1987 (5) TMI 19

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....r taxation work) as an admissible expenditure in computing the agricultural income. The claim was negatived by the assessing authority. In the appeal preferred by the assessee, the Deputy Commissioner (Appeals) allowed the claim. In second appeal, the Agricultural Income-tax Appellate Tribunal sustained the allowance ordered by the first appellate authority. Aggrieved by the decision of the Appellate Tribunal, the Revenue filed two reference applications under section 60(1) of the Agricultural Income-tax Act praying that the following two questions may be referred to this court for a decision : " (i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the expenses incurred for the profession....

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....er section 5(j) of the Agricultural Income-tax Act. It was contended that this is not an expenditure laid out or expended wholly and exclusively for the Purpose of deriving agricultural income. On the other hand, counsel for the assessee contended that the crucial words in section 5(j) of the Agricultural Income-tax Act are similar to section 10(2)(xv) of the Indian Income-tax Act, 1922, and the legal expenses incurred for taxation work are an admissible expenditure. It was argued that the legal expenses incurred for representation before the Investigation Commission were held to be a permissible expenditure under section 10(2)(xv) of the Indian Income-tax Act, 1922, by the Supreme Court in Birla Cotton Spinning & Weaving Mills Ltd.'s case ....

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....usiness, there is always a possibility of higher profits and this will be a permissible expenditure. In the light of the decision in Malayalam Plantations' case [1978] 115 ITR 624 (Ker) and the decision in Birla Cotton Spinning & Weaving Mills' case [1971] 82 ITR 166 (SC), we have to hold that any expenditure incurred in connection with the receipt of agricultural income is a deductible expenditure. The decision in Malayalam Plantations' case [1978] 115 ITR 624 (Ker) was followed in ITRs Nos. 63, 64 and 65 of 1978-CIT (Agrl) v. Emerald Valley Estates Limited [1988] 169 ITR 392 and also in ITRs Nos. 109 and 125 of 1977-CIT (Agrl.) v. S. Bhaskaran [1988] 169 ITR 395 and in ITR No. 107 of 1977-CIT (Agrl.) v. Malabar Industries Company Ltd. ....