1936 (2) TMI 22

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..... ed in an income-producing business, is the interest paid on such borrowing deductible under Section 10(2)(iii) from the income of that business? (2) Is rent of a mill-site within the definition of agricultural income, Section 2(1)? (3) Are Lambardari fees within the definition of agricultural income, Section 2(1)? (4) Is the net profit from commission charged to tenants for sale of their produce on their behalf, within the definition of agricultural income, Section 2(1)? It appears that the assessee lend money to their tenants and during the accounting period they received ₹ 4,253 on account of interest on these loans. During the same period they paid interest amounting to ₹ 1,556 to their bankers. The case of the as .....

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..... s totally excluded from the operation of the Income Tax Act and that the sources of income enumerated in Section 6 cannot include agricultural income. Section 10, therefore, applies to Business assessable under the Act, and the allowance referred to in Sub-section (2) of Section 10 cannot apply to agricultural income, but only to interest paid in respect of capital borrowed for the purposes of the business assessable under Section 6 of the Act. We are, therefore, of the opinion that the money borrowed by the assessees for the purposes of paying land revenue, etc., cannot be exempted from income-tax under the provisions of Section 10(2)(iii). Agricultural income is defined in Section 2(1) of the Act. The rent of the site of a flour .....

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..... e collection of the revenue. Section 2(1) of the Act applies to the case of a person who gets agricultural income from the use of the land by direct operation. It is not applicable to a person who gets certain fees which constitute his remuneration for the work of the collection of the land revenue. The learned counsel for the assessees contended that the assessees undertake to sell the produce of the tenants either to Government or in the market, and that the commission which is charged really represents the expenses incurred by the assessees for cleaning, storing and drying the produce of the tenants before it is marketed. The Income-tax Officer has held, however, that only ₹ 400 were incurred as expenses for cleaning, drying, et .....

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