1991 (4) TMI 90 - HC - Income Tax

Summary

Issues Involved:

1. Apportionment of expenditure between non-agricultural and agricultural activities.
2. Disallowance of expenditure on salaries of estate guards for cashew tope.
3. Disallowance of salaries of agricultural farm supervisory staff.
4. Disallowance of direct wages paid to labourers.

Detailed Analysis:

1. Apportionment of Expenditure Between Non-Agricultural and Agricultural Activities:

The petitioner, Neyveli Lignite Corporation Ltd., claimed certain expenditures in the agricultural income-tax returns filed for various assessment years. The expenditures included pay and allowances of supervisory staff, direct wages paid to agricultural farm workers, and salaries of estate guards engaged for cashew tope. The returns were initially accepted by the Agricultural Income-tax Officer, but the Commissioner of Agricultural Income-tax, Madras, later revised the orders and directed re-examination of the claims. Upon reassessment, the expenditure was apportioned between agricultural and non-agricultural activities, and the assessee's claims were partially disallowed. The Tribunal and the Appellate Assistant Commissioner upheld the apportionment, noting that the staff, including security personnel, were not exclusively engaged in agricultural activities. The court found no fault with the apportionment, emphasizing that the assessee failed to produce evidence to show that the expenditure was solely for agricultural purposes.

2. Disallowance of Expenditure on Salaries of Estate Guards for Cashew Tope:

The petitioner contended that the expenditure on estate guards was essential to protect the estate and the trees. However, the authorities found that the guards were also involved in non-agricultural activities, such as guarding the township and industrial structures. The Tribunal accepted the findings of the Appellate Assistant Commissioner that part of the expenditure was related to non-agricultural activities. The court upheld this view, noting that no evidence was provided to show that the guards were exclusively employed for agricultural purposes.

3. Disallowance of Salaries of Agricultural Farm Supervisory Staff:

The petitioner claimed that the wages of the supervisory staff were incurred exclusively for agricultural activities. The authorities, however, found that the staff was not exclusively engaged in agricultural operations. The Tribunal and the Appellate Assistant Commissioner noted that no evidence was produced to show exclusive employment for agricultural purposes. The court agreed, stating that the assessee failed to prove that the expenditure was solely referable to earning agricultural income.

4. Disallowance of Direct Wages Paid to Labourers:

The petitioner argued that the wages paid to labourers were exclusively for agricultural activities. The authorities, however, found that the labourers were not exclusively engaged in agricultural operations. The Tribunal and the Appellate Assistant Commissioner observed that the assessee did not produce any material evidence to support its claim. The court upheld the apportionment, emphasizing that the assessee failed to discharge the onus of proving exclusive employment for agricultural activities.

Conclusion:

The court found that the assessee did not provide sufficient evidence to prove that the expenditures claimed were exclusively for agricultural activities. The apportionment of expenditure by the statutory authorities was deemed rational and logical. Consequently, all nine tax revision cases were dismissed, and the court did not interfere with the findings of the authorities regarding the apportionment of expenditure.