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TMI Blog1963 (8) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... months ended March 31, 1959. The questions referred are: "1. Whether expenditure laid out or expended for the cultivation, upkeep or maintenance of immature plants as mentioned in Explanation 2 of amended section 3 of the Agricultural Income-tax Act would take in any portion of the estate or overhead expenses met by the appellant? 2. If so, whether the Tribunal was justified in striking down ₹ 4,915 from the taxable income being proportionate estate or overhead expenses disallowed and added back by the department?" The assessee returned a net taxable income of ₹ 10,547.67. That amount was arrived at after deducting a sum of ₹ 25,548.86 from the gross receipts of the accounting period. Out of the said sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onate general charges included for immature area are admissible expenditure under the provisions of the Act. What the Tribunal has actually found is that none of these items of expenses amounting to ₹ 4,915 relates directly to the cultivation, upkeep or maintenance of the immature plants. Under Explanation 2 to amended section 5 of the Agricultural Income-tax Act, the direct expenses met for cultivation, upkeep and maintenance of immature plants alone will have to be disallowed." Section 5 of the Agricultural Income-tax Act, 1950, as it stood prior to the Agricultural Income-tax (Amendment) Act, 1961, came up for consideration in this court in Travancore Rubber & Tea Co. Ltd. v. Commissioner of Agricultural Income-tax [1959] 37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was reversed by the Supreme Court in Travancore Rubber & Tea Co. Ltd. v. Commissioner of Agricultural Income-tax, Kerala [1961] 41 I.T.R. 751; [1961] 3 S.C.R. 279. The purpose of the Agricultural Income-tax (Amendment) Act, 1961, was to get over the effect of the Supreme Court decision and restore the position to that under the decision of this court in Travancore Rubber & Tea Co. Ltd. v. Commissioner of Agricultural Income-tax [1959] 37 I.T.R. 549, 551. In order to effectuate that object, a new explanation. Explanation 2, was added to section 5 with effect from January 1, 1951, the date on which the parent Act came into force. That Explanation reads as follows: "Nothing contained in this section shall be deemed to entitle a person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Agricultural Income-tax Act, the Explanation to section 2 of that Act must be kept in mind and the income must be taken to be as defined for the purposes of the enactments relating to Indian income-tax"; and in the latter [1963] 48 I.T.R. (S.C.) 102, 106: "The question of the applicability of Explanation 2 to section 5 to the agricultural income derived from tea plantations was before us for determination in Karimtharuvi Tea Estates Ltd. v. State of Kerala [1963] 48 I.T.R. (S.C.) 83, 92. We have held in that case that Explanation 2 to section 5 does not apply to the agricultural income from tea plantations. It was argued that if such be the view of this court, the Explanation would bring about discrimination between agric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainly connected with the cultivation, upkeep or maintenance of the immature plants. It will come within the Explanation and will not be admissible for deduction. The Tribunal has come to the conclusion that the disallowance of ₹ 4,915 was not proper and there is no material before us--even the sheet No. 31 mentioned by the Tribunal is not part of the paper-book--to differ from its conclusion even if we have the power and the inclination to do so on this question of fact. What the department has done is to divide the total of the estate or overhead expenses by the number of acres comprising the estate and then multiply the expenses per acre by the number of acres covered by the immature plants in the estate of the assessee. This is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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