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TMI Blog1996 (9) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... Act (as it stood prior to its amendment by the Assam Taxation Laws (Third Amendment) Act, 1989) without considering the implication of the second proviso to section 8(2) of the said Act and the provisions of rule 5 of the Assam Agricultural Income-tax Rules, 1939 ? (ii) Whether the Board was right in distinguishing sixty per cent. of income derived from cultivation, manufacture and sale of tea from agricultural income ? (iii) On the facts and in the circumstances of the case whether the Board was right in holding that sixty per cent. of the expenses disallowed in computing hundred per cent. of the composite income from cultivation, manufacture and sale of tea for the purpose of the Income-tax Act, 1961, would not be deductible from six ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board, the deduction in respect of the expenses can be allowed if the assessee incurred the expenses in agricultural activities. Being aggrieved, the appellant requested the Board to refer the above questions to this court. The Board, however, refused to make the reference of the above questions on the ground that no question of law was involved in those questions. Situated thus, the assessee approached this court by filing a petition under section 28(4) of the Act and this court in Civil Rule Nos. 2(M), 3(M) and 4(M) of 1993 by a common judgment directed the Board to refer the above questions. Hence, the present reference. We have heard Mr. R. Gogoi, learned counsel assisted by Mr. H. Roy, learned counsel appearing on behalf of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made for the purpose of cultivation and manufacture of tea may be allowed under the Act. Dr. Todi further submits that every expenditure disallowed by the income-tax authorities cannot be allowed under section 8(2)(f)(vii) of the Act. As per the submission of Dr. Todi, the Agricultural Income-tax Officer should find out the actual expenditure relating to agriculture before allowing deductions. We have gone through the judgment passed by the Assam Board of Revenue. The assessee claimed deduction in respect of the following items : (1) Expenses incurred on entertainment, (2) Legal expenses, (3) Guest house maintenance expenses, (4) Travelling expenses, (5) Perquisites. The Board considered the respective expenses and observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the Income-tax Rules deals with income from the manufacture of tea. Rule 8 is quoted below : " (1) Income derived from the sale of tea grown and manufactured by the seller in India shall be computed as if it were income derived from business, and forty per cent. of such income shall be deemed to be income liable to tax. (2) In computing such income an allowance shall be made in respect of the cost of planting bushes in replacement of bushes that have died or become permanently useless in an area already planted, if such area has not previously been abandoned, and for the purpose of determining such cost, no deduction shall be made in respect of the amount of any subsidy which, under the provisions of clause (30) of section 10, is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t prescribed. Under section 2(a) of the Act "agricultural income" means,-- " (1) any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land revenue in Assam or subject to a local rate assessed and collected by officers of the (Government) as such. (2) any income derived from such land by-- (i) agriculture, or (ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market, or (iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Assam, the portion of net income worked out under the Indian Income-tax Act and left unassessed as being agricultural shall be assessed under this Act after allowing such deductions under the Act and the rules made thereunder so far as they have not been allowed under the Indian Income-tax Act in computing the net income from the entire operation. " From a reading of these provisions of the Act and the Rules, in our opinion, expenses incurred for the purpose of earning agricultural income after giving allowable deductions by the Income-tax Officer while making the assessment, whatever amount is left out genuine expenses are to be deducted in accordance with law. In our opinion, the Act and the Rules do not prescribe any procedure for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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