SAKTHI ESTATES Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) THESE revisions are directed by the assessee against the common order passed by the Tamil Nadu Agricultural Income -tax Appellate Tribunal, Madras, in respect of the levy of assessment for the years 1973 -74 to 1976 -77. The revision -petitioner is the assessee, namely, Messrs. Sakthi Estates, Pollachi. The abovesaid estate consisted of lands on which coffee, cardamom, etc., were grown. According to the assessee, only on a portion of the lands, there were mature plants from which income was actually derived. There were immature coffee plants and on some lands, new planting work was done which yielded no agricultural income during the years. The assessee claimed deduction of the interest on the loan borrowed in connection with the maintenance of the said estate. The question that arose for consideration before the Tribunal was whether deduction is to be given under section 5(k) or under section 5(e) of the Tamil Nadu Agricultural Income -tax Act, 1955. It was contended by the assessee, revision -petitioner herein, that section 5(k) of the Act applies only to the amount borrowed and actually spent on the land from which agricultural income is derived, and any interest other than this would be governed by section 5(e) of the Act, and as such, even in respect of establishment expenses, such portion incurred on land which actually yielded income during the accounting year has to be segregated from expenses incurred in respect of lands on which immature plants existed and the same procedure must be adopted in computing the agricultural income. The Tribunal, after considering the respective contentions of the assessee as well as the Department, remanded I. T. A. No. 144 of 1978 and in respect of the other three appeals, I. T. A. Nos. 20, 21 and 22 of 1978, they are partly allowed and partly remanded The grievance of the assessee is with respect to the observations in para 5 of the order, where it is stated :

(2.) ACCORDING to learned counsel for the petitioner, the said observation of the Tribunal is not correct and it was not the interpretation put forward on behalf of the assessee by learned counsel. On the other hand, the only contention put forward on behalf of the assessee was that only in cases where any interest is paid in the previous year on any amount borrowed and actually spent on the land from which the agricultural income is derived, deduction has to be allowed in accordance with section 5(k) of the Act and the remaining portion has to be dealt with under section 5(e) of the Act. Learned counsel also submitted that the Tribunal has not properly interpreted the distinction between sections 5(k) and 5(e) of the Act and erred in holding that the interest on monies borrowed for cultivation expenses have to be brought under section 5(k) of the Act no matter whether there was any mature or immature plant. It was also submitted that the Tribunal is not correct in saying that, in determining the expenditure incurred on the land from which the agricultural income is derived, it is not possible to make this dubious distinction between land which yielded some produce and the rest. .Though the assessee is not disputing the order of remand, the said finding of the Tribunal, according to learned counsel, will work great hardship, that it is against the very provisions, that the Tribunal has not properly appreciated the distinction between sections 5(e) and 5(k) of the Act and that it is only for the purpose of clarification that these revision -petitions are filed. In this connection, learned counsel drew our attention to the relevant provisions of sections 5(e) and 5(k) of the Tamil Nadu Agricultural Income. -tax Act, 1955, as well as the decision of this court in Puthutotam Estates (1943) Ltd. v. State of Tamil Nadu 1984 (148) ITR 341, 1984 (42) CTR 57, 1984 (2) TLR 1540. The scope of sections 5(e) and 5(k) of the Act had been dealt with by three Division Benches of this court. In State of Madras v. Thiru Arooran Sugars Ltd. 1965 (55) ITR 307 (Mad), it was observed (at p. 345 of 148 ITR)

(3.) IT is further held.