Proportionate head office expense deduction failed for lack of proof linking the expenditure to agricultural income in Kerala.

Deduction of proportionate head office expenses was disallowed because the assessee failed to produce evidence showing that the expenditure was incidental to earning agricultural income in Kerala. The record contained no cogent material to establish a nexus between the claimed head office and the Kerala operations, so the claim could not be accepted. The disallowance was therefore upheld and the issue was decided in favour of the Department and against the assessee.

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Issues: Whether the disallowance of the assessee's claim for deduction of proportionate head office expenses was justified for want of evidence showing that the expenditure was incidental to the earning of agricultural income in Kerala.

Analysis: The claim for deduction was rejected by the assessing authority, the first appellate authority, and the Tribunal on the ground that the assessee did not produce evidence to establish the nexus between the head office expenses and the earning of agricultural income in Kerala. The record showed no cogent material to support the allocation of the claimed expenditure to the Kerala operations. In the absence of proof, the claim for deduction could not be accepted.

Conclusion: The disallowance was upheld and the question was answered in favour of the Department and against the assessee.

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