Agricultural income-tax deduction requires independent proof that expenses were wholly and exclusively incurred for earning agricultural income.

Expenditure on salary, transit accommodation and travelling costs connected with tea cultivation and manufacture was deductible only if it was non-capital and laid out wholly and exclusively for earning agricultural income, and only to the extent not already allowed in earlier computation. The taxing authorities had not recorded a definite finding on whether the claimed expenses satisfied that statutory test, and allowance under income-tax computation did not by itself determine the agricultural income-tax claim. On that basis, the disallowance was unsustainable, the assessment and revisional orders were set aside, and the matter was left open for fresh assessment in accordance with law.

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Issues: Whether the expenditure claimed by the assessee for salary, transit accommodation and travelling expenses in connection with tea cultivation and manufacture was deductible under section 8(2)(f)(vii) of the Assam Agricultural Income-tax Act, 1939, and whether the assessment orders disallowing the claim could be sustained.

Analysis: The relevant provision permits deduction only where the expenditure is not capital in nature and is laid out or expended wholly and exclusively for earning or deriving agricultural income, and only to the extent the same has not already been allowed in earlier computation. The assessment records did not show any definite finding by the taxing authorities on whether the impugned expenditures were in fact incurred wholly and exclusively for the relevant agricultural purpose. The decision also turned on the principle that allowance under the income-tax computation does not by itself conclude the agricultural income-tax claim unless the statutory conditions are independently examined. On that footing, the impugned orders were found to have been made without the necessary scrutiny required by law.

Conclusion: The disallowance could not be sustained, and the assessee succeeded on the issue.

Final Conclusion: The assessment and revisional orders were set aside and the matter was left open for fresh assessment in accordance with law.

Ratio Decidendi: A claim for deduction under the agricultural income-tax law must be independently tested on the statutory requirement that the expenditure was wholly and exclusively laid out for earning agricultural income, and a disallowance made without such examination is unsustainable.

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