S.V. Maruthi, J.
1. 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 Income-tax Act, 1961, in respect of the sum of Rs. 91,000 being interest paid on agricultural loans
(2) 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 35C also on the above interest paid to bank when it does not satisfy the other conditions laid down in Section 35C even though it is held to be an industrial company ?'
2. The facts in brief are as follows :
The assessee is a private limited company 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 (for short 'the Act'). The assessee also claimed deduction under Section 55C of the Act in respect of the expenditure incurred by it. The Income-tax Officer rejected both the claims made by the assessee. The order of the Income-tax Officer was confirmed by the Commissioner of Income-tax (Appeals). On a further appeal to the Tribunal, the Tribunal following its decision for the 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. Holding as such, the Tribunal remanded the matter to the Income-tax Officer. However, at the instance of the Revenue, the questions referred to in the above paragraphs were referred for the opinion of this court.
3. The assessee's own case for the earlier assessment years came up for consideration before this court against the judgment of the Income-tax Appellate Tribunal. This court in CIT v. Navabharat Enterprises Private Limited : [1987]165ITR603(AP) , held as follows (headnote) :
'(i) that in so far as the interest apportionable to the amount spent for raising crops other than tobacco was concerned, it could not be allowed as a deduction, for, the raising of the said crops could not be said to have any connection with the tobacco processing operations carried on by the assessee, much less could it be said that the raising of the said other crops was indivisibly and inseparably connected with the tobacco raising operations of the assessee. Only the interest on the amount spent upon the land for raising tobacco was deductible under Section 37 and not the whole amount of Rs. 1,04,155 ;
(ii) that the Income-tax Officer to whom the matter had already been remanded by the Tribunal should decide whether the amount spent upon the land utilised for raising tobacco could be deducted under Section 35C. It was, however, clear that the same amount could not be deducted simultaneously under both the provisions, namely, Sections 37 and 35C ;
(iii) that with regard to the expenditure of Rs. 74,870, since all the facts necessary for deciding the applicability or otherwise of Section 35C were not looked into by any of the three authorities, the Tribunal might remand this matter also to the Income-tax Officer for a fuller examination in the light of the analysis of Section 35C.'
4. Following the judgment in the assessee's own case for the earlier assessment years, we answer question No. 1 thus :
Only the interest on the amount spent upon the land used for raising tobacco is deductible under Section 37 of the Act and not the whole amount of Rs. 91,000.
5. We decline to answer question No. 2 and observe that while passing final orders, the Income-tax Officer (to whom the matter has already been remanded by the Tribunal) shall decide whether the amount spent upon the lands utilised for raising tobacco crop can be deducted under Section 35C. It is, however, clear that the same amount could not be deducted simultaneously under both the provisions. It must fall under one or the other.
6. The reference is answered accordingly.