R. Jayasimha Babu, J.
1. The assessee has come up in revision aggrieved by the disallowance of its claims for deduction of Rs. 1,000 being the amount paid by the company to its managing director towards his personal accident insurance premium to cover the medical expenses that payment having been approved by the company, the sum of Rs. 147 paid towards property tax for the properties belonging to the company of its head office situated at Kerala State : the company's estate measuring 1284-94 acres being situated in Velimalai Village, Nagercoil District; a sum of Rs. 27,435.53 alleged to be the repair charges of the vehicles in respect of which proper records had not been filed; a sum of Rs. 4,977.20 being the alleged expenditure on postage and telegram; that amount have been disallowed on the ground of personal use; a sum of Rs. 1,532.35 being the amount of interest paid on overdraft disallowance on the ground that the loan and the purpose for which loan had been obtained had not been made available; a sum of Rs. 1,053 being the expenditure said to have been incurred for meeting the Rubber Board officials who had come to the estate to give advice on spraying and cultivation work; and a sum of Rs. 7,623 being the depreciation on the motor car for the assessment year 1984-85.
2. Learned counsel for the assessee contended that section 5(e) of the Tamil Nadu Agricultural Income-tax Act, 1955, entitled an assessee to deduct the whole amount laid out by the assessee or expended by it wholly and exclusively for the purpose of the land or plantation, if such expenditure is not capital expenditure, and also is not a personal expenditure, and that not only direct but even indirect and incidental expenditure, incurred on or for the land is deductible under section 5(e).
3. Counsel for the assessee relied on the decisions of the apex court and of this and other High Courts in support of his submissions. In the case of State of Madras v. G. J. Coelho : [1964]53ITR186(SC) , the Supreme Court held that the interest paid by the assessee on a loan obtained for the purchase of plantation is deductible under section 5(e) of the said Act, and that expenditure ordinarily regarded as such under normal commercial accountancy principles, is deductible.
4. In Purtabpore Co. Ltd. v. State of Uttar Pradesh, : [1971]1SCR426 , the court dealt with a somewhat similar provision under the Uttar Pradesh Act, and held that the expenditure incurred on or for the purpose of the entire work and operations involved in raising the crops making the same fit for marketing and the transportation of the produce to the market constitute expenditure incurred wholly and exclusively for the purposes of raising the crop. It was also observed that the provision for deduction considered in that case was not to be construed in a narrow and pedantic sense but must be given its full effect in the background of modern large scale farming and the Organisation required for it.
5. The apex court in the case of Sassoon J. David and Co. P. Ltd. v. CIT : [1979]118ITR261(SC) , dealt with the expression 'wholly and exclusively' used in section 10(2)(xv) of the Indian Income-tax Act, 1922. The court held that the expression does not mean 'necessarily' and that ordinarily, it is for the assessee to decide whether any expenditure should be incurred in the course of his or its business and further that if such expenditure is incurred for promoting the business and to earn profits, the assessee can claim deduction under section 10(2)(xv) of the Act, even though there was no compelling necessity to incur such expenditure.
6. A Full Bench of the Kerala High Court in the case of Plantation Corporation of Kerala Ltd. v. Commr. of Agrl. I.T. : [1993]200ITR27(Ker) , considered the scope of section 5(j) of the Kerala Act, which is in pari materia with section 5(e) of the Tamil Nadu Act as it stood during the relevant period. M. Jagannadha Rao C. J., as he then was, held that that provision was a residuary provision like section 10(2)(xv) of the Indian Income-tax Act, 1922, and section 37(1) of the Income-tax Act, 1961. It was further held that this provision permits deduction of the expenditure of a direct as well as indirect nature laid out or expended for the purpose of deriving agricultural income subject to what has been excluded in the statute.
7. This court in the case of Kil Kotagiri Tea and Coffee Estates Co., Ltd. v. Government of Madras : [1974]96ITR165(Mad) , held that the words 'for the purpose of land' used in section 5(e) of the Tamil Nadu Agricultural Income-tax Act are much wider in scope than the expression, 'for the purpose of deriving the agricultural income from the land' used in section 5(j) of the Act. The court further held that the expression 'for the purposes of land' covers a wide range of expenses, taking in not only the expenses incurred actually for deriving agricultural income, but also expenses which are not directly incurred for deriving agricultural income, but have been expended in connection with the lands 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 using it for the purpose of agriculture.
8. The law laid down by the apex court in relation to section 10(2)(xv) of the Indian Income-tax Act, 1922, is equally applicable to section 5(e) of the Tamil Nadu Agricultural Income-tax. This provision has to be broadly construed. As pointed out by the Supreme Court in Purtabpore Co. Ltd. v. State of U.P. : [1971]1SCR426 , all expenses which are reasonably connected with the land are deductible.
9. The sum of Rs. 1,000 paid by the company to the managing director of the company for his personal accident insurance premium has been disallowed by the Tribunal. It is not in dispute that the company had incurred the expenditure. The amount so paid was in accordance with the terms of his employment. The expenditure was not unreal or artificially boosted to reduce the amount of taxable income. That expenditure is deductible under section 5(e). The Tribunal was in error in disallowing this claim.
10. The property tax paid in respect of the property belonging to the company at its head office has been disallowed by the Tribunal. If the assessee owns the premises, where its head office is located, it must necessarily pay the property tax. The tax so paid is deductible as an item of expenditure under section 5(e) of the Act, even though the payment of the tax for the head office which is situated away from the plantation, may not fall within the scope of section 5(h) of the Act, which deals with any tax, cess or rate paid on the cultivation or sale of the crop from which such agricultural income is derived. Section 5(e) of the Act is to be broadly construed and full effect must be given to the provision. It is only to the extent that a particular claim is specifically covered by any other provision in the Act that it can be said that such claim is to be excluded from the purview of section 5(e) of the Act.
11. The repair charges of the vehicle claimed by the assessee have been disallowed by the Tribunal on the ground that 'the assessee is not shown to have filed proper records, for such huge raise of expenditure under this head'. The disallowance has been properly made and shall stand undisturbed.
12. The assessee's claim for deduction of a sum of Rs. 4,977.20 being the expenditure for the postage and telegrams has been disallowed on the ground that it must have been for personal use. The assessee is a limited company and there is hardly any scope for assuming that there was personal use of stamps bought by the company. There was no evidence before the Tribunal regarding any personal use. The assessee is entitled to the deduction of the amount spent on postage and telegrams, as the fact that such expenditure had been incurred has not been doubted by any of the authorities. The Supreme Court in the case of Purtabpore Co. Ltd. v. State of U.P. : [1971]1SCR426 , has observed that (page 1581) 'the expenditure incurred for the postage, telegrams, printing and stationery for the purposes of and in connection with farming would also be allowable.'
13. The disallowance of a sum of Rs. 1,532.35 as interest claimed on overdraft facility has been disallowed on the ground that the details of the loan and the purpose for which loan had been obtained, had not been made available to the authorities. The disallowance was fully warranted.
14. The expenditure of Rs. 1,053 said to have been incurred for meeting the Rubber Board officials has been rejected on the ground that the expenditure relates to rubber cultivation. That the expenditure was incurred is not in doubt. This expenditure was laid out for an incidental activity and is reasonably connected with the earning of agricultural income. The amount is not such as to be regarded as unreal or artificially boosted. The Tribunal was in error in not allowing this deduction.
15. The last item in respect of which the assessee is aggrieved is disallowance of a part of the amount which it had claimed as depreciation of a motorcar. The Tribunal has found that the motor car did not belong to the assessee. The Assessing Officer in the assessment order has noted that on enquiry, it was found that no car was maintained in the estate and the motor car maintained by the superintendent was not the property of the estate. Under section 5(f) of the Act, depreciation can be claimed only in respect of things owned by the assessee and used for the purpose of deriving the agricultural income. As the assessee is not the owner of the car, as found by the Tribunal, the assessee is not entitled to claim any depreciation on the motor car.
16. In the result, the revision petition is allowed in part. Parties should bear their respective costs.