Deductibility of wealth-tax on agricultural lands depends on proof it was wholly and exclusively incurred for agricultural income.

Wealth-tax paid on agricultural lands may qualify as deductible expenditure under section 5(j) of the Kerala Agricultural Income-tax Act, 1950, but only if it was wholly and exclusively incurred for the purpose of deriving agricultural income. The Court treated the real controversy as the deductibility of wealth-tax and accepted that such tax can fall within the provision in principle, yet emphasised that the statutory requirement must be satisfied on its own terms. Because the relevant factual inquiry had not been examined by the taxing authorities, the matter was left for determination by the Tribunal.

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Issues: Whether wealth-tax paid on agricultural lands is deductible under section 5(j) of the Kerala Agricultural Income-tax Act, 1950, and whether the allowance depends on proof that the expenditure was wholly and exclusively incurred for the purpose of deriving agricultural income.

Analysis: The question referred was treated as arising from the Tribunal's order because the real controversy concerned the deductibility of wealth-tax, even though it was discussed with reference to a different provision. The Court accepted the principle that wealth-tax could qualify as deductible expenditure, but held that section 5(j) must still be applied on its own language, which requires the expenditure to be wholly and exclusively incurred for the purpose of deriving agricultural income. As that factual aspect had not been investigated or found by the taxing authorities, the Court declined to foreclose further inquiry and directed the Tribunal to examine the matter.

Conclusion: Wealth-tax paid on agricultural lands is deductible under section 5(j) only if the expenditure was wholly and exclusively incurred for the purpose of deriving agricultural income; the factual question was left for determination by the Tribunal.

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