TMI Blog1980 (9) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... itself was a cultivator, grower or producer of the products as mentioned in s. 35C of the Act and the provision of the goods, services or facilities was by the assessee-company to the assessee-company itself. This view of the assessee was controverted by the departmental representative by urging that the agricultural development allowance stipulated in s. 35C would cover only that expenditure which had been incurred to provide goods, services or facilities to certain classes of persons, viz., cultivators, growers or producers in India, persons distinct from the assessee-company. In support of such view reference was made to the language used in cls. (a) and (b) of sub-s. (1) of s. 35C of the Act and also to the language used in the Explanation thereto. The Tribunal upheld the order of the AAC by observing as under: " A perusal of this provision shows that the following conditions must co-exist before the agricultural development allowance stipulated therein can be allowed: (1) The assessee should be a company. (2) The company must be utilising any product of agriculture, animal husbandry or dairy or poultry farming. Such product may be utilised by the assessee as raw materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to this court for its opinion : " Whether, on the facts and in the circumstances of the case, the assessee is entitled to agricultural development allowance of Rs. 3,16,855 under section 35C of the Income-tax Act, 1961, in its assessment for the accounting period relevant to the assessment year 1973-74 ? " Mr. Nirmal Mukherjee, learned counsel for the assessee, contends that for the purpose of claiming agricultural development allowance a person who is a cultivator, grower or producer of agricultural products in India need not be a person distinct from the company itself. He draws our attention to the order of the Tribunal at page 57 of the paper book. In para. 10 it is stated that in respect of the sugarcane unit, the claim of the assessee for allowing agricultural development allowance under s. 35C has been disallowed by the ITO on the ground that the condition laid down therein had not been fulfilled. Section 35C of the Act makes provision for agricultural development allowance. The AAC at page 58 of the paper book, while confirming the order of the ITO, observed as under: " The above provision shows that the allowance is available only to such company which is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the proposed amendments to the I.T. Act mentions about tax incentives for improving agricultural productivity and increasing supplementary food resources. Paragraph 50(2) lays down that a company which uses the products of agriculture, animal husbandry or dairy or poultry farming as raw material for their industry or process, such product is eligible for weighted deduction in the computation of its business profits with reference to expenditure incurred by the company in providing goods, services or facilities under specified heads to a cultivator, grower or producer of the products of agriculture, etc. Thus, according to Mr. Mukherjee, both ss. 35B and 35C were imported into the I.T. Act for giving a scope for market development allowance and agricultural development allowance, respectively. Next, Mr. Mukherjee refers to the decision of this court in the case of CIT v. Clive Insurance Co. Ltd. [1972] 85 ITR 531. At p. 577 of the report, their Lordships observed as under : " To us, however, it appears that section 49D which has been enacted for the purpose of granting relief to an assessee should be so construed as will serve the object and purpose of the said section and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be claimed by a company or a co-operative society engaged in the manufacture or processing of articles or things made out of or by using any product of agriculture animal husbandry, dairy or poultry farming. The expenditure may be incurred directly or through an approved body or institution. Thus, while concluding his arguments, Mr. Mukherjee points out that if the word " person " can be interpreted in two ways, the one that is in favour of the assessee should be accepted. In support of his contention, he relies on a decision of the Supreme Court in the case of CIT v. Naga Hills Tea Co. Ltd. [1973] 89 ITR 236. It is held therein that if a provision of taxing statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee has got to be accepted. We have already pointed out that there is no scope for interpretation of the section in two ways. Mr. B. K. Bagchi, learned advocate for the revenue, without disputing the law as enunciated by their Lordships in CIT v. Naga Hills Tea Co. Ltd. [1973] 89 ITR 236 (SC), contends that there is no scope for interpretation of s. 35C of the Act. With reference to s. 35C of the Act, he argues that a com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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