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TMI Blog1998 (8) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ontribution to superannuation fund and estate expenses comprised of (i) rates and taxes (ii) repairs and maintenance of buildings, (iii) repairs to roads and drains, (iv) repairs and maintenance of vehicles, (v) repairs and maintenance of others, (vi) professional tax, (vii) telephone charges, (viii) legal and professional charges, (ix) printing and stationery, (x) provision for contingent liability. The disallowances were confirmed. Head office expenses: Repairs and maintenance of vehicles.--The assessee-company claimed Rs. 1,05,960.48 under this head. There were three cars. According to the Agricultural Income-tax Officer three cars were not in the estate premises and no log book was maintained by the assessee-company and so, it was not possible to ascertain the person who had actually used the vehicle and the purpose for which it was used. The Agricultural Income-tax Officer also found that the contention of the assessee that the managing director has got his own car and so, using the company car for his private use does not arise at all is not an acceptable one and he disallowed 25 per cent. of the expenses which was sustained by the Assistant Commissioner of Agricultural Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the company's product. Publishing the financial results in the newspapers cannot be stated to be a statutory requirement and publication of financial results will not amount to popularising the company's product. This expenditure is in no way connected with the agricultural operations and it has to be disallowed. The authorities below have rightly rejected the claim of the assessee in this aspect. The orders of the authorities below do not warrant any interference in this aspect. Postage, telegram and telephones.--The assessee has claimed a sum of Rs. 43,336.84 under this head on the ground that this amount has been used for estate agricultural purposes. The Agricultural Income-tax Officer disallowed 25 per cent. of this claim on the ground that the assessee has not produced any records to show that the amount has been spent solely for estate agricultural purposes. His finding is that personal calls would have been included in the assessment. Counsel for the assessee argued that the assessee is carrying on business in processing its rubber and selling it and it has to necessarily incur this expenditure for contacting other places. The same point came up for consideration by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s comprehensive as the entire area lies together and that the plantation and non-plantation areas are also comprehensive and inseparable. The Assistant Commissioner had confirmed the same. The Tribunal also confirmed the view of the authorities below. The authorities below found that the expenditure related to the plantation area should be allowed in full. So, with regard to the non-plantation area, they have found that 19 per cent. is disallowable. The order of the authorities below is perfectly in order. Telephone charges.--This expenditure was incurred for the estate only. The lower authorities found that personal usage cannot be ruled out. In the absence of any register maintained in this regard it has to be held that this expenditure was incurred in connection with the agricultural estate. Accordingly, we hold that it is an allowable expenditure. Legal and professional charges.--The Agricultural Income-tax Officer disallowed a sum of Rs. 10,110 under this head on the ground that the appellant has not furnished the details, such as nature of the case, its number and other details. Counsel for the assessee submitted that this amount was paid as legal charges for conducting a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss or proceedings which might have resulted in the reduction of its income and profits. Even otherwise the expenditure was incidental to the business and was necessitated or justified by commercial expediency. The expenditure which was incurred by the assessee in opposing a coercive Government action with the object of saving taxation and safeguarding business was justified by commercial expediency and was therefore allowable under section 10(2)(xv) of the Indian Income-tax Act, 1922." So, the essential test which has to be applied is whether the expense is incurred for the preservation and protection of the estate from any proceedings which might have resulted in the reduction of its income and profit. The expenditure must have been incurred honestly in the litigation for preserving the estate and deriving agricultural income. So, the legal expenses incurred must have nexus with the agricultural operations and in such case, it is an allowable claim. The authorities below have found that the legal expenses incurred were in connection with road cases and the nature of the case and other details are not available and it is not connected with the agricultural operations and this expe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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