1986 (3) TMI 20 - HC - Income Tax

Summary

Issues Involved:
1. Depreciation on agricultural implements.
2. Deductibility of expenses on guest houses, trucks, and cars.
3. Determination of the previous year for assessment purposes.

Detailed Analysis:

Issue 1: Depreciation on Agricultural Implements
Question: Whether the Tribunal was correct in holding that the opponents were entitled to claim depreciation on the cost price of their assets and not on the basis of the cost price less depreciation allowable under the Act?

Judgment: It is agreed between the parties that in view of the decision of this court in the case of Commr. of Agrl. IT v. Phalton Sugar Works Ltd. [1980] 121 ITR 920, question No. I must be answered in the affirmative and in favor of the assessee. Therefore, the Tribunal's decision to allow depreciation on the actual cost was upheld.

Issue 2: Deductibility of Expenses on Guest Houses, Trucks, and Cars
Question: Whether the Tribunal was correct in law in holding that the expenses on guest houses, trucks, and cars to the extent disallowed by the Income-tax Officer before fixing the common charge were admissible deductions under clause (b) of the proviso to section 9(1) of the Act?

Judgment: It was agreed between the parties that expenses considered personal by the Income-tax Officer cannot be allowed as deductions for computing income under the Maharashtra Agricultural Income-tax Act, 1962. Under section 9(1)(b) of the Act, common charges permissible under both the Agricultural Income-tax Act and the Indian Income-tax Act should be divided accordingly. Therefore, question No. 2 was answered in the affirmative, except for the personal expenses disallowed by the Income-tax Officer.

Issue 3: Determination of the Previous Year
Question: Whether the Tribunal was correct in law in holding that for the purpose of assessments, the previous years would be the years ending on 31st March and not the relevant accounting years ending on 30th June?

Judgment: The financial year has not been defined in the Maharashtra Agricultural Income-tax Act, but under section 21 of the General Clauses Act, it means the year commencing on the 1st day of April. The Tribunal found that the assessees had not opted for the co-operative year as their previous year. The Tribunal concluded that the assessees had adopted the financial year as their previous year, as evidenced by their letter to the Agricultural Income-tax Officer and the filing of returns based on the financial year. Therefore, question No. 3 was answered in the affirmative and in favor of the assessees.

Conclusion
The judgment addressed three main issues related to agricultural income-tax assessments. The court upheld the Tribunal's decisions on all three issues, affirming the assessees' entitlement to claim depreciation on the cost price of assets, the deductibility of certain expenses, and the determination of the financial year as the previous year for assessment purposes. The applicants were ordered to pay the respondents' costs of the reference in one set.