JUDGMENT
Mishra, J.
1. Two questions, (1) whether the replanting subsidy of Rs. 5,475 received from the Rubber Board was liable to tax as agricultural income, and (2) whether expenses of the motor car belonging to the company used by the manager of the company, allegedly personal in nature, was liable to exemption from the agricultural Income-tax or not, arise in the instant petition. Disputing the disallowance of various expenditures and inclusion of replanting subsidy received from the Rubber Board in the taxable income, the assessee preferred an appeal before the Tamil Nadu Agricultural Income-tax Appellate Tribunal. The Tribunal partly remanded and partly allowed the appeal : but decided that replanting subsidy of Rs. 5,475 is taxable as a revenue receipt even otherwise and that the car allowance was rightly disallowed by the assessing authorities : but, “however, this being a company, the use of the car for non-agricultural activity cannot be considered. We will restrict the disallowance to 25 per cent. Thus there will be a relief of Rs. 7,219”. The assessee/petitioner placed reliance upon a Bench decision of this court in Velimalai Rubber Co. Ltd. v. Agri. ITO [1991] 188 ITR 262 (T. C. Nos. 52 to 54 and 282 of 1981, dated August 23, 1990) in which the question whether the subsidy received from the Rubber Board is to be treated as revenue derived from land and, as such, exigible to agricultural Income-tax, as held by the Tribunal, or, is not to be treated as agricultural income derived from the land but to be treated as a capital receipt, and as such, not exigible to agricultural Income-tax, as contended by learned counsel for the petitioner, was considered and answered in favour of the assessee. The learned judge, in deciding the case, agreed with the view expressed by a Full Bench of the Kerala High Court and held that the contention that the subsidy received from the Rubber Board should be treated as a revenue receipt cannot be accepted. Nothing has been brought to our notice to disagree with the view expressed by the learned judges in the said case. The order of the Tribunal in so far as it held that replanting subsidy received from the Rubber Board is liable to tax as agricultural income has to be reversed.
2. Learned counsel for the petitioner, however, has endeavoured before us to show that the car which was in the personal use of the general manager of the company was not used for purposes of the company’s business. Since it was not used for purposes of company’s business, any expenses incurred upon it should not have been included in the taxable income. The Tribunal has said :
“The authorised representative for the appellants submitted that the appellant being a corporate body, the question of treating any expenditure as ‘personal’ does not arise; that the car was only used by the employees of the company for the purpose of the company’s business. We find from the order of the Assistant Commissioner that he had upheld the disallowance mainly on the ground that the appellants were not maintaining a log book or trip sheet and had not produced any evidence to show that the car was exclusively used for agricultural purposes. The Assistant Commissioner further observed ‘the authorised representative also accepts that there is some personal usage of car but only the extent of personal use could not be assessed. In view of this, I do not find the Agricultural Income-tax Officer has made any unjustified disallowance….. We agree that, on the reasons stated by the Assistant Commissioner, there is a case for disallowance. The fact that, in some other years, no such disallowance was made cannot be a ground. However, this being a company, the use of the car for non-agricultural activity cannot be considered. We will restrict the disallowance to 25 per cent. Thus, there will be a relief of Rs. 7,219.”
3. It would indeed always depend upon the evidence that it may be said that a certain car belonging to the assessee-company was, in fact, in the personal use of any person, and not in the use of the company. It was on account of absence of evidence in this regard that the assessing authorities found it difficult to accept the claim of the assessee, for not disallowing the entire expenses. In fact, the assessing authority disallowed 50 per cent. of the car expense as for personal use which was affirmed by the Assistant Commissioner. The Tribunal took rather a lenient view and, on a mere conjecture, brought down the disallowance to 25 per cent., in favour of the assessee. We find no reason to differ from the finding aforementioned in favour of the assessee as, doing so, will mean accepting the assertion of the assessee without any evidence whatsoever.
4. For the reasons aforesaid, the application is allowed in part. The respondents are directed to exclude replanting subsidy of Rs. 5,475 received from the Rubber Board during the assessment year from the taxable income. The order of the Tribunal in so far as disallowance of 25 per cent. of the expenses on motor car belonging to the company used by the manager of the company is, however, affirmed. No costs.
