STANMORE ANAMALLAY ESTATES LIMITED Vs. GOVERNMENT OF MADRAS

JUDGEMENT

(1.) THE assessee in this case is a public limited company owning a tea estate in Valparai Hills. On a portion of the estate cardamom was also cultivated.. For the assessment year 1965-66, the Agricultural Income-tax Officer determined the total agricultural income of the assessee under the Madras Agricultural Income-tax Act at Rs. 5,31,112. While computing the said total, the Agricultural Income-tax Officer disallowed the following three items of expenses incurred by the assessee :--(1) a sum of Rs. 8,063 said to have been incurred in connection with the cardamom cultivation ; (2) a sum of Rs. 3,416.87 said to be the interest paid to the workers on their savings deposits ; and (3) a sum of Rs. 2,056.39 incurred for the annual sports and other social gatherings of the labourers.

(2.) AGGRIEVED against the disallowance of those items, the assessee went in appeal to the Assistant Commissioner of Agricultural Income-tax but without success. The assessee, therefore, filed a further appeal before the Tribunal. The Tribunal also substantially agreed with the view taken by the Agricultural Income-tax Officer, though it allowed a sum of Rs. 597 as a further deduction under the first head. The decision of the Tribunal is being challenged by the assessee before us.

(3.) HOWEVER, as regards the first item disallowed by the Agricultural Income-tax Officer, the position is slightly different. There, the Income-tax Officer has apportioned the total head office expenses of the assessee-company on the basis of the extent used for cardamom and tea and allowed the proportionate share of expenditure of Rs. 8,369 in addition to what has been allowed by the Agricultural Income-tax Officer in determining the income from cardamom cultivation in his provisional assessment. In his final assessment order, the Agricultural Income-tax Officer has not accepted the apportionment made by the Income-tax Officer of the head office expenses on the basis of acreage, on the ground that the cardamom cultivation has been practically given up. Even if the view taken by the Agricultural Income-tax Officer in this regard were to be taken as correct, that would mean that the, said expenditure of Rs. 8,369 disallowed by him should be taken to be the expenditure incurred in relation to the cultivation of tea and should have been allowed as against the agricultural income from tea. This position the assessing officer has overlooked. That the assessee has incurred the said expenditure of Rs. 8,369 is not in dispute. The Income-tax Officer allowed this as a deduction in respect of cardamom cultivation after making allocation between tea and cardamom cultivation, If there is no cardamom cultivation during the year as held by the Agricultural Income-tax Officer, then the allocation cannot he sustained and the entire head office expenses including the disputed sum of Rs. 8,369 has to be taken as expenses relating to the cultivation of tea. Thus, in any case, it seems to be clear that the assessee cannot he denied the benefit of deduction. We arc, therefore, of the view that the assessee's contention in respect of all the three items of deductions has to be accepted. The tax case is, therefore, allowed with costs. Counsel's fee Rs. 150.