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TMI Blog1986 (7) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 is not agricultural income for the assessment year 1964-65 ? " The assesses, Kerala Estate Mooriad Chalapuram, is a broad description of seven persons possessing the status of tenants-in-common under the Kerala Agricultural Income-tax Act, 1950. They owned an estate from which they derived agricultural income liable to be assessed in the year 1963-64. The assesses followed the mercantile system of accounting. In the assessment proceedings for the year 1963-64, the assesses claimed deduction of Rs. 33,747.09 from their agricultural income on the ground that it was payable towards interest on a loan of Rs. 4,00,000 taken by them from M/s. Associated Planters Ltd., Calicut. The deduction was allowed. During the accounting period relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssesses. The Kerala Agricultural Income-tax Act, 1950, provides for the levy of tax on agricultural income in the State of Kerala. Section 3 of the Act provides that agricultural income shall be charged for each financial year on the total agricultural income of the previous year of every person at the rates specified in the Schedule. Section 4 defines what " total agricultural income " is, and section 5 details the deductions to be made in computing the agricultural income. Clauses (e), (g), (h) and (i) of section 5 refer to interest paid by an assessee in different kinds of cases. The interest in all these cases has to be deducted from the agricultural income of a person before the levy is imposed. It is not disputed that the interest al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est pursuant to section 5 of the Act. It was a deduction made permissible by the Act. To be regarded as taxable in the hands of the assesses, the amount which was the subject of remission must be capable of being described as agricultural income. As the High Court has observed in the present case " what was returned to the assessee has nothing to do with the activities of the assessee, it does not arise from business nor does it arise from agricultural operations when the assessee is an agriculturist ". In order to eliminate such a controversy in cases falling under the Indian Income-tax Act, 1922, sub-section (2A) was added in section 10 of that Act, whereby a receipt such as this was expressly made liable to tax by legal fiction as profi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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