Deduction for interest on borrowings used to maintain immature coffee plants falls under the general expenditure provision, not the restricted interest rule.

Interest on borrowings used to maintain immature coffee plants in a replanted area falls within the general deduction for expenditure laid out wholly and exclusively for the purpose of the land. The restricted deduction for interest on borrowed amounts applies only where the money was actually spent on the land from which agricultural income is derived. Because immature plants did not yield income in the relevant year, the special limitation did not apply to that borrowing, and the interest remained deductible under the general provision.

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Issues: Whether interest on borrowings used for maintaining immature coffee plants in a replanted area falls under the general deduction for expenditure laid out wholly and exclusively for the purpose of the land, or under the restricted deduction for interest on amounts borrowed and actually spent on the land from which agricultural income is derived.

Analysis: The provisions operate in different fields. The deduction for expenditure wholly and exclusively for the purpose of the land covers revenue expenditure connected with maintaining immature plants, while the interest restriction applies only where the borrowed amount is actually spent on the land from which agricultural income is derived. The statutory distinction between expenditure for the purpose of the land and interest on amounts actually spent on income-yielding land cannot be ignored. Interest on borrowings for maintaining immature plants, which do not yield income in the relevant year, is not confined by the limitation attached to the special interest provision.

Conclusion: Interest paid on borrowings used for maintaining immature coffee plants is deductible under the general expenditure provision and is not subject to the restriction applicable to interest on amounts borrowed and actually spent on the income-yielding land.

Final Conclusion: The interest attributable to immature plantation maintenance is to be dealt with under the general deduction provision, while the restricted interest deduction applies only to borrowings actually spent on the land yielding agricultural income.

Ratio Decidendi: Where borrowed funds are spent on maintaining immature plantation areas not yielding agricultural income in the relevant year, the interest thereon falls under the general deduction for expenditure on the land and not under the restricted provision governing interest on amounts borrowed and actually spent on the income-yielding land.

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