GLENBURN ESTATE LIMITED Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) IN this revision the assessee has come up with the contention that any amount of interest paid on the outstanding borrowings is to be deducted from the agricultural income as an expenditure laid out or expended wholly W exclusively for the purpose of the land under section 5(e) of the Tamil Nadu Agricultural INcome-tax Act, 1955. The assessment year in question is 1979-80. The amount claimed as deduction on that ground was Rs. 3,56,891.46. The Assistant Commissioner allocated this interest to the purpose referred to in sections 5(k) and 5(e) of the Act. He allowed in accordance with the second proviso under section 5(k) of the Act after calculating nine per cent. of 25 per cent. of the agricultural income for, the year, the income for the year being Rs. 14,08,573. The Assessing Officer had allowed that sum and the Assistant Commissioner, on Appeal, affirmed it. The Assistant Commissioner also allowed a sum of Rs. 1,78,882.02 as interest under section 5(e) of the Act. He arrived at that figure of Rs. 1,78,882 after apportioning the expenditure for the year of assessment, for the purposes specified under sections 5(e) and 5(k). He found that this sum of Rs. 1,78,882 represents the interest paid on the borrowings falling outside section 5(k) and within the ambit of section 5(e). He, therefore, allowed, the appeal regarding the sum of Rs. 1,78,882 which sum had been disallowed by the Assessing Officer. The disallowance of a part of the amount under section 5(k) of the Act was on account of the ceiling imposed by the proviso to that section.

(2.) THE Tribunal has affirmed the order of the Assistant Commissioner. THE Tribunal, in the course of its order, noted that the borrowings in respect of which the interest liability had been incurred were made in the year 1972-73. It noted the submission made for the assessee before the Tribunal as under :

(3.) THE assessing authority had of necessity to adopt a workable method for determining the interest paid on the outstanding loan allowable as a deduction and allocating the same under sections 5(k) and 5(e), as the assessee did not furnish all the necessary particulars regarding the manner in which the moneys had been expended in the earlier years from out of the loans still outstanding. THE proportion in which expenditure was incurred in the previous year has therefore been adopted as the basis for allocating the amount of interest to be allowed as a deduction, under sections 5(e) and 5(k) even though the borrowings were in the earlier years. It is not open to an assessee to obtain a larger benefit by merely asserting that the Assessing Officer should allow his claim, without furnishing all the relevant information. Since the particulars required to be furnished were not furnished, it was open to the authority to adopt the method which was not unfair or illegal. We are satisfied that the method adopted cannot be regarded as violative of any provision of law and the method adopted is fair.