1985 (11) TMI 52 - HC - Income Tax

Summary

Issues:
1. Disallowance of expenditure for levelling of football ground and tractor charges.
2. Allowance of expenses for cash in transit insurance and cash in safe insurance under section 5(j) of the Kerala Agricultural Income-tax Act, 1950.

The judgment addressed two main issues referred by the Agricultural Income-tax Appellate Tribunal. The first issue involved the disallowance of expenses for levelling a football ground and tractor charges, claimed by the assessee for deriving agricultural income. The Income-tax Officer and appellate authorities had rejected the claim, leading to the reference. The assessee argued that the expenditure for levelling the ground was allowable under section 5(j) of the Kerala Agricultural Income-tax Act, 1950, citing a Bombay High Court decision. However, the court differentiated between section 37(1) of the Income-tax Act, 1961, and section 5(j) of the Kerala Act, emphasizing that the expenditure must be wholly and exclusively for deriving agricultural income. The court concluded that the levelling expenses for a football ground did not meet this criterion and upheld the disallowance, ruling in favor of the Revenue.

The second issue involved the allowance of expenses related to cash in transit insurance and cash in safe insurance under section 5(j) of the Kerala Agricultural Income-tax Act, 1950. The Tribunal had allowed these expenses, and the Revenue challenged this decision. The court referred to a previous decision and ruled in favor of the assessee, stating that the expenses were deductible under section 5(j). The court directed the parties to bear their respective costs and ordered the judgment to be forwarded to the Agricultural Income-tax Appellate Tribunal, Additional Bench, Kozhikode for further action.