Law: Income Tax Act, 1961

Section: 35,35C,37

(a) Income-tax--Business expenditure--Interest on agricultural loans ---Assessee engaged in processing add export of tobacco---Interest allowable only on amount spent for raising tobacco, not other crops-Indian Income Tax Act, 1961, S.37. The assessee-company was engaged in the business of processing and export of tobacco. The assessee claimed the interest paid to the bank on medium and. short-term agricultural loans as deduction under section 37 of the income Tax Act, 1961. The assessee also claimed deduction under section 35C of the Act in respect of the expenditure incurred by it. The :Income-tax officer rejected both the claims made by the assessee. The Tribunal following its decision for earlier years in the case of the same assessee held that the claims would have to be examined de novo by the Income-tax Officer. On a reference: Held, that only the interest on the amount spent upon the land used for raising tobacco was deductible under section 37 of the Act and not the .whole amount of Rs.91,000. (b) Income-tax-- ----Agricultural development allowance ---Assessee engaged in processing and export of tobacco---Interest on amounts spent on land utilised for raising tobacco---Whether entitled to allowance---Matter remanded--- Same amount not to be deducted simultaneously under Ss.35C & 37---Indian Income Tax . Act, 1961, Ss.35C & 37. While passing final orders, the income-tax officer (to whom the matter had already been remanded by the Tribunal) shall decide whether the interest on amount spent upon the lands utilised for raising the tobacco crop could be deducted under section 35C. It was, however, clear that the same amount could not be deducted simultaneously under both the provisions. It must fall under one or the other. CIT v. Navabharat Enterprises (Pvt.) Ltd. (1987) 165 ITR 603 (AP) fol. THIS JUDGMENT DELIVERED BY: MS. S. V. MARUTHI, J.---At the instance of the Revenue, the Tribunal referred the following two questions for the opinion of this Court. "(1) Whether, on the facts and in the circumstances of the case, the income-tax Appellate Tribunal is right in law in holding that the assessee is entitled for deduction under section 37. of the…

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