1964 (4) TMI 14 - SUPREME COURT

Whether interest paid on monies borrowed for the purchase of the plantation is expenditure of the nature referred to in section 5(e) of the Act and should therefore be deducted in assessing the income of the plantation during the year ?

Held that:- it is impossible to dissociate the character of the assessee as the owner of the plantation and as a person working the plantation. The assessee had bought the plantation for working it as a plantation, i.e., for growing tea, coffee and rubber. In principle, no distinction between interest paid on capital borrowed for the acquisition of a plantation and interest paid on capital borrowed for the purpose of existing plantations : both are for the purposes of the plantation.

In the result, we agree with the High Court that the deduction claimed by the assessee fell within the scope of section 5(e) of the Act, and that the whole of ₹ 22,628-9-8 and not merely ₹ 1,570-10-7 should have been deducted from his assessable income. Appeal dismissed.