JUDGMENT
T. Kochu Thommen, J. – The following questions have been referred to us by the Kerala Agricultural Income-tax Appellate Tribunal, Additional Bench, Kozhikode :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the premium paid on the insurance against loss or theft of cash in transit is allowable deduction as per s. 5(j) of the Kerala Agricultural Income Tax Act, 1950, especially so when there is a clear provisions regarding the payment of insurance premium on insurance against loss or damage of crop in s. 5(n)(iv) ?
2. Was not the Tribunal in error of law in deciding that even if the said insurance premium paid towards insurance of loss or theft of cash in transit is not allowable under s. 5(n)(iv), it is allowable under s. 5(j) ?”
2. The assessees claim for deduction in respect of the asst. yr. 1975-76 was disallowed by the Inspecting Assistant Commissioner of Agricultural Income-tax and Sales Tax (Special) by his order dt. 17-1-1977. He held that in so far as the claim related to premium paid on insurance against loss or theft of cash in transit, it did not come under the specific provision of s. 5(n)(iv) of the Kerala Agricultural Income-tax Act, 1950 (“the Act”), which related only to loss or damage of crops or property and not to cash in transit. He further held that in so far as the section was not applicable to the claim of the assessee. It could not be treated as an expenditure laid out or expended wholly and exclusively for the purpose of deriving agricultural income. He did not consider whether, in view of the nature of the claim, although the provisions quoted by the assessee was not applicable, the provisions of s. 5(j) had been attracted. On appeal by the assessee, the Deputy Commissioner (Appeals) also disposed of the matter as abruptly as the AAC did not rejected the contentions of the assessee. All that the Deputy Commissioner (Appeals) said was :
“……… The other deductions claimed relate to cash in transit, insurance and cash in safe insurance. These two items are not permissible.”
3. On further appeal, the assessees contention was accepted by the Tribunal. The Tribunal found that although it was not a case which would come under s. 5(n)(iv), the facts urged before the Tribunal showed that s. 5(j) was attracted.
4. It is not disputed that the expenditure in curred by way of premium paid on insurance against loss or theft of cash in transit will be an allowable expenditure in terms of s. 5(j) provided the transit of cash was for the purpose of and intimately connected with the business so as to derive income therefrom. The premium paid on insurance covering such transport of the cash is an expenditure incurred for the purpose of deriving from the estate. Without the transport of cash to the estate, the expenses in the estate cannot be met. Cash was, therefore, in transit for the purpose of incurring the expenditure necessary for earning the income.
5. In view of the fact that the Tribunal accepted the contention urged by the assessee before it, presumably with reference to the relevant records, we see no reason to interfere with the finding of the Tribunal.
6. In the circumstances, question No. 1 is answered in the affirmative, that is, in favour of the assessee and against the Revenue. In the light of our answer to question No. 1, we dedcline to answer question No. 2. The case is disposed of accordingly. We direct the parties to bear their respective costs in this tax referred case.
