1936 (2) TMI 22

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....d not the assessee's own capital been invested in an income-producing business, is the interest paid on such borrowing deductible under Section 10(2)(iii) from the income of that business? (2) Is rent of a mill-site within the definition of agricultural income, Section 2(1)? (3) Are Lambardari fees within the definition of agricultural income, Section 2(1)? (4) Is the net profit from commission charged to tenants for sale of their produce on their behalf, within the definition of agricultural income, Section 2(1)? It appears that the assessee lend money to their tenants and during the accounting period they received ₹ 4,253 on account of interest on these loans. During the same period they paid interest amounting to ₹....

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....t is obvious, therefore, that agricultural income is totally excluded from the operation of the Income Tax Act and that the sources of income enumerated in Section 6 cannot include agricultural income. Section 10, therefore, applies to "Business" assessable under the Act, and the "allowance" referred to in Sub-section (2) of Section 10 cannot apply to agricultural income, but only to interest paid in respect of capital borrowed for the purposes of the "business" assessable under Section 6 of the Act. We are, therefore, of the opinion that the money borrowed by the assessees for the purposes of paying land revenue, etc., cannot be exempted from income-tax under the provisions of Section 10(2)(iii). Agricultural....