1972 (3) TMI 12

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.... interest of Rs. 4,204 is allowable under section 5(h) or 5(i) of the Agricultural Income-tax Act ? " For the year of assessment 1961-62, in computing the total income of the assessee, the assessing authority added back among other things a sum of Rs. 4,204 being a portion of the claim under interest which the assessee claimed as an allowable deduction. The assessing authority by the order, annexure " A " to the statement of the case, dealing with this question in paragraph 6, stated thus : " 6. Interest.-Out of Rs. 16,614.32 paid as interest during the period a sum of Rs. 8,206.29 relates to interest paid on mortgage and hence will be allowed in full. Out of the balance of Rs. 8,408.03, 50% will be disallowed as related to immature a....

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....the following deductions, namely :---.... (h) any sum paid in the previous year as interest in respect of agricultural loans taken and expended on the land from which agricultural income is derived ; (i) interest paid on any amount borrowed and actually spent for the purpose of reclaiming, improving or cultivating the property from which agricultural income is derived. We may also refer to section 5(j), which runs thus : " (j) any expenditure (not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of deriving the agricultural income. " The Supreme Court interpreting section 5(j) came to the conclusion that expenditure laid out for the up....

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....tion, upkeep or maintenance of immature plants is to see whether the said portion of these expenses would have been incurred in the absence of the 'immature' area within the estate. If it would not have been incurred but for the existence of the 'immature' area, it is certainly connected with the cultivation, upkeep or maintenance of the immature plants. It will come within the Explanation and will not be admissible for deduction. " In that particular case, the Tribunal had set aside the disallowance of certain expenses as the proportionate disallowances attributable to immature area on the ground that " none of these expenses relates directly to the cultivation, upkeep or maintenance of plants, much less immature plants. In this case....