H.S. Shivakantappa v. Commissioner of Agricultural Income-tax
[Citation -1993-LL-0914-11]

Citation 1993-LL-0914-11
Appellant Name H.S. Shivakantappa
Respondent Name Commissioner of Agricultural Income-tax
Court SUPREME COURT
Relevant Act Income-tax
Date of Order 14/09/1993
Judgment View Judgment
Keyword Tags agricultural income • allowable deduction
Bot Summary: I. T. v. Nilambur Rubber Co. Ltd. 1969 71 ITR 686, held that only amounts expended in connection with the raising and processing of crops, rendering them in a condition to be taken to the market and transportation charges would legitimately fall within the scope of the said section 5(j). It was brought to our notice by learned counsel for the appellant that a Full Bench of the Kerala High Court had in Plantation Corporation of Kerala Limited v. Commr. I. T. 1993 200 ITR 27, considered the earlier judgment in Nilambur Rubber Co. Ltd.'s case 1969 71 ITR 686, and held that the interpretation put upon section 10(2)(xv) of the Indian Income-tax Act, 1922, and upon section 37(1) of the Income-tax Act, 1961, by this court in Travancore Rubber and Tea Co. Ltd. v. Commr. I. T. 1961 41 ITR 751, and State of Madras v. G. J. Coelho 1964 53 ITR 186, would be applicable to the said section 5(j). Section 5(j) is wide enough to cover the fee paid by the assessee to his auditors for preparing returns under the said Act. We see no reason whatsoever why the principle that applies to the interpretation of section 37 of the Income-tax Act, 1961, should not apply to the said section 5(j). The fact that section 5(j) uses the words for the purposes of deriving the agricultural income, pressed by learned counsel for the Revenue, do not, in our view, mean anything very different from the words used in section 37 of the Income-tax Act, 1961. Expenditure of this kind falls under section 37 of the Income-tax Act, 1961, and must fall within the said section 5(j). Our attention was also drawn to the judgment in Nilambur Rubber Co. Ltd.'s case 1969 71 ITR 686. That judgment states that it was not disputed that expenditure incurred for maintaining accounts and getting them audited was a permissible deduction under the said section 5(j) but it was submitted that expenditure incurred for preparing the return of income and statements to be filed before the Income-tax Officer and the remuneration paid to counsel for conducting the case before the incometax authorities was not an allowable deduction, and this was upheld. It must follow that the professional fee paid to an auditor for the purpose also falls under section 5(j). In the result, the appeal is allowed.


JUDGMENT ORDER High Court of Kerala (See [1982] 134 ITR 481) answered in affirmative, that is, in favour of Revenue and against assessee, following question (at page 482): " Whether, on facts and in circumstances of case, Tribunal was right in law in holding that fee paid to auditors has been correctly disallowed in computing agricultural income of appellant for assessment year 1972-73? " short question before High Court was whether amounts expended by assessee, who is in appeal before us, by way of charges paid to his auditors for purposes of preparing his returns of income under Kerala Agricultural Income-tax Act, 1950, were allowable expenditure under section 5(j) thereof, whereunder, deduction could be allowed in respect of "any expenditure laid out or expended wholly and exclusively for purposes of deriving agricultural income". High Court, basing itself on its earlier judgment in Commr. of Agrl. I. T. v. Nilambur Rubber Co. Ltd. [1969] 71 ITR 686 (Ker), held that only amounts expended in connection with raising and processing of crops, rendering them in condition to be taken to market and transportation charges would legitimately fall within scope of said section 5(j). It was brought to our notice by learned counsel for appellant that Full Bench of Kerala High Court had in Plantation Corporation of Kerala Limited v. Commr. of Agrl. I. T. [1993] 200 ITR 27, considered earlier judgment in Nilambur Rubber Co. Ltd.'s case [1969] 71 ITR 686, and held that interpretation put upon section 10(2)(xv) of Indian Income-tax Act, 1922, and upon section 37(1) of Income-tax Act, 1961, by this court in Travancore Rubber and Tea Co. Ltd. v. Commr. of Agrl. I. T. [1961] 41 ITR 751, and State of Madras v. G. J. Coelho [1964] 53 ITR 186, would be applicable to said section 5(j). Section 5(j) is, therefore, wide enough to cover fee paid by assessee to his auditors for preparing returns under said Act. We must note that learned counsel for Revenue stated that special leave petition against Full Bench judgment was pending. We see no reason whatsoever why principle that applies to interpretation of section 37 of Income-tax Act, 1961, should not apply to said section 5(j). fact that section 5(j) uses words "for purposes of deriving agricultural income", pressed by learned counsel for Revenue, do not, in our view, mean anything very different from words used in section 37 of Income-tax Act, 1961. Expenditure of this kind falls under section 37 of Income-tax Act, 1961, and must, therefore, fall within said section 5(j). Our attention was also drawn to judgment in Nilambur Rubber Co. Ltd.'s case [1969] 71 ITR 686 (Ker). That judgment states that it was not disputed that expenditure incurred for maintaining accounts and getting them audited was permissible deduction under said section 5(j) but it was submitted that expenditure incurred for preparing return of income and statements to be filed before Income-tax Officer and remuneration paid to counsel for conducting case before incometax authorities was not allowable deduction, and this was upheld. We see no real distinction between expenditure incurred for purpose of maintaining accounts and getting them audited and for purpose of preparing return of income under said Act. It must follow that professional fee paid to auditor for purpose also falls under section 5(j). In result, appeal is allowed. judgment and order under appeal are set aside. question referred to High Court is answered in negative, that is, in favour of assessee and against Revenue. There shall be no order as to costs. Appeal allowed. *** H.S. Shivakantappa v. Commissioner of Agricultural Income-tax
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