LAWS(KER)-2008-1-85

VANIAMPARA RUBBER CO. LTD Vs. STATE OF KERALA

Decided On January 22, 2008
Vaniampara Rubber Co. Ltd Appellant
V/S
STATE OF KERALA Respondents

JUDGEMENT

(1.) This is a tax revision case filed under Section 78 of the Agricultural Income Tax Act, 1991 (hereinafter called "the Act") challenging the order of the Agricultural Income Tax Appellate Tribunal confirming disallowance of deduction claimed by the assessee under Section 9(4) of the Act on investment in the equity of a company which set up an industry for centrifuging latex. We have heard Senior counsel Sri.Joseph Markose, appearing for the petitioner and the Government Pleader appearing for the respondent.

(2.) During the accounting year relevant for the assessment year 1996- 97 the assessee invested Rs.68 lakhs towards equity in a company by name Confoams Ltd. which set up a new industrial unit for centrifuging rubber latex. The agricultural income of the assessee computed for the relevant assessment year without deduction under Section 9(4) was Rs.39,67,570/-, whereas the investment by the assesseee in the equity of the company which started new industrial undertaking during the previous year in respect of which 50% of the claim was made under Section 9(4) was Rs.68 lakhs. While completing the assessment, the Assessing Officer disallowed deduction claimed under Section 9(4) of the Act on two grounds. First ground of disallowance is that the new industry set up by the company in which investment in the form of equity was made by the appellant, was engaged in centrifuging rubber latex which is the agricultural produce of petitioner and being an industry engaged in processing of agricultural produce to make it centrifuged latex, the investment in it's equity does not qualify for deduction. The other ground on which disallowance is made is that investment made in the equity is Rs.68 lakhs, whereas the income computed exclusive of deduction is Rs.39,67,570/- which is not permissible under Section 9(4) of the Act. The first appellate authority as well as the Tribunal concurred with the Assessing Officer and held that the industry in which investment is made does not qualify for deduction. Since this issue was decided against the assessee, the Tribunal did not consider the other ground on which disallowance was made. In order to appreciate the contentions raised, we have to refer to the relevant Section which is extracted hereunder:

(3.) Sub-section (4) first introduced with effect from 1.4.1994 was amended by Finance Act 1998 with retrospective effect from 1.4.1994. One important change made through the amendment relevant for this case is the qualification introduced to the negative clause to the effect that a downstream industry of the produce of the plantation industry is not eligible.