Judgment:
ORDER
K. P. BALANARAYANA MARAR J. - These two revisions arise from the common order of the Agricultural Income-tax Appellate Tribunal, Thiruvananthapuram, in T.A. Nos. 19 and 20 of 1987. The two appeals arose from two separate orders of the Additional Appellate Assistant Commissioner, Kollam, rendered on December 17, 1986, relating to the assessment years 1979-80 and 1980-81.
The revision petitioner is an assessee to agricultural income-tax. The revision petitioner, Messrs. Catholic Diocese of Thiruvalla, was getting income from various crops including rubber from different estates. They did not concede any taxable income in the return submitted for the assessment years 1979-80 and 198081 on the ground that the entire income was spent for religious and charitable purposes. They claimed eligibility for exemption under section 4 of the Agricultural Income-tax Act. The consolidated statement of income filed for the two years disclosed net income from all the estates at Rs. 15,85,815.90 and Rs. 13,41,363.95, respectively. The assessing authority found that the assessee has failed to maintain separate and verifiable accounts for agricultural income and the expenditure of such income towards religious and charitable purposes. The assessing authority, therefore, completed the assessment for the above-mentioned years to the best of his judgment by apportioning the income determined, towards that spent for religious and charitable purposes exempted under section 4 of the Agricultural Income-tax Act, and that not falling under the said category in the proportion as disclosed from the accounts maintained. The next taxable income for the two years aforementioned was fixed at Rs. 9,77,300 and Rs. 2,68,480, respectively. The assessment orders were challenged by the assessee before the Appellate Assistant Commissioner, Kollam, and by his order dated December 17, 1986, the Additional Appellate Assistant Commissioner modified the assessments by allowing certain items of expenditure disallowed or limited. The assessee carried the matter to the Tribunal. The appeals were heard jointly by the Tribunal and by the common order dated November 8, 1990, certain modifications were made by the Tribunal and in other respects the order of the appellate authority was confirmed. Hence the two revisions by the assessee.
Heard counsel for the assessee and Government Pleader for the respondent.
The grievance of the revision petitioner in these two appeals is that the expenditure incurred for charitable and religious purposes was not excluded by the Tribunal from out of the agricultural income. Section 4 of the Agricultural Income-tax Act of 1950, which is the provision applicable in these cases, stipulates that the total agricultural income of any previous year comprises all agricultural income derived from land situated within the State and received within or without the State. But this will not include among other things any agricultural income derived from property held under trust wholly for charitable or religious purposes to the extent to which such income is applied to such purposes in the State. Where any such income is accumulated or set apart for application to such purposes in the State the amount so accumulated or set apart to the extent to which the income so accumulated or set part is not in excess of 25 per cent. of the agricultural income will also be excluded. The agricultural income is admittedly derived by the assessee from properties held under trust wholly for charitable or religious purposes. The specific contention of the assessee is that the entire agricultural income was applied to charitable or religious purposes in the State. It is for this reason that they claim total exemption of the entire agricultural income received by them for the assessment years 1979-80 and 1980-81. The assessing authority disallowed the claim mainly for the reason that the assessee had not maintained separate and verifiable accounts to ascertain how much of the agricultural income was spent for religious and charitable purposes. The assessee had agricultural income as well as income from non-agricultural sources. The assessee had produced accounts before the assessing authority showing the expenses incurred for religious and charitable purposes. But the accounts did not show much of the agricultural income was spent for these purposes. The assessee was admittedly getting considerable amounts by way of agricultural income. In the absence of accounts showing agricultural and non-agricultural income separately the assessing authority though it fair and reasonable to divide the expenses incurred for charitable and religious purposes proportionately from both the agricultural and non-agricultural income. It was by giving due deductions to the non-agricultural income proposed that the assessments for the two years was completed. Though the appellate authority modified the assessment to some extent, it concurred with the assessing authority regarding the method adopted by it in apportioning the amount of expenses incurred for charitable and religious purposes proportionately from both the agricultural and non-agricultural income. The Tribunal also adopted the same view. After refereeing to the replies given by the assessee for the years 1979-80 and 1980-81, the Tribunal observed that no attempt was made by the appellant to furnish the details clarifying the objection in that respect. The Tribunal held that, in the circumstances, the apportionment made on the basis of the consolidated accounts produced for both the years under appeal was just and proper. For that reason, the levy of tax on the portion of the net income so fixed was confirmed.
Assailing the above finding of the Tribunal, it is contended by learned counsel for the revision petitioner that the entire income derived from agricultural and non-agricultural income had been applied for religious and charitable purposes and as such the question of apportionment of the expenses from out of the agricultural income separately does not arise. Counsel relied on the decision of the Allahabad High Court in CIT v. Panchayati Akhara Nirmal : [1991]190ITR121(All) . That was a case where a charitable trust was deriving income from agricultural and non-agricultural property. Separate accounts for the two types of income were not maintained. The Income-tax Officer in that case allocated the amount spent between agricultural and non-agricultural income in an appropriate ratio. The Allahabad High Court observed that it is not necessary that there should be a provision in the Income-tax Act and Rules for this purpose. The assessee in that case wanted the entire agricultural income to be excluded from consideration. It is observed that if that is done the result would be that no part of the agricultural income would have been applied to the specified purposes. It was in these circumstances that the Allahabad High Court observed that the Income-tax Officer was perfectly justified in allocating the amount applied in proportion to the agricultural and non-agricultural income. This decision is of no assistance to the revision petitioner since the dispute in that case was only regarding allocation of the amount applied in proportion to the agricultural and non-agricultural income. In the present case, the assessing authority has divided the expenditure incurred for charitable and religious purposes proportionately from both the agricultural and non-agricultural income and by giving due deductions to the net agricultural income proposed the claim for exemption was disallowed only because there was no separate verifiable accounts from which the agricultural income applied for charitable or religious purposes could be ascertained. The Tribunal has observed that the amount spend by the diocese from agricultural income for religious and charitable purposes is not proved by separate accounts or by any verifiable accounts. No error has, therefore, been committed by the Tribunal in arriving at this finding. No interference is, therefore, called for.
For the aforesaid reasons both the tax revision cases are dismissed.