TMI Blog2002 (1) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ding upkeep wages paid 1,00,811.00 (c) Cattlemen wages 39,071.88 (d) Security expenses for dogs 30,561.08 (e) Midday meal expenses 93,934.89 (f) Mess expenses 17,929.52 (g) Interest payments to bank 1,35,330.00 (h) -do- 15,081.07 (i) Hire purchase interest 15,420.41 (j) Printing and stationery 13,199.15 (k) -do.- 20,960.12 (l) Mess expenses 81,320.00 (m) Transit flat allowance 14,473.00 (n) Motor car expenses 17,161.60 (o) Subscription to professional bodies 5,301.00 ----------------------------------------------------------------------- Against the order of the Agricultural Income-tax Appellate Tribunal, this revision has been filed. Counsel for the petitioner herein submits that the Agricultural Income-tax Appellate Tribunal erred in sustaining the disallowance of payment mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these buildings are occupied by the estate manager and four assistant managers and regular employees are doing the job of cleaning of bungalow and cleaning of surrounding areas and they are maintaining the gardens and there is no necessity to incur this expenditure for upkeep of buildings. The Tribunal also found, "the Assistant Commissioner (AIT) has also found that the pay roll does not reflect the actual expenditure of the upkeep of the building. There is no proof with regard to the wages for upkeep of buildings." Hence, the disallowance was confirmed by the appellate authority. The above finding of this Appellate Tribunal can not be said to be incorrect in the absence of any proof of actual employment of workers for this specific purpose. Counsel contended that the payment to workers was properly vouched. Our attention was not drawn to any such vouchers in proof of payment of this amount and this court cannot go into such questions of fact. Therefore, confirmation of disallowance by the Appellate Tribunal cannot be said to be illegal. Hence, the confirmation of disallowance by the Appellate Tribunal cannot be set aside and hence it is confirmed. (c) Cattlemen wages: The lowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, those expenses will be included in the expenses, "for the purpose of the land". In view of this decision, the conclusion of the Tribunal that the expenses "has no nexus with agriculture" and the consequent disallowance is not legal. It is not the case of no evidence or proof for this expenditure. In the circumstances, the disallowance is liable to be set aside. Hence, the claim for security expenses for dogs is allowed. (e) Mid-day meal expenses: The petitioner-company claimed that it had spent Rs.93,934.89 for providing mid-day meals to the staff. The authorities disallowed this expenditure on the ground that the Plantation Labour Act does not provide for mid-day meals to the labourers and hence, it is not an admissible expenditure. The Appellate Tribunal observed that "providing mid-day meals to the labourers, is not at all connected with the agricultural activities", and therefore, disallowance was held to be proper. It is not the case of the authorities that there is no proof for the expenditure of providing midday meals for the employees. On the contrary, the Appellate Tribunal also found that "the appellant-company had provided mid-day meals to the estate workers." The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Tribunal cannot be said to be illegal. Hence, this disallowance is confirmed. (i) Hire-purchase agreements: The petitioner claimed Rs.15,420.41 towards interest paid on hire purchase agreement as revenue expenditure. The Income-tax Officer disallowed it holding that, "the things brought under hire purchase for which the interest claimed to have been paid, is capital in nature." The Tribunal held that it has not been established by the petitioner-company that the assets were purchased on hire purchase basis, in connection with the agricultural activities. Counsel for the petitioner contended that when the assets were purchased on hire purchase, interest had to be paid, as per the terms of the agreement; further, counsel submitted that the Appellate Tribunal instead of sustaining the entire disallowance of interest expenses ought to have remanded the issue for ascertaining as to what portion of interest payments should be considered under sections 5(e) and 5(k) of the Tamil Nadu Agricultural Income-tax Act. The appellate authority has found that the "company has not tried to establish the interest amount under section 5(e) or 5(k)" according to the ingredients stipulated therei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess expenses on the ground that the petitioner-company provided lunch to their staff and this expenditure was incurred by the petitioner-company during the course of and for the purpose of business and this expenditure has got nexus to the earning capacity of the company's business. But the authorities have disallowed 50 per cent. of the expenditure on the ground that the staff are paid wages. The Appellate Tribunal found no error in the order of the Assistant Commissioner of Agricultural Income-tax. Counsel for the petitioner contended that the factum of expenditure was not doubted and the petitioner incurred such expenditure in the normal course of agricultural activities. The disallowance of 50 per cent. expenditure was erroneous and contrary to law. The authorities have not doubted whether such expenditure was incurred. But, it had only disallowed on the ground that the staff are paid salaries and therefore, this expenditure was held "not allowable" in its entirety. Such an approach does not appear to be correct in the absence of any reason to doubt the expenditure of actual expenditure incurred. In view of the fact that neither the Agricultural Income-tax Officer, nor the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant-company claimed Rs.5,301 towards subscription to professional bodies. Subscription was paid to the Federation of Chambers of Commerce and Industry, Southern India Chamber of Commerce and Industry, All India Organisation of Employers and Diners' Club. The subscription paid to these bodies are not at all connected with the agricultural activities of the company. Therefore, this expenditure was disallowed. The Appellate Tribunal also found that the disallowance made is proper. Counsel contended that the expenditure incurred by the company is in its normal course of agricultural operation. The subscription paid to all these professional bodies was incurred on behalf of the company and the complete details were furnished relating to various bodies and no portion of the expenditure should have been disallowed. In support of his contention, counsel relied upon the decision in Goodricke Group Ltd. v. Asst. Commr. of Taxes (Appeals) [2000] 244 ITR 687, where the Gauhati High Court on the question whether expenditure incurred in respect of entertainment to be considered for deduction in computation of income-tax has held, "that the expenditure incurred by the assessee under entertainm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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