SHAKER NAGARAJAN Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THE grievance of the assessees against the common order passed by the Tamil Nadu Agricultural Income-tax Appellate Tribunal is regarding the disallowance of several items of expenditure claimed by them as having been incurred wholly and exclusively for the purpose of the land from which the agricultural income was derived, for the assessment year 1982-83.

(2.) THE lands owned by the assessees are coffee plantations. THE income realised from, the sale of coffee is not in dispute, as the coffee was, during the relevant years, required to be delivered to the statutory body, Coffee Board and the income was received from the Coffee Board.

(3.) LEARNED counsel for the assessees contended that it was not open to the authorities to make an estimate of what in their view is the expenditure that could have been properly incurred, when the accounts had been filed before the authorities. It was submitted that the authorities were bound to accept the accounts unless it was found by them with regard to any particular item of expenditure or any voucher that the expenditure claimed was unreal, or was not incurred wholly and exclusively for the purpose of the land by the assessee. LEARNED counsel relied upon the decisions of the Supreme Court in the case of CIT v. Walchand and Co. Pvt. Ltd. and the case of J. K. Woollen Manufacturers v. CIT [1969] 72 ITR 612. The principle stated in the earlier case was reiterated in the latter case. The question involved in those cases was the legality of the disallowance of a part of the remuneration paid by the employer to an employee on the ground that higher remuneration was not warranted by the business, the reality of the payment not being in question. It was held by the apex court in CIT v. Walchand and Co. Pvt. Ltd. [1967] 65 ITR 381, that the reasonableness of an expenditure has to be adjudged from the point of view of the businessman and not of the revenue and that increased remuneration need not necessarily be regarded as justified only if there is corresponding increase in profit of the employer.