CATHOLIC DIOCESE OF TIRUVALLA Vs. STATE OF KERALA

JUDGEMENT

(1.) THESE two revisions arise from the common order of the Agricultural Income-tax Appellate Tribunal, Thiruvananthapuram, in T. A. Nos. 19 and 20 of 1987. The two appeals arose from two separate orders of the Additional Appellate Assistant Commissioner, Kollam, rendered on December 17, 1986, relating to the assessment years 1979-80 and' 1980-81.

(2.) THE revision petitioner is an assessee to agricultural income-tax. THE revision petitioner, Messrs. Catholic Diocese of Thiruvalla, was getting income from various crops including rubber from different estates. THEy did not concede any taxable income in the return submitted for the assessment years 1979-80 and 1980-81 on the ground that the entire income was spent for religious and charitable purposes. THEy claimed eligibility for exemption under Section 4 of the Agricultural Income-tax Act. THE consolidated statement of income filed for the two years disclosed net income from all the estates at Rs. 15,85,815,90 and Rs. 13,41,363.95, respectively. THE assessing authority found that the assessee has failed to maintain separate and verifiable accounts for agricultural income and the expenditure of such income towards religious and, charitable purposes. THE assessing authority, therefore, completed the assessment for the above-mentioned years to the best of his judgment by apportioning the income determined, towards that spent for religious and charitable purposes exempted under Section 4 of the Agricultural Income-tax Act, and that not falling under the said category in the proportion as disclosed from the accounts maintained. THE net taxable income for the two years aforementioned was fixed at Rs. 9,77,300 and Rs. 2,68,480, respectively. THE assessment orders were challenged by the assessee before the Appellate Assistant Commissioner, Kollam, and by his order dated December 17, 1986, the Additional Appellate Assistant Commissioner modified the assessments by allowing certain items of expenditure disallowed or limited. THE assessee carried the matter to the Tribunal. THE appeals were heard jointly by the Tribunal and by the common order dated November 8, 1990, certain modifications were made by the Tribunal and in other respects the order of the appellate authority was confirmed. Hence the two revisions by the assessee.

(3.) ASSAILING the above finding of the Tribunal, it is contended by learned counsel for the revision petitioner that the entire income derived from agricultural and non-agricultural income had been applied for religious and charitable purposes and as such the question of apportionment of the expenses from out of the agricultural income separately does not arise. Counsel relied on the decision of the Allahabad High Court in CIT v. Panchayati Akhara Nirmal [1991] 190 ITR 121. That was a case where a charitable trust was deriving income from agricultural and non-agricultural property. Separate accounts for the two types of income were not maintained. The Income-tax Officer in that case allocated the amount spent between agricultural and non-agricultural income in an appropriate ratio. The Allahabad High Court observed that it is not necessary that there should be a provision in the Income-tax Act and Rules for this purpose. The assessee in that case wanted the entire agricultural income to be excluded from consideration. It is observed that if that is done the result would be that no part of the agricultural income would have been applied to the specified purposes. It was in these circumstances that the Allahabad High Court observed that the Income-tax Officer was perfectly justified in allocating the amount applied in proportion to the agricultural and non-agricultural income. This decision is of no assistance to the revision petitioner since the dispute in that case was only regarding allocation of the amount applied in proportion to the agricultural and non-agricultural income. In the present case, the assessing authority has divided the expenditure incurred for charitable and religious purposes proportionately from both the agricultural and non-agricultural income and by giving due deductions to the net agricultural income proposed the claim for exemption was disallowed only because there was no separate verifiable accounts from which the agricultural income applied for charitable or religious purposes could be ascertained. The Tribunal has observed that the amount spent by the diocese from agricultural income for religious and charitable purposes is not proved by separate accounts or by any verifiable accounts. No error has, therefore, been committed by the Tribunal in arriving at this finding. No interference is, therefore, called for.