as an occupation. If the expenses are reasonably connected with the holding of the land and using it for the purpose of agriculture, we are of opinion that those expenses will come under the expression ' for the purpose of the land ', In this connection we may also refer to some of the decisions of the Supreme Court which considered similar questions.
8. In Travancore Rubber & Tea Company v. Commissioner of Agricultural Income-tax, : 41ITR751(SC) the Supreme Court was considering Section 5(j) of the Travancore Cochin Agricultural Income-tax Act, 1950, which reads as follows:
' The agricultural income of a person shall be computed after making the following deductions, namely :--...... (j) any expenditure (not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of deriving the agricultural income.'
9. The High Court held that the expenses incurred for the upkeep and maintenance of immature rubber plants could not be considered as ' laid out or expended for the purposes of deriving agricultural income '. The Supreme Court reversed the decision of the High Court and held that the expenses incurred on the upkeep and maintenance of the whole estate including the immature rubber plants would also come within the purview of the expression ' laid out and expended wholly and exclusively for the purpose of deriving the agricultural income '.
10. In Commissioner of Agricultural Income-tax v. Calvary Mount EstatesLtd., : 41ITR755(SC) the Supreme Court considered the scope of Section 5(e) of the MadrasAct. In that case also the expenses that were the subject-matter ofdispute were incurred in forking and manuring of the non-bearing andimmature rubber plants grown in the estate. The Supreme Court followed their earlier decision in Travancore Rubber & Tea Co. v. Commissioner of Agricultural Income-tax, and held that these expenses are deductible under Section 5(e) of the Act. While so holding the Supreme Court noted the difference in phraseology in Section 5(j) of the Travancore-Cochin Agricultural Income-tax Act, 1950, and Section 5(e) of the Madras Agricultural Income-tax Act, 1955, and held that the expression ' for the purpose of land ' occurring in the Madras Act was much more favourable to the assessee for his contention than the expression ' for the purpose of deriving agricultural income ' occurring in the Travancore-Cochin Act. The definition of ' land ' in Section 2(nnn) in the Madras Act includes ' plantation ' and that is why Section 5(e) reads as ' for the purpose of the land ' instead of the original expression ' for the purpose of plantation '. It would be seen, therefore, that the expression ' for the purpose of the land ' is wider in its content than the expression ' for the purpose of deriving agricultural income '.
11. In M. V. Chacko v. State of Madras,  70 I.T.R. 891 it was held that when under an agreement an amount was advanced and the creditor was given a share of the net profits in lieu of interest, the amount paid as a share in the net profits to the creditor would be an allowable deduction under Section 5(c) on the ground that the payment of a share in the net profits was for money borrowed and expended in connection with the working of the land.
12. In Commissioner of Agricultural Income-tax v. Tipperary Estates Co., : 76ITR396(Mad) a Division Bench of this court, to which one of us was a party, has held that the payments made to a partner for services rendered to the partnership de hors a partner is an allowable deduction under Section 5(e) on the ground that such payments come under the expression ' expenditure laid out wholly and exclusively for the purpose of the land '.
13. These decisions show that the expression ' for the purpose of the land ' covers a wide range of expenses taking in not only the expenses incurred actually for deriving agricultural income but also expenses which are not directly incurred for deriving agricultural income but expended in connection with the lands which do not have any relationship to the agricultural income derived in the previous year. Bearing these principles in mind, let us now consider the actual expenses claimed as deductions.
14. Rose Institute of Tropical Hygiene is stated to be an institute which advises the owners of coffee and tea plantations on matters like family planning, malaria eradication, tuberculosis diagnosis, anaemia, etc., for the guidance of the workers and the staff employed in the estate. The UPASI Club also helps its members in various ways and the Sports Club of UPASI caters to the needs of the employees of the estate. Both from the point of view of commercial expediency and as a welfare measure these subscriptions were given by the assessee. It is closely related to the activity of agriculture in the estate. We are, therefore, of opinion that this expenditure is an allowable deduction under Section 5(e) of the Act. The purchase of the book Introduction to Investor and subscription to the Gazette of India are also connected with the business of agriculture and, therefore, the expenditure on this account is an allowable deduction, but not the charges for printing share certificates which is in the nature of a capital expenditure. Except the legal expenses incurred in connection with the suit of Mahajan, the other legal expenses related to sales tax and company proceedings. Some of the expenses were for consulting solicitors regarding the implication of various provisions of the company law and the procedure to be adopted to continue the appointment of selling agents and managing agents. These items of expenditure have to be incurred in the course of the carrying on of its activity as the owner of the estate and therefore, they are allowable deductions. But the expenditure incurred in connection with the Mahajan's suit challenging the election of Srinivasan as a director, is in the nature of a personal dispute between the said Mahajan and Srinivasan. Though Srinivasan was a director, no expenditure could be incurred by the company in connection with this election and the expenditure has nothing to do with the estate as such. That expenditure will, therefore, have to be disallowed. We accordingly hold that except the expenses relating to the suit of Mahajan and printing of share certificates, the other items of expenditure claimed by the assessee are deductible under Section 5(e) of the Act. The revision petitions are, therefore, allowed with costs. Counsel fee Rs. 150, one set.