Madras High Court
Sakthi Estates vs State Of Tamilnadu on 21 August, 1995
Equivalent citations: [1996]219ITR589(MAD)
JUDGMENT Abdul Hadi, J.
1. This tax case revision is filed by the assessee under s. 54 of the Tamil Nadu Agrl. IT Act, 1955, and the question is whether the sum of Rs. 5,61,542.50 paid as interest on loan borrowed by the assessee is allowable as deduction in computing the total agricultural income under s. 5(e) of the Tamil Nadu Agricultural IT Act (hereinafter referred to as "the Act") as contended by the assessee. The Tribunal has upheld the disallowance of the said sum by both the lower authorities, on the ground that the said borrowal would fall under s. 5(k) of the Act and the said interest amount is beyond the limit prescribed under the said s. 5(k) of the Act.
2. The argument of learned counsel for the assessee/petitioner is that the relevant borrowal in respect of the abovesaid interest amount is only spent on the land from which agricultural income is not derived and hence, s. 5(e) is attracted. But learned counsel for the Revenue submits that there is no proof for holding that the said borrowal was spent on the land for which agricultural income is not derived and that hence the interest thereof cannot be deducted under s. 5(e) of the Act. In other words, according to her, if the case squarely comes under s. 5(k) of the Act, no deduction can be claimed beyond the limits prescribed under s. 5(k) of the Act. She also relied on the decisions reported in CIT vs. Carborundum Universal Ltd. and Sakthi Estates vs. State of Tamil Nadu (1990) 185 ITR 600 (Mad).
3. We have considered the rival submissions. There is no dispute regarding the law to be applied since that is made clear in the abovesaid decisions in CIT vs. Carborundum Universal Ltd. (supra) and Sakthi Estates vs. State of Tamil Nadu (Mad)(supra). But all that learned counsel for the respondent submits is that there is no definite proof that the money borrowed has been spent on the land from which agricultural income is not derived. No doubt in this regard learned counsel for the assessee points out that the Tribunal has held as follows :
"In this case the expenditure towards interest is mostly for maintenance of the estate, viz., running of the estate."
4. But from the abovesaid passage, it is not clear whether the money has been spent on the maintenance of the land from which agricultural income is not derived. Further, the abovesaid passage only says that the money is spent "mostly" for maintenance. The use of the word "mostly" is also vague. So, necessarily the matter has to be remanded to the assessing authority and it is open to the assessee to furnish necessary proof regarding the abovesaid question.
5. In the result, the orders of all the three authorities below are set aside and the matter is remanded to the assessing authority for fresh disposal in the light of the two decisions referred to above and the tax case revision is disposed of accordingly.