K. RAVIRAJA PANDIAN J.
1. The revision in T. C. (R) No. 450 of 1999 is filed against the order of the Tribunal, whereby a sum of Rs. 94,571.91 has been disallowed on the ground that this claim would not come within the purview of Section 5(e) of the Tamil Nadu Agricultural Income-tax Act, 1955.
2. Heard learned counsel on either side.
3. The abovesaid amount has been claimed as exemption on the ground the said amount is the interest paid on the loan borrowed and spent for the purpose of construction of roads, revetments, fencing, boundaries, irrigation and purchase of sprayers, machineries, pipes, overhead tanks, motors, etc. The reason for disallowing this claim under Section 5(e) by the Tribunal is that the expenditure claimed would come only under Section 5(k) which is a specific provision and by virtue of its restriction of interest amount in proportion to the income earned, the amount now claimed is not admissible for deduction. The further reason given by the Tribunal is that on a similar set of facts, the Tribunal has upheld many orders on the ground that the nature of expenditure now claimed has been considered and held to be as spent on the land and not for the purpose of the land and thus the claim would come onlyunder Section 5(k). Even if the expenditure is coverable under Section 5(e) of the Act, exemption could not be granted in view of the restriction contained in Section 5(k) which is a specific provision.
4. The reason given by the Tribunal is erroneous in our view. Section 5(e) of the Act was considered by this court on an earlier occasion and held as in the nature of residual clause and would take in its fold not only the expenditure incurred 'for the purpose of earning the agricultural income', but also from among expenses involved in carrying the agricultural activities as an occupation. The expression 'for the purpose of the land' is much wider in scope than the expression 'for the purpose of deriving agricultural income from the land'. It covers a wide range of expenses taking not only the expenses incurred actually for deriving agricultural income but also the expenses which are not directly incurred for deriving agricultural income but have been expended in connection with the land which do not have any relationship to the agricultural income derived in the previous year. If the expenses are reasonably connected with the holding of the land and used it for the purpose of agriculture, those expenses will come under the expression 'for the purpose of the land' under Section 5(e).
5. So far as the present case is concerned, the amount of Rs. 94,571.91 has been stated to be the interest on the amount borrowed and expended for construction of roads, revetments, fencing, boundaries, irrigation and purchase of sprayers, machineries, pipes, overhead tanks, motors, etc., which definitely have a nexus or relationship with the agricultural income derived. Hence, the interest paid on the amount borrowed and expended for the abovesaid purpose would definitely come within the purview of Section 5(e) of the Act as per the ratio laid down by the Supreme Court in State of Madras v. G.}. Coelho : [1964]53ITR186(SC) and followed by Kil Kotagiri Tea and Coffee Estates Co. ltd. v. Government of Madras : [1974]96ITR165(Mad) . Hence, we are of the considered view that the assessee is entitled to claim deduction of the interest paid on the borrowings for the purposes of the abovesaid under Section 5(e) and as such, the order of the Tribunal denying the benefit to the assessee has to be set aside and is set aside by holding that the assessee is entitled to the claim of deduction in a sum of Rs. 94,571 under Section 5(e) of the Act.
6. Hence, the revision in T. C. (R) No. 450 of 1999 is allowed and the order of the Tribunal dated July 10, 1990, in A. T. A. No. 14 of 1990 is set aside. For the reasons stated in T. C. (R) No. 450 of 1999, T. C. (R) Nos. 451 and 452 of 1999 are allowed to the extent of the expenditure disallowed by the Tribunal on the ground the expenses are not coming under Section 5(e) of the Tamil Nadu Agricultural Income-tax Act. No costs.