Interest on agricultural land borrowings is confined to the specific deduction provision, and excess cannot be shifted to residuary expenditure relief.

Interest on borrowings used for land from which agricultural income is derived falls within section 5(k) of the Tamil Nadu Agricultural Income-tax Act, 1955 when the borrowed funds are actually spent on that land, and the deduction is confined to the statutory ceiling in that provision. The wider residuary deduction in section 5(e) does not permit a taxpayer to recharacterise interest already governed by section 5(k) or shift any disallowed portion to bypass the ceiling. Eligibility depends on the purpose of the borrowing and the actual use of the borrowed amount. Where the factual basis for those matters was not examined below, fresh scrutiny of the evidence is required.

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Issues: Whether interest on borrowings used on land from which agricultural income is derived falls within section 5(k) of the Tamil Nadu Agricultural Income-tax Act, 1955, and whether any portion disallowed under that provision can nevertheless be claimed under section 5(e).

Analysis: Section 5(k) governs interest paid on amounts borrowed and actually spent on the land from which agricultural income is derived, subject to the statutory ceiling. Section 5(e) is a wider residuary provision for expenditure laid out wholly and exclusively for the purpose of the land, but it does not permit a claim for interest on borrowings that are already covered by section 5(k). The decisive enquiry is the purpose of the borrowing and the manner in which the borrowed amount was actually utilised. If the borrowing was for and was spent on the land from which agricultural income is derived, the claim can arise only under section 5(k). If the borrowing does not fall within that category, interest may be considered under section 5(e). As the factual materials said to have been furnished by the assessee were not examined by the authorities below, fresh scrutiny was required.

Conclusion: Interest on borrowings actually spent on the land from which agricultural income is derived is allowable only under section 5(k), and no part of the amount disallowed by reason of the section 5(k) ceiling can be shifted to section 5(e). The matter was remitted for reconsideration of the factual basis and the extent of allowable deduction.

Ratio Decidendi: Where a specific provision governs interest on borrowings actually spent on agricultural land, that claim cannot be recharacterised under a wider residuary expenditure provision merely to bypass the statutory ceiling; entitlement depends on the purpose of the borrowing and the actual use of the borrowed funds.

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