CAUVERY PEAK ESTATE Vs. GOVERNMENT OF MADRAS

JUDGEMENT

(1.) AS the point arising in all these three tax cases is the same, they can be dealt with together, though they had been filed by different assessees. The question that is raised in these cases is as to whether the deduction under Section 5(k) of the Madras Agricultural Income-tax Act towards the interest paid by the assessee in the previous year on the amounts borrowed and actually spent on the land from which agricultural income is derived should be limited to an amount equivalent to 25% of the net agricultural income or the gross agricultural income.

(2.) ACCORDING to the assessees, the expression "agricultural income", occurring in the second proviso to Section 5(k), should be understood in the sense in which it has been defined in Section 2(a) and if so read the assessee will be entitled to the deduction of interest paid in the previous year on the amounts borrowed and actually spent on the land up to the limit of 25% of the gross agricultural income received during the year. The learned counsel seeks support for that position from the decision of Rajagopalan J. in Soundarapandian and Bros. v. Agricultural Income-tax Officer, [1957] 2 M.L.J. 431. 437 (Mad.) wherein it has been expressed: