2002 (12) TMI 26 - HC - Income Tax

Disallowance of the expenditure incurred under livestock maintenance, rejection of claim for allowances of common expenses incurred for the head office and disallowance of managerial remuneration expenditure - We are of the view that there is no irregularity or infirmity as to the finding arrived at by the authorities below in respect of the disallowance of abovesaid three expenses as claimed by the petitioner.

Summary

Issues involved:
1. Disallowance of livestock maintenance expenses.
2. Disallowance of common expenses related to staff salaries.
3. Disallowance of managerial remuneration.

I. Livestock expenses in a sum of Rs. 53,373:
The petitioner claimed expenses for livestock maintenance, arguing it was essential for obtaining natural manure for crops and that the livestock's milk was used in the workers' canteen. However, authorities found the natural manure was not utilized for rubber crops and the milk was used for commercial purposes, not directly related to agricultural income. The court upheld the disallowance of these expenses, stating they lacked a direct connection to agricultural income.

II. Common expenses in a sum of Rs. 14,37,274:
The petitioner contested the disallowance of common expenses related to staff salaries, claiming the entire amount should be allowed due to no income from an investment company. The court disagreed, citing rule 9 of the Tamil Nadu Agricultural Income-tax Rules, which mandates allocation of expenses based on income assessable to agricultural and central income tax. As the petitioner was only engaged in rubber plantation, not tea or coffee, the rule did not apply. The court upheld the apportionment of expenses by authorities, finding no fault in their decision.

III. Managerial remuneration Rs. 1,05,000:
The petitioner sought to claim managerial remuneration as a deduction, but authorities disallowed a portion, stating it lacked relevance to agriculture. The court confirmed this decision, noting the amount was actually commission paid to directors, not directly related to agricultural activities. The court upheld the lower authorities' findings on this matter as well.

In conclusion, the court found no irregularity in the decisions made by the authorities regarding the disallowance of the above expenses claimed by the petitioner. The revision was dismissed accordingly.