Depreciation and repairs on plantation buildings were allowable even without actual rent, where used for agricultural activity.

Expenditure laid out wholly for the purposes of deriving agricultural income could be allowed under the Agricultural Income-tax Act, 1950 even if the plantations had not yet begun to yield income in the relevant year. On that basis, depreciation and repairs on buildings used for employees engaged in planting were deductible under the computation provisions, and the allowance was not confined to buildings from which rent was actually realised. The claim was therefore accepted in favour of the assessee.

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Issues: Whether depreciation and repairs expenditure in respect of all the buildings used for employees engaged in planting were allowable even though some of those buildings did not actually yield rent.

Analysis: The deductions claimed fell within section 5 of the Agricultural Income-tax Act, 1950. The fact that the plantations had not yet begun to yield income did not, by itself, defeat the statutory allowances. The computation provisions, read with the loss-carry-forward scheme, showed that expenditure laid out wholly for the purposes of deriving agricultural income could be allowed even where there was no income in the relevant year. The same principle applied to repairs and depreciation for buildings required for the agricultural activity.

Conclusion: The assessee was entitled to claim depreciation and repairs on all the buildings, not merely those from which rent was actually realised, and the question was answered in the affirmative in favour of the assessee.

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