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Interpretation of Sec. 10(2)(ix) of the Burma Income-Tax Act regarding deduction of expenditure for a business comprising agricultural and other receipts. Analysis: The judgment pertains to a reference under Sec. 66(2) of the Burma Income-Tax Act, where the main issue was the entitlement of an assessee, having a business with agricultural and other receipts, to deduct all expenditure, including that for realizing agricultural receipts, under Sec. 10(2)(ix) of the Act. The assessee, a Hindu undivided family business, engaged in Chettyar banking business in Burma, leased agricultural land to tenants and received rents as part of their profits. The Income-Tax Officer disallowed a portion of the expenditure claimed by the assessee, leading to an appeal to the Assistant Commissioner of Income-Tax. The core question was whether income-tax should be payable only on taxable receipts less than the gross expenditure incurred, including the non-taxable agricultural income. The court held that only the expenditure attributable to the taxable part of the business could be deducted under Sec. 10(2)(ix). The judgment extensively discussed the relevant provisions of the Income-tax Act, emphasizing Sec. 10(2)(ix) which allows deduction of expenditure incurred solely for earning profits or gains. Reference was made to a Madras case regarding a similar business structure, where the court's decision on the applicability of clause (ix) was briefly mentioned. The court disagreed with the Madras decision's interpretation and highlighted the need to analyze the provisions of the Burma Income-Tax Act independently without relying on English decisions due to significant differences in the tax schemes. Further, the judgment delved into the definition of agricultural income under the Act and the exclusion of agricultural income from the scope of the Act, as established by previous judicial decisions. The court clarified that the profits or gains of a business do not include agricultural income, and therefore, the deduction under Sec. 10(2)(ix) cannot be applied to expenses related to earning agricultural income. The court rejected the argument that Sec. 10 should be interpreted broadly to include all kinds of profits, emphasizing the specific exclusion of agricultural income. In conclusion, the court answered the reference in the negative, affirming that the assessee was not entitled to deduct expenses related to agricultural income under Sec. 10(2)(ix). The Commissioner of Income-tax was awarded costs for the reference. The judgment was a unanimous decision by the judges, affirming the interpretation of the relevant provisions of the Burma Income-Tax Act in the context of business income comprising agricultural and other receipts.
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