SAKTHI ESTATES Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THIS tax case revision is filed by the assessee under s. 54 of the Tamil Nadu Agrl. IT Act, 1955, and the question is whether the sum of Rs. 5,61,542.50 paid as interest on loan borrowed by the assessee is allowable as deduction in computing the total agricultural income under s. 5(e) of the Tamil Nadu Agricultural IT Act (hereinafter referred to as "the Act") as contended by the assessee. The Tribunal has upheld the disallowance of the said sum by both the lower authorities, on the ground that the said borrowal would fall under s. 5(k) of the Act and the said interest amount is beyond the limit prescribed under the said s. 5(k) of the Act.

(2.) THE argument of learned counsel for the assessee/petitioner is that the relevant borrowal in respect of the abovesaid interest amount is only spent on the land from which agricultural income is not derived and hence, s. 5(e) is attracted. But learned counsel for the Revenue submits that there is no proof for holding that the said borrowal was spent on the land for which agricultural income is not derived and that hence the interest thereof cannot be deducted under s. 5(e) of the Act. In other words, according to her, if the case squarely comes under s. 5(k) of the Act, no deduction can be claimed beyond the limits prescribed under s. 5(k) of the Act. She also relied on the decisions reported in CIT vs. Carborundum Universal Ltd. and Sakthi Estates vs. State of Tamil Nadu (1990) 185 ITR 600 (Mad).