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2017 (12) TMI 1822 - AT - Income TaxDeduction u/s 43B - agricultural income tax paid by the assessee during the assessment years concerned - AO held that section 43B(a) will not have application since agricultural income tax is not a tax “otherwise allowable” under the Income-tax Act - HELD THAT:- Admittedly, the agricultural income is exempt from Central Income tax by virtue of provisions of section 10(1) of the Income-tax Act. When agricultural income itself is exempt from the purview of Central Income tax, there is no reason why a payment made out of agricultural income (already exempt) should be allowed as a deduction in computing the business income under the Central Income-tax Act. Section 43B states that “a deduction otherwise allowable under this Act” shall alone be allowed as a deduction u/s 43B(a). Since the agricultural income tax is not tax “otherwise allowable” under the Income-tax Act, payment of agricultural income tax in the respective assessment years on payment basis cannot be allowed as a deduction u/s 43B(a). DR as well as the AR was unable to enlighten us what has happened subsequent to the remand by the Tribunal in assessee’s own case in assessment years 1997-98, 1998-99 and 1999-2000. For our reasoning in aforesaid paragraph we hold that the agricultural income being exempt from taxation under the Central Income-tax, the agricultural income tax paid by the assessee cannot be allowed as a deduction under the Central Incometax. Therefore, the order of the CIT(A) on this issue is reversed.
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