TMI Blog2000 (5) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... ner found that the income-tax authority disallowed the claim of deduction to the tune of Rs. 1,07,295 and Rs. 3,75,052 for the assessment years 1979-80 and 1980-81, respectively, under the heads entertainment perquisites, advertisement and transit flat expenses, 60 per cent. of which, amounting to Rs. 64,377 and Rs. 2,25,031 for the assessment year 1979-80 and 1980-81, respectively, being claimed by the appellant under section 8(2) of the State Act and rule 2(2) of the State Rules. The appellate authority in conformity with the earlier decision of the Assam Board of Revenue in Case No. 2-4/AIT in respect of the same appellant, set aside the assessment order and remanded back the matter to the Agricultural Income-tax Officer, Assam, to make reassessment in conformity with the directions set out in the judgment and the order of the appellate order dated January 31, 1992. The appellate authority/Assistant Commissioner of Taxes (Appeals) disallowed the deduction of entertainment, perquisites and advertisement expenses. The appellate authority in remanding the matter, adhered to the observations made by the Revenue Board in the case mentioned above wherein the Revenue Board noted : "T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard in deciding the appeals was right in relying solely on the provisions of section 8(2)(f)(vii) of the Assam Agricultural Income-tax Act [as it stood prior to its amendment by the Assam Taxation Laws (Third Amendment) Act, 1989], without considering the implication of the second proviso to section 8(2) of the said Act and the provisions of rule 5 of the Assam Agricultural Income-tax Rules, 1939 ? (2) On the facts and in the circumstances of the cases whether the Board was right in holding that sixty per cent. of the expenses disallowed in computing hundred per cent. of the composite income from cultivation, manufacture and sale of tea for the purposes of the Income-tax Act, 1961, would not be deductible from sixty per cent. of the composite income from tea business as determined under the Income-tax Act, 1961, as such sixty per cent. of such composite income could not be said to be agricultural income ? (3) Whether the Board was right in distinguishing sixty per cent. of income derived from cultivation, manufacture and sale of tea from agricultural income ?" Hence, this reference. Mr. R. Gogoi, learned senior counsel appearing on behalf of the applicant-company, assisted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be made in respect of the amount of any subsidy which, under the provisions of clause (30) of section 10, is not included in the total income. Again the Explanation to section 2(a)(2) of the Act of 1939, provides that "agricultural income derived from such land by the cultivation of tea" means that portion of the income derived from the cultivation, manufacture and sale of tea as is defined to be agricultural income for the purposes of the enactments relating to Indian income-tax. "Total agricultural income" is defined in section 2(p) of the Act of 1939, as the aggregate of amounts of agricultural income referred to in clause (a) of section 2 and determined in the manner laid down in or under the said Act of 1939. Chapter II of the Act of 1939, contains the scheme of charge of agricultural income-tax. Section 3 is the charging section. Section 4 of the Act of 1939, speaks about the exemptions from assessment. Section 6 sets out the limit of taxable income and the rate of tax, and determination of agricultural income after making certain deductions, is set out in section 7 of the Act of 1939. Under section 8 of the Act of 1939, the agricultural income as mentioned in sub-clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act and left unassessed as being agricultural, shall be assessed under this Act after allowing such deductions under the Act and the rules made thereunder, so far as they have not been allowed under the Indian Income-tax Act in computing the net income from the entire operation : Provided that the computation made by the Income-tax Officer shall be ordinarily accepted by the Assam Agricultural Income-tax Officer who may, for his satisfaction under section 20 of the Assam Agricultural Income-tax Act, obtain further details from the assessee or from the Indian Income-tax Officer, but shall not without the previous sanction of the Deputy Commissioner of Taxes or when there is no Deputy Commissioner of Taxes, the Assistant Commissioner of Taxes empowered by the Commissioner of Taxes in this behalf require under the proviso to section 49 the production of account books already examined by the Indian Income-tax Officer for determining the agricultural income from tea grown and manufactured in Assam or refuse to accept the computation of the Indian Income-tax Officer : (1) The Act applies to income from sale of tea grown and manufactured in Assam irrespective of whether the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome so computed less the allowable deductions as agricultural income taxable under the State Act. Under the State Act, expenditure (not being in the nature of capital expenditure) undertaken or expended wholly and exclusively for the purpose of earning or deriving agricultural income after providing for allowable deduction by the income-tax authority in making the assessment, the net amount of the agricultural income is to be determined. This court in George Williamson [1997] 223 ITR 468, held that the expenditure incurred for the purpose of earning agricultural income after giving allowable deductions by the Income-tax Officer while making the assessment, whatever amount is left out of the genuine expenses are to be deducted in accordance with law. The court held that the Act as well as the Rules did not specify any methodology for ascertaining physically the real amount spent on agricultural activities. Mr. D. N. Baruah J., speaking on behalf of the court reflecting on the statutory scheme, observed : "The Legislature thought it fit to prescribe the percentage for determining the income both agriculture and business. It is the legislative wisdom not to prescribe any percentage fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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