Commissioner of Agricultural Income Tax vs Kartikolam and Alathur Estates Limited and Plantation Corporation of Kerala

V.P. Gopalan Nambiyar, C.J.—The question raised in these references relates to the deductibility of certain items of expenditure claimed by the assessee as deduction u/s 5(j) of the Kerala Agricultural Income Tax Act, 1950. That section reads :

"5. Computation of agricultural income.--The agricultural income of a person shall be computed after making the following deductions, namely:--...

(j) any expenditure (not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of deriving the agricultural income."

The expenses sought to be deducted, what may be broadly described, are legal and audit expenses incurred by the assessee and claimed as having been incurred for the purpose of deriving the agricultural income. In ITR No. 50 of 1977, a sum of Rs. 1,894 was claimed as remuneration paid to the auditors. In ITR No. 108 of 1977, a sum of Rs. 7,925.08 was claimed as legal charges. The scope of Section 5(j) of the Act fell for examination before a Division Bench of this court in COMMISSIONER OF AGRICULTURAL Income Tax Vs. MALAYALAM PLANTATIONS LTD., . The decision was referred to and followed in ITR No. 107 of 1977 (supra p. 390). In the light of the principle laid down by the above decisions, we have no doubt that the amounts claimed in these cases are deductible u/s 5(j) of the Act. The questions formulated for our opinion in these references are accordingly answered in the affirmative, that is, in favour of the assessee and against the Revenue. There will be no order as to costs.

A copy of this judgment under the signature of the Registrar and the seal of this court will be communicated to the Kerala Agricultural Income Tax Appellate Tribunal, Trivandrum, as required by law.