THE COMMISSIONER OF AGRICULTURAL INCOME-TAX versus THE CALVARY MOUNT ESTATES (PRIVATE)

December 15.

3 S.C.R. SUPREME COURT REPORTS

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THE COMMISSIONER OF AGRICULTURAL INCOME-TAX v. THE CALVARY MOUNT ESTATES (PRIVATE) LTD. (J. L. KAPUR, M. liIDAYATULLAH and J. c. SHAH, JJ.)

Agricultural Income Tax'-Rubber Plantation-Expenditure on immature trees-Whether permissible deduction-Madras Plan tations Agricultural Income-tax Act, I955 (Mad. V of I955l. s. 5(e).

The assessee owned an Estate of 590 acres out of which 235 acres were occupied by immature non-bearing rubber trees, for the maintenance and upkeep of which the respondent claimed expenses from out of the income, which was allowed both by the Agricultural Income Tax Tribunal and the High Court. The appellant came up by special leave.

Held, that the provisions of s. 5(e) of the Madras Planta tions Agricultural· Income Tax Act,· 1955 (Mad. V of 1955). applicable to the present case, and those of s. 5(j) of the Travan core-Cochin Agricultural Income Tax Act, 1950 (Tr. Co. XXII of 1950) being the same, the judgment in Travancore Rubber & Tea Co. Ltd. v. The Commissioner of Agricultural Income-tax, Kerala, in which the question of deductibility of sums expended for pur poses of forking, manuring etc. of immature rubber trees had been decided, will govern this case.

Travancore Rubber©- Tea Co. Ltd. v. The Commissioner of

Agricultural Income-tax, Kerala, [1961] 3 S.C.R. 279, applied.

CIVIL APPELLATE JURISDICTION: Civil Appeal No.

145 of 1960.

Appeal by special leave from the judgment and order dated March 18, 1958, of the Kerala High Court in Tax Revision Case No. 12 of 1957.

V. A. Seyid Mu1ia·mad and Sardar Bahadur, for the

appellant.

O. K. Daphtary, Solicitor-General of India, Thomat1 Vellapally, 8. N. Andley, J.B. Dadachanji, Rameshwar Nath and P. L. Vokra, for the respondent.

1960. December 15. The Judgment of the Court

was delivered by

286

SUPREME COURT REPORTS

[1961]

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KAPUR, J.-This is an appeal by' special leave 196° against the judgment and order of the High Court of - . . ' ' N 12 f 1957 The Commossrnna }T , o. . It gricu ur:1 The respon ent who IS the assessee owned an estate Income-tax of 590 acres in South M11labar district, now in Kerah v. nc Calvary Sta.te. Out of that area 85 acres were covered by Pep ~fount Estate> per, Arecanut, Paddy and Coconut cultivation while the rest i.e. 505 acres had rubber plantations upon it. (Prfratc) Ltd. Kapur J. Of that area 235 acres were occupied by immature non-bearing rubber trees and 270 acres had m11ture rubber trees. The assessment relates to the year 1955-56, the accounting year being the year ending March 31, 1955. The respondent claimed from out of the income expenses relating to the m11intenance and upkeep of immature non.bearing rubber trees. The tax Tribunal held that the Agricultural Income expenses incurred on the whole area under rubber plant11tions were deductible expenses and remanded the case for ascertaining the expenses incurred in fork ing and manuring of the "non-bearing and immature" rubber grown areas also. The appellant then prefer red a revision application to the High Court under s. 54(1) of the Madras Plantn,tions Agricultural Income Tax Act, 1955 (Mad, V of 1955), The High Court held that the amount spent on the upkeep and maintenance of immature rubber trees was a deductible expenditure under s. 5(e) of that Act which provides:

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

•••••'""'''''''''''''•••••••••••••••••••••••••••••"•••••••••••••••••

(e) any expenditure incurred in the previous year (not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expend- ed wholly and exclusively for the purpose of the plantation;",

The provisions of s, 5(e) of the Madras Act, applicable to the present case, are the same as those of s. 5(j) of the Trav'ancore Cochin Agricultural Income Tax Act (Act XXII of 1950). The only difference is in the last few words, In place of "for the purpose of the plan tation" in the former, the words "for the purpose of

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3 S.C.R. SUPREME COURT REPOR'l'S

287

deriving the agricultural income" are used in the latter. If anything the words of the former Act are more h .t: 1avoura e to t e respon ent.

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In Travancore Rubber and 'I ea Company Ltd. v. Commissioner of Agricultural Income Tax, Kerala ('), which was an assessment under the Travancore Cochin Act, we have decided the question of deducti- Mount Estates bility of sums expended for purposes of forking, (P,ivat<) Ltd. manuring etc .. of immature rubber trees. That judg- Kapu' J. ment will govern this case also. This appeal there- fore fail.s and is dismissed wi~h costs in this courL and the High Court.

196.0

The Commissiontr of Ag>icultural Income-ta.> v. The Calva'Y

Appeal dismissed

Decetnbe" z5.

RAJA BAHADUR VISHESHWARA SINGH AND OTHEHS. v. COMMISSIONER OE' INCOME-TAX, BIHAR AN'D ORISSA (J. L. KA!'UR, M. HIDAYATULLAH and J.C. SHAH, JJ.) Income Tax-l'urihase and sate of shares and scwrities with surplus tn.oney-Such transactions, if amount to investment or busi· ness in shares~Test-Excess sale proceeds-If amou,nt to business profit or mere accretion to capital-Indian Income-tax Act, 1922 (II of 1922), s. 66(2).

The appellant used to invest his cash surplus in shares and securities and maintained an account book called Book No. l relating thereto. During the period from 1930 to 1941-42 he purchased a large number of shares and securities which by the accounting year 1941-42 were of a value Rs. 14·91 lacs. He sold certain shares and se<;urities of the value of several lacs and In 1940 the appel made certain amount of profit on those sales. lant borrowed a large amount of money from his brother, the Maharaj a of Darbhanga and opened a new account named account No. 2 \vhich contained all entries regarding shares purchased and sold out of the money borrowed from the Maharaja. In the assessment year 19-14-45 to 1948-49 the profits made by ti)e

(1) [i961] 3 S.C.R. 279.