1991 (3) TMI 10 - HC - Income Tax

Summary

Issues:
1. Disallowance of mess expenses
2. Disallowance of advertisement charges

Disallowed Mess Expenses:
The petitioner, a private limited company owning plantations, filed a return under the Tamil Nadu Agricultural Income-tax Act, 1955, for the assessment year 1979-80, claiming deductions for certain expenses. The assessing authority disallowed some items of expenses, which were partially allowed by the appellate authority and the Agricultural Income-tax Appellate Tribunal. The High Court focused on the disallowance of mess expenses amounting to Rs. 4,311. The Tribunal had restricted the deduction to Rs. 8,000, questioning the reasonableness of the claimed amount. The High Court found no basis for this restriction, emphasizing that the Tribunal accepted the principle of allowing mess expenses but failed to provide a rationale for the limitation. The Court noted previous years' allowances of mess expenses in full and found no grounds for doubting the correctness of the expenses. Consequently, the High Court set aside the disallowance and directed the entire claimed amount of Rs. 12,311 to be treated as a deduction from taxable income.

Disallowed Advertisement Charges:
Regarding the disallowed deduction of Rs. 9,292 for advertisement charges, the petitioner argued that it fell under section 5(e) of the Act, allowing deductions for expenditures laid out exclusively for the purpose of the land. However, the Tribunal found that the advertisement charges were mainly donations to various organizations, not connected with the agricultural income of the assessee. The High Court upheld the Tribunal's decision, stating that the claimed advertisement charges did not qualify as expenditures incurred wholly and exclusively for the purpose of the land as required by the Act. The Court emphasized that the analogy with deductions under the Income-tax Act was irrelevant in this context. Consequently, the High Court found no reason to interfere with the Tribunal's disallowance of the advertisement charges.

Conclusion:
The tax revision case partly succeeded concerning the disallowance of mess expenses, which was set aside, allowing the full claimed amount as a deduction. However, the grievance over the disallowance of advertisement charges failed to convince the High Court, and the disallowance was upheld. The Court made no order as to costs in this revision case.