TMI Blog1986 (3) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ition, the provisions of section 28 of that Act were declared ultra vires, but the challenge to the rest of the provisions failed. Both the assessee as well as the State preferred appeals against the said judgment to the Supreme Court. In 1964, however, the said Ceiling on Agricultural Holdings Act was included in Schedule IX to the Constitution of India, with the result that the challenge to the provisions of the said Act came to an end. On May 10, 1965, certain terms of the agreement were entered into between the assessee and the State of Maharashtra. Although the terms of the agreement recorded that an agreement incorporating the said terms would be executed between the parties under section 23(f) of the said Ceiling on Agricultural Holdings Act, it is common ground that no such agreement was executed but both the parties have acted on the terms of the agreement itself and have accepted the same as binding. Clause A(1) of the said terms runs as follows: " A(1) The companies will pay to the State Government within three months of the date of execution of an agreement under section 23(f) or before the 1st September, 1965, whichever is earlier : (a) a sum of Rs. 150 (i.e., Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade under section 8 and/or sub-section (9) of section 8 of the Maharashtra Agricultural Income-tax Act. The agricultural Income-tax Assessor disallowed the said claims along with some other claims made by the assessee. The assessee preferred an appeal to the Appellate Assistant Commissioner of Agricultural Income-tax. The Appellate Assistant Commissioner rejected the appeal of the assessee in so far as it related to the aforesaid claims. The assessee then preferred an appeal against the order of the Appellate Assistant Commissioner to the Sales Tax Tribunal. The said appeal was directed to be placed before Special Bench or a larger Bench of the Tribunal. The Special Bench of the Tribunal disallowed the said expenditure on the ground that the said expenditure was not admissible under section 8 or sub-section (9) of section 8 of the Maharashtra Agricultural Income-tax Act, 1962. From the said decision of the Tribunal, the following question has been posed to us for our determination: " Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in disallowing deduction of (i) Rs. 4,57,350 as licence fees, (ii) Rs. 2,71,325 as Government share of profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t submission urged by him was that the income received by the assessee was merely as an agent of the Government and the real income of the assessee was only that part of it which it was allowed to retain by the Government. In our view, Mr. Dwarkadas is not entitled to make this submission at all on the basis of the question raised. The question raised merely relates to the disallowing of certain deductions or allowances claimed by the assessee and there is nothing in the question to suggest that the contention of the assessee which was sought to be brought out in the question was that the assessee received the income as an agent of the Government of Maharashtra or that the only income of the assessee was that which it was allowed to retain. We may, moreover, point out that under the terms of the agreement which we have referred to earlier, there is nothing to suggest that the assessee received the income as an agent of the Government or that it utilised the sugarcane crop which it was allowed to harvest as an agent of the Government. The first submission of Mr. Dwarkadas must, therefore, be rejected. The second submission urged by Mr. Dwarkadas was that in respect of the amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see's accounting year was from October, 1, to September, 30, and it was for this accounting period that the assessee was being assessed to income-tax. The assessment in question was in respect of the previous year April 1, 1961, to March 31, 1962, for the assessment year April 1, 1962, to March 31, 1963, under the Maharashtra Agricultural Income-tax Act. The returns filed by the assessees comprised halves of two accounting periods, namely, the second half of the accounting year October 1, 1960, to September 30, 1961, and the first half of the accounting year October 1, 1961, to September 30, 1962. The assessees submitted before the Agricultural Income-tax Officer their profit and loss accounts for these two accounting years, namely, October 1, 1960, to September 30, 1961 and October 1, 1961, to September 30, 1962. In their assessment proceedings, the assessees contended that since their previous year was different from their accounting year and involved parts of two accounting years, the proper method of arriving at their agricultural income for the previous year taxable under the Act was to take the results arrived at in the profit and loss accounts and the statements filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation which is covered by sub-sections (6) and (7) of that section and apart from sub-section (9), every other sub-section speaks of the expenditure incurred in the previous year. The very wording of sub-section (9) would show that it too refers to the expenditure incurred in the previous year. That sub-section uses the expression 'any other expenditure'. Further, it refers to expenditure which is not in the nature of capital or personal expenditure, that is, it is revenue expenditure of a nature different from that specified in the earlier sub-sections which deal with revenue expenditure ...... Under the Act, however, they are entitled to claim a deduction only on the expenditure incurred in that half of their first accounting period as also of their second accounting period which falls within the previous year. " The Division Bench has thus held that for any, expenditure to be allowed as deductible expenditure under section 8 and particularly under sub-section (9) of section 8, the expenditure has to be incurred in the relevant previous year, that is, the amount claimed must be expended in the relevant previous year. In the present case, the amounts in question were paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what is more material, the payments allowed by way of deductions were actually made by the assessee on May 26, 1964, that is well before the close of the relevant previous year. Thus, this case is clearly distinguishable. Moreover, there is nothing in the judgment of the said case which would suggest that a payment made after the end of the relevant previous year could be allowed by way of deduction under section 8(9). In the result, the question referred to us must be answered in the affirmative and against the assessee. The question is answered accordingly. It was submitted by Mr. Dwarkadas that, in any event, the amounts claimed by the assessee as deductions as set out in the said question should be allowed as allowable deductions in the assessment for the year 1966-67, that is, for the relevant previous year ending March 31, 1966. We cannot go into this question in this reference. If it is open to the assessee to make such a claim as aforesaid in the proceedings pertaining to the assessment year 1966-67, the assessee will make the claim and the Tribunal shall determine the same in accordance with law. The assessee to pay to the State the costs of this reference. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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