Expenses incurred on maintenance of capital assets required for collection of rent due in respect of land from which agricultural income is derived are deductible under Sec. 6(g) of the Bihar Agricultural Income-Tax Act, 1948.

Sarjoo Prosad, J.

1. In this reference under Sec.28 (3) of the Bihar Agricultural Income-Tax Act (Act 32 of 1948) read with Sec.25 (3) of Act 7 of 1938 the Court called for a statement of case from the Board of Agricultural Income-tax on various points relating to certain deductions claimed by the assessee. There are as many as ten questions involved but the answer to the questions turns upon the interpretation of just a few provisions of the Act embodied in Sec. 6 or 7 thereof.

2. The questions are whether the assessee is entitled to deductions in respect of : (1) Rs. 56,000.00 spent on repairs of Raj buildings at Darbhanga; (2) Rs. 30,000.00 paid on account of municipal tax in respect of the said buildings; (3) Rs. 22, 946/- spent on the repair of roads; (4) Rs. 68,085/- spent on the maintenance of the Raj power-house at Darbhanga; and (5) Rs. 1,91,232/- on account of depreciation of building and furniture. I have put these five questions under one head as I propose to discuss them together.

3. The sixth question relates to a claim for deduction of Rs. 83,538/- spent on the maintenance of horses in the stables at Darbhanga; the seventh to a sum of Rs. 23,137/- spent over the Raj Engineering Department; the eighth and ninth to a sum of Rs. 2,43,159/- adjusted against the capital of a loan advanced to the Tikari Estate, and another sum of Rs. 10,059/-paid to the proprietor of the Lachmipur Estate, respectively, and the tenth and the last question, relates to a sum of Rs. 9,395/4/3 received by the assessee as Dasturat Malikana. The year of assessment to which these questions relate is 1946-47.

4. The Board of Agricultural Income-tax and the officers of the Agricultural Income-tax Department refused to allow the above deductions claimed by the assessee because in their opinion the deductions were not admissible in law.

5. On behalf of the assessee Mr. B. C. De claims that he is entitled to the deductions which form the subject-matter of the first five questions by virtue of the provisions of Sec. 6(f) and (g) read with Sec. 6(b) and Clause (f) and (g) of Section 7 of the Act. Clause (g) of Sec. 6 on which stress has been mainly laid by the learned Counsel runs thus:

"any expense incurred on the maintenance of any capital asset purchased or constructed before this Act came into force, if such maintenance is required in connection with the collection of rents due in respect of the land from which such agricultural income is derived."

The learned Counsel contends that the repairs of the Raj buildings in question were expenses incurred over capital assets constructed before the operation of the Act and those buildings were required to be maintained for the collection of rents due in respect of the land from which agricultural income was derived. It appears from the relevant facts, stated by the Board, that a substantial sum of Rs. 23,939/-under the head of repairs of Raj buildings was claimed by the assessee in respect of the Nargaon palace at Darbhanga which was constructed sometime ago on the occasion of the visit of some Viceroy. The Department is of the opinion that these buildings were not required in connection with the collection of rent at all.

The Board, however, concedes that if the palaces and other buildings were used for the purpose of collecting agricultural income, the assessee would be entitled to that deduction. It was, however, of the view that these buildings were mainly intended for pomp and show and other luxurious requirements and not for the purpose of deriving any agricultural income. For the assessee, however, it is contended that some of the buildings contained the various departments of the Raj office concerned with the collection of rent and some of the buildings were used for residential purposes although some others might be intended for guests who visited the Maharaja not only in connection with social functions but also in connection with the administration of the Raj. It is not disputed that