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TMI Blog1972 (9) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years 1963-64 and 1964-65. The assessee-petitioner is a public limited company owning both coffee and tea estates. Certain items of expenditure of the company were disallowed in determining the total agricultural income by the Additional Agricultural Income-tax Officer, Coonoor. This disallowance was confirmed by the Assistant Commissioner of Agricultural Income-tax, Ootacamund and the Tribunal. The items of expenditure in question for the assessment years 1963-64 and 1964-65 are as follows : 1. Subscriptions paid to Ross Institute of Tropical Hygiene and the Sports Club of UPASI. 2. Secretarial and general charges of the company. 3. Legal expenses incurred in connection with the various matters relating to the day-to-day carryin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration in these two revisions is as to whether the above-said items of expenditure are admissible deductions under section 5(e) of the Madras Agricultural Income-tax Act, 1955. Section 5(e) of the Act is as follows : " Any expenditure incurred in the previous year (not being in the nature of a capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of the land." The majority view of the Tribunal was that the expression " for the purpose of the land " is narrower in its scope than that of the expressions " the land from which the agricultural income is derived " or " the benefit of the land from which the agricultural income is derived " which are found in some of the sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersonal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of deriving the agricultural income. " The High Court held that the expenses incurred for the upkeep and maintenance of immature rubber plants could not be considered as " laid out or expended for the purposes of deriving agricultural income ". The Supreme Court reversed the decision of the High Court and held that the expenses incurred on the upkeep and maintenance of the whole estate including the immature rubber plants would also come within the purview of the expression " laid out and expended wholly and exclusively for the purpose of deriving the agricultural income ". In Commissioner of Agricultural Income-tax v. Calvary Mount Estates Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st, the amount paid as a share in the net profits to the creditor would be an allowable deduction under section 5(e) on the ground that the payment of a share in the net profits was for money borrowed and expended in connection with the working of the land. In Commissioner of Agricultural Income-tax v. Tipperary Estates Co., a Division Bench of this court, to which one of us was a party, has held that the payments made to a partner for services rendered to the partnership de hors a partner is an allowable deduction under section 5(e) on the ground that such payments come under the expression " expenditure laid out wholly and exclusively for the purpose of the land ". These decisions show that the expression " for the purpose of the land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurred in connection with the suit of Mahajan, the other legal expenses related to sales tax and company proceedings. Some of the expenses were for consulting solicitors regarding the implication of various provisions of the company law and the procedure to be adopted to continue the appointment of selling agents and managing agents. These items of expenditure have to be incurred in the course of the carrying on of its activity as the owner of the estate and therefore, they are allowable deductions. But the expenditure incurred in connection with the Mahajan's suit challenging the election of Srinivasan as a director, is in the nature of a personal dispute between the said Mahajan and Srinivasan. Though Srinivasan was a director, no expend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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