BAKER R G A Vs. STATE OF KERALA

JUDGEMENT

(1.) This Income Tax Referred Case arises out of an order of reference dated 13-12-1963 passed by the Agricultural Income Tax Appellate Tribunal, Trivandrum. The assessee concerned has been assessed to agricultural Income Tax for the year 1957-1958. The corresponding accounting period of 12 months ended on 31-5-1957. By a composite order of reference relating to the three assessment years 1957-1958, 1958-1959 and 1959-1960, three questions have been referred to us. We are concerned in this appeal only with the latter two questions which read as follows:-

(2.) Counsel on behalf of the assessee has stressed two points before us and these relate to a sum of Rs. 6,066-14-0 admittedly paid by way of retrenchment compensation and another sum of Rs. 6,055/- written off as bad debts.

(3.) Dealing with the first of these amounts, it is seen that retrenchment compensation was paid because some part of the land from which agricultural income was derived was either acquired, or sold by the assessee. The authorities have allowed a sum of Rs. 3150/- out of the total of Rs. 9216-14-0 claimed. It is the balance which has been disallowed that is the subject matter of the question number (1) formulated above. It is not clear whether this sum represents the amount paid to labour on account of acquisition by Government of some portion of the land or because part of it was sold voluntarily by the assessee. When there is a transfer and as a result of the transfer there is termination of services of the employees there is no retrenchment ensuing. No doubt, by virtue of the provision in S.25FF of the Industrial Disputes Act, such termination of services may be deemed to be a retrenchment. We may add that it is admitted by counsel on either side that the Industrial Disputes Act had been made applicable to the estate in question. There is nothing to indicate the terms of the transfer. It may be that the assessee had received full consideration because he has not been able to induce the transferee to undertake the liability to retrenchment compensation provided by the Section. If that be so, it would not be correct to say that this amount paid should be an item of deduction in computing the agricultural income of the assessee. We therefore answer the question (1) formulated above by saying that this is not an allowable deduction.