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TMI Blog2008 (1) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged in manufacture of centrifuged latex. Obviously, since the investment exceeds the income, it does not qualify for deduction. Therefore, even if our answer to the first question was in favour of the assessee, we do not think the assessee would have got benefit because as against the agricultural income computed at ₹ 39,67,570, the assessee has made investment of ₹ 68 lakhs which is not permissible under section 9(4) of the Act. Appeal dismissed. - - - - - Dated:- 22-1-2008 - JUDGEMENT C. N. Ramachandran Nair J.-This is a tax revision case filed under section 78 of the Kerala Agricultural Income-tax Act, 1991 (hereinafter called "the Act"), challenging the order of the Agricultural Income-tax Appellate Tribunal confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in the equity is Rs. 68 lakhs, whereas the income computed exclusive of deduction is Rs.39,67,570 which is not permissible under section 9(4) of the Act. The first appellate authority as well as the Tribunal concurred with the Assessing Officer and held that the industry in which investment is made does not qualify for deduction. Since this issue was decided against the assessee, the Tribunal did not consider the other ground on which disallowance was made. In order to appreciate the contentions raised, we have to refer to the relevant section which is extracted here under : "9. (4) In computing the total agricultural income of a company engaged in plantation business, which has invested any amount in the equity of a company registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nic Industrial Complex v. Deputy CST [2003] 130 STC 69 and the Full Bench decision of this court in Kurian Abraham P. Ltd. v. Asst. Commissioner [2004] 137 STC 237 and contended that centrifuged latex is a product and the industry engaged in the production of centrifuged latex from field latex is engaged in manufacture of a product. According to him, the manufacture of centrifuged latex from rubber latex is neither a plantation industry nor is an agricultural activity auxiliary to the plantation industry to bring it within the negative clause of section 9(4) of the Act and so much so, the claim is allowable. The Government pleader on the other hand contended that negative items in section 9(4) covers not only plantation industry, but any in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation purposes, etc. In other words, the petitioner' s investment is in a downstream industry of the produce of the petitioner' s plantation, i.e., field rubber latex. Therefore, after the amendment, the industry in which the petitioner made the investment squarely falls within the negative list. We are of the view that the amendment is only clarificatory because even before the amendment, industry engaged in agricultural activities auxiliary to the plantation industry does not qualify for exemption in respect of investment made in such industry. Agricultural activities auxiliary to the plantation industry is essentially processing of agricultural produce. Rubber latex which is the produce of the petitioner's plantation is a highly perishab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted without providing for deduction under section 9(4). In other words, the investment should be equal to or less than the income computed under the Act without deduction under section 9(4). If the assessee' s contention that ceiling of 50 per cent. is with reference to total agricultural income before computation is accepted, then the assessee will be able to borrow funds and invest in the eligible industry and claim deduction which is not intended under the Act. In other words, the investment is expected out of the total agricultural income computed without providing for deduction under section 9(4) of the Act. In this particular case, the assessee whose agricultural income is computed at Rs. 39,67,570 has made an investment of Rs. 68 lak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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