Section 5 in Karnataka Agricultural Income-Tax Act, 1957
5. Computation of agricultural Income.
- [(1)] [Re-numbered by Act 29 of 1976 w.e.f.1.4.1975] The agricultural income of a person shall be computed after making the following deductions, namely: -(a)any sums paid in the previous year on account of, -(i)land revenue, local rates and cesses and municipal taxes in respect of the land from which the agricultural income is derived; and(ii)any excise duty or tax as may be prescribed in respect of the agricultural produce from such land;(b)any rent paid in the previous year to the landlord, or superior landlord as the case may be, in respect of the land from which the agricultural income is derived;(c)any expenses incurred in the previous year on the maintenance of any irrigation or protective work constructed for the benefit of the land from which the agricultural income is derived;(d)any expenses incurred in the previous year, on repairs, in respect of any capital asset which was purchased or constructed for the benefit of the land from which the agricultural income is derived;(e)in respect of depreciation of buildings, machinery, plant, fencing materials, hose pipes and furniture which are the property of the assessee and which are required for the purpose of deriving the agricultural income, a sum equivalent to such percentage on the written down value thereof as may in any case or class of cases be prescribed and where the buildings have been newly erected, or the machinery or plant being new has been installed, a further sum subject to such conditions as may be prescribed:Provided that, -(1)the prescribed particulars have been duly furnished;(2)where full effect cannot be given to any such allowance in any year owing to there being no agricultural income chargeable for that year, or owing to the agricultural income chargeable being less than the allowance, then subject to the provisions of the second proviso to section 15, the allowance or part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance or depreciation for the following year and deemed to be part of that allowance, or if there is no such allowance for that year, be deemed to be the allowance for the next year, and so on for succeeding years; and(3)the aggregate of all such allowances made under this Act shall, in no case, exceed the original cost to the assessee of the buildings, machinery, plant, or furniture, as the case may be;[Explanation. - For the purpose of this clause the property acquired by the assessee on hire purchase basis shall be deemed to be the property of the assessee;] [Inserted by Act 23 of 1985 w.e.f.1.4.1985](f)in respect of any such building, machinery or plant which has been sold or discarded or demolished or destroyed, the amount by which the written down value thereof exceeds the amount for which the building, machinery or plant, as the case may be, is actually sold for its scrap value:Provided that such amount is actually written off in the books of the assessee:Provided further that where the amount for which any such building, machinery or plant is sold, whether during the continuance of the agricultural operations or after the cessation thereof, exceeds the written down value, so much of the excess as does not 20 exceed the difference between the original cost and the written down value shall be deemed to be profits of the previous year in which the sale took place:Provided further that for the purposes of this clause, the original cost of a building, the written down value of which is determined in accordance with the Explanation to this section, shall be deemed to be the written down value so determined as at the date of its being brought into use for the purposes of deriving the agricultural income;(g)any interest paid in the previous year on any amount borrowed and actually spent on any capital expenditure incurred for the benefit of the land from which the agricultural income is derived;[Provided that any interest paid in the previous year on any amount borrowed and actually spent on any capital expenditure of purchase of motor car,-(a)in case of an assessee where the total extent of land under plantation crop is less than fifty acres, such interest shall be restricted to purchase of one motor car; and(b)in case of other assessees, to purchase of two motor cars.](h)where the land from which the agricultural income is derived is subject to a mortgage or other capital charge, any interest paid in the previous year in respect of such mortgage or charge;(i)any interest paid in the previous year on any debt, whether secured or not, incurred for the purpose of acquiring the land from which the agricultural income is derived:[Provided that the interest allowable under clauses (g), (h) and (i) shall be the actual interest paid on such loans or the amount calculated at the rate of interest charged by the scheduled banks on such loans whichever is less;] [Substituted by Act 23 of 1985 w.e.f.1.4.1985](j)any interest paid in the previous year on any amount borrowed and actually spent on the land on which the agricultural income is derived:Provided that the need for borrowing was bona fide having regard to assets of the assessee at the time:[Provided further that the interest allowable under this clause shall be the actual interest paid on such loan or the amount calculated at the rate of interest charged by the scheduled banks on such loan whichever is less.] [Substituted by Act 23 of 1985 w.e.f.1.4.1985](k)any expenditure (not being in the nature of capital expenditure) laid out or expended in the previous year wholly and exclusively for the purpose of deriving the agricultural income:[Provided that the following amounts shall not be deemed to be expenditure laid out or expended for the purpose of deriving the agricultural income, -(i)in the case of any firm, any payment of interest, salary, bonus, commission or remuneration made by the firm to any partner of the firm;(ii)in the case of any company, any expenditure which results directly or indirectly in the provision of any remuneration or benefit or amenity to a director or to a person who has a substantial interest in the company or to a relative of the director or of such person, as the case may be, if in the opinion of the [Assistant Commissioner of Agricultural Income-tax] any such expenditure is excessive or unreasonable having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom;](iii)[ any sum paid on account of wealth tax under the Wealth Tax Act, 1957 (Central Act XXVII of 1957);] [Inserted by Act 14 of 1983 w.e.f.1.4.1964][Explanation. - For the removal of doubts it is hereby declared that deductions under this clause shall not include deductions specifically provided for or allowed under other clauses of this section or rules made under this section.] [Inserted by Act 23 of 1985 w.e.f.1.10.1957](l)such other deductions as may be prescribed generally or in particular cases;(m)in the case of agricultural income under the head rent or revenue derived from land referred to in sub-clause (1) of clause (a) of section 2, -(i)any expenses actually incurred in the previous year in the collection of agricultural income;(ii)any expenses incurred in the previous year on repairs in respect of any capital asset used in connection with the collection of rents due in respect of the land from which the agricultural income is derived;(n)in the case of agricultural income referred to in sub-clause (2) of clause (a) of section 2, -(i)the expenses other than capital expenditure incurred in the previous year of raising the crop from which the agricultural income is derived and of transporting such crop to market, including the maintenance of agricultural implements and cattle required for such cultivation and transport or both;(ii)the cost incurred in the previous year in the purchase or replacement of cattle or implements, which are necessary for cultivation, to such extent as may be prescribed, less the amount realised by sale of the cattle or implements replaced or their estimated value;(iii)any sum paid in the previous year in order to effect an insurance against loss or damage of crops or property from which the agricultural income is derived:Provided that any amount received in respect of such insurance in any year shall be deemed to be agricultural income for the purposes of this Act, and shall be liable to agricultural income-tax after deducting the portion thereof, if any, which has been assessed to income-tax under the [Income-tax Act, 1961 (Central Act 43 of 1961)] [Substituted by Act 29 of 1976 w.e.f.1.4.1975];(iv)any expenses incurred in the previous year on the maintenance of any capital asset if such maintenance is required for the purpose of deriving the agricultural income:Provided that no deduction shall be made under this section if it has already been made in the assessment under the [Income-tax Act, 1961 (Central Act 43 of 1961)] [Substituted by Act 29 of 1976 w.e.f.1.4.1975].[Explanation. - For the purposes of this sub-section 'building' includes all structures constructed with a view to provide amenities to workers as defined in the Plantations Labour Act, 1951 (Central Act 69 of 1951) employed in plantations and for the purpose of deriving the agricultural income; 'relative' in relation to an individual means the husband, wife, brother or sister or any lineal ascendant or descendant, of that individual and "written down value" means, -(i)in the case of assets acquired in the previous year the actual cost to the assessee; and(ii)in the case of assets acquired before the previous year, the actual cost to the assessee less such sum as may be prescribed.](2)[ (a) Nothing contained in sub-section (1) shall be deemed to entitle a person deriving agricultural income, to the deduction of any expenditure laid out or expended, for the cultivation, upkeep or maintenance of immature plants (other than tea plants) from which no agricultural income has been derived during the previous year.(b)Notwithstanding anything contained in clause (a), -(i)if in any year expenditure is incurred by a person exclusively on new cultivation of land for growing [x x x] cardamom, [x x x] [Omitted by Act 18 of 1994 w.e.f.1.4.1994] coffee, orange or rubber plants and also on maintenance of immature plants of [x x x] [Omitted by Act 18 of 1994 w.e.f.1.4.1994.] cardamom, [x x x] [Omitted by Act 18 of 1994 w.e.f.1.4.1994] coffee, orange or rubber, ten per cent of such expenditure may be deducted from the agricultural income of such person;(ii)if in any year expenditure is incurred by a person for replanting of cardamom, coffee, orange or rubber plants in any plantation [x x x] [2] such expenditure not exceeding the amount necessary for replanting, -(a)two and half per cent of the acreage of plantation held by the person concerned in the case of coffee or rubber plants;(b)one and two-thirds per cent of the acreage of [x x x] [2] plantation held by the person concerned in the case of [x x x] [2] orange plants; and(c)eight and one-third per cent of the acreage of plantation held by the person concerned in the case of cardamom plants, may be deducted from the agricultural income of such person:Provided that if the replanting expenditure allowance under item (ii) is not incurred in one year, the allowance for the year or years may be carried forward for a period of three years in the case of [x x x] [2] coffee, orange and rubber and one year in the case of cardamom, beyond the year of assessment:(iii)[ a person deriving agricultural income from land on which coffee is grown may, in lieu of the deductions referred to in items (i) and (ii), at his option exercised in writing, deduct from his agricultural income a sum of [nine hundred rupees for every standard ton of coffee produced by him] [Substituted by Act 23 of 1985 w.e.f.1.4.1985] subject to a maximum of fifteen percent of the [average total Agricultural income] [Substituted by Act 18 of 1994 w.e.f.1.4.1985] during the previous year and three years immediately preceding it towards expenditure for new cultivation, replanting and maintenance of immature plants and if the said expenditure is not incurred in that year the same may be carried forward for a period of five years beyond the year of assessment and any such 23 sum which is spent for a purpose other than those specified above or which remains unspent for five years shall be treated as income of the year succeeding the fifth year:Provided that subject to the conditions and restrictions specified in this clause, where the coffee produced and delivered by him to the Coffee Board is in excess of six hundred kilograms per acre, he may deduct from his agricultural income a sum of thirty rupees for every fifty kilograms of coffee produced and delivered to the Coffee Board:Provided further that the option once exercised shall be final and the said expenditure allowance shall be calculated on the same basis for purposes of future assessments:Provided also that if at any time during the said period of five years, there is a change of ownership of such land either by sale or otherwise, the amount referred to in item (iii) and remaining unspent on the date of such change of ownership shall be treated as income of the transferor for the year in which such change of ownership takes place.[Explanation I.] [Re-numbered by Act 18 of 1994 w.e.f.1.4.1994] - For the removal of doubts it is hereby declared that where deduction is allowed under this clause, no further deduction shall be allowed towards expenditure for filling the vacancies of diseased or dead plants in a coffee plantation.] [Inserted by Act 29 of 1976 w.e.f.1.4.1975]] [Substituted by Act 29 of 1976 w.e.f.1.4.1975][Explanation II. - For the purpose of item (iii) of this clause, "standard ton" coffee produced shall be arrived at in the following manner: -One standard ton of coffee is equal to(i)1,225 Kilograms of uncured Arabica Parchment,or(ii)1,904 Kilograms of uncured Arabica Cherry,or(iii)1,194 Kilograms of uncured Robusta Parchment,or(iv)1,962 Kilograms of uncured Robusta Cherryor(v)2,430 Kilograms of uncured Liberia Coffee."or(vi)2,373 Kilograms of uncured Excelsia Coffee.](3)[ (1) In respect of a machinery or plant specified by the State Government by Notification in the Official Gazette which is owned by the assessee and is wholly used for the purpose of deriving agricultural income by him, there shall be allowed a deduction, in respect of the previous year, in which the machinery or plant is first put to use of a sum by way of investment allowance equal to ten percent of the actual cost to the assessee of the machinery or plant:Provided that, -(a)the machinery or plant is a new machinery or plant acquired by the assessee;(b)the particulars specified in the notification by the State Government have been duly furnished by the assessee:Provided further that no deduction shall be allowed under this sub-section in respect of, -(a)any machinery or plant installed in any office premises or any residential accommodation including any accommodation in the nature of a Guest House;(b)any office appliances or road transport vehicles other than the tractors.(2)If the machinery or plant in respect of which investment allowance is made under clause (1) of this sub-section is sold or otherwise transferred by the assessee to any person at any time before the expiry of five years from the end of the previous year in which it was first put to use whether during the continuation of agricultural operation or after the cessation thereof, the investment allowance made in respect of such machinery or plant shall be treated as the income of the assessee for the previous year in which such machinery or plant is sold or otherwise transferred.] [Inserted by Act 23 of 1985 w.e.f.1.4.1985]
