Agricultural income-tax interest deduction turns on actual use of borrowed funds; immature plantation borrowings fall under the residual provision.

Section 5(k) of the Tamil Nadu Agricultural Income-tax Act applies only where borrowed funds are actually spent on the land from which agricultural income is derived in the relevant year; interest on such borrowings is deductible under that provision. Interest on borrowings used for maintaining immature coffee plants or other non-income-yielding areas does not satisfy that requirement and falls residually under section 5(e). The High Court thus clarified the narrower scope of section 5(k), rejected the Tribunal's contrary view on this distinction, and maintained the remand to the assessing authority.

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Issues: Whether interest on borrowings for maintaining mature crop areas and immature coffee plants falls under section 5(k) or section 5(e) of the Tamil Nadu Agricultural Income-tax Act, 1955.

Analysis: Section 5(k) is a special provision dealing with interest on monies borrowed and actually spent on the land from which agricultural income is derived in the previous year. Section 5(e) operates residually and covers interest on borrowings for agricultural expenditure not falling within the narrower scope of section 5(k). The distinction is that section 5(k) applies only where the borrowed money has been actually spent on the income-yielding land, whereas borrowings used for maintaining immature plants or other areas not yielding income in the relevant year do not satisfy that requirement.

Conclusion: The interest relatable to amounts borrowed and actually spent on the land from which income was derived falls under section 5(k), while interest on borrowings for maintaining immature plants falls under section 5(e). The contrary view of the Tribunal on this distinction was set aside.

Final Conclusion: The legal position was clarified in favour of a restricted application of section 5(k) and a residual application of section 5(e) for immature plantations, while the remand to the assessing authority was maintained.

Ratio Decidendi: Section 5(k) applies only to interest on borrowed funds actually spent on the income-yielding land, and interest on borrowings for maintaining immature plants is governed by section 5(e).

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