STATE OF TAMIL NADU Vs. PANCHARA ESTATES LIMITED

JUDGEMENT

(1.) THE State has come up in revision against the order of the Agricultural Income-tax Appellate Tribunal which has allowed the assessee to deduct the amount of interest paid from the interest received by it during the year 1981-82 even before considering the assessee's entitlement to the amount of interest that it can properly claim as deduction under section 5(k) of the Tamil Nadu Agricultural Income-tax Act, 1955.

(2.) THE Agricultural Income-tax Officer had rightly observed that the income received by way of interest should have been added to the total income and the amount of interest paid only claimed as deduction to the extent permissible under law. THE assessee had reported the receipt of Rs. 1,35,908 as interest received by it on investments and loans and a sum of Rs. 2,09,811.13 as interest paid. While calculating its net expenditure, it set off the interest, deducted the total amount of the interest received from the total expenditure including the amount of interest paid and claimed a sum of Rs. 4,46,202.02 as the net expenditure. In this process, the assessee sought to obtain for itself the benefit of the deduction of the entire amount paid as interest as a deduction.

(3.) WE, therefore, set aside the order of the Tribunal and allow the revision petition. No costs.