SETHURAMAN J.

These two revision petitions have been filed under s. 54(1) of the Tamil Nadu Agrl. I.T. Act, 1955, to revise the orders of the Agricultural Income-tax Appellate Tribunal, Madras, dated 22nd March, 1975, and 1st July, 1976, respectively for the assessment years 1973-74 and 1974-75. The assessee is a public limited company owning an estate measuring 1, 028.65 acres in Sheveroy Hills. In the estate coffee is grown. For the assessment year 1973-74, the assessee filed a return of loss of Rs. 52, 289. The assessing authority found some inadmissible deductions having been claimed and after adjusting them the loss disappeared and an income of Rs. 32, 828 was assessed to tax. In computing the income, the Agrl. ITO had not allowed deduction of Rs. 1, 60, 233 representing the estimated claim for gratuity. The assessee, in fact, did not make the claim for a deduction of the sum of Rs. 1, 60, 233 at the time of the filing, of the return, nor had it debited the said amount in the profit and loss account or in the profit and loss appropriation account. In the balance-sheet for the year ending on 30th June, 1973, the staff pension and gratuity reserve stood at Rs. 7, 125 both at the beginning and at the end of the year. The claim for the deduction of Rs. 1, 60, 233 came to be made for the first time by a letter addressed to the Agrl. ITO on 15th January, 1974. Along with the letter, a revised return was filed, and as regards the claim for gratuity, the assessee's case was that it had become a statutory liability under the Payment of Gratuity Act, 1972, which came into force on 16th September, 1972, which fell during the previous year ending on 31st March, 1973. The Agrl. ITO did not allow this claim observing that the gratuity would be allowed as a deduction as and when payment was made. On appeal, the Asst. Commr. of Agrl. I.T. confirmed the order of the assessing authority. The assessee took the matter on further appeal to the Tribunal, and the Tribunal, after elaborately considering the matter, came to the conclusion that neither the assessee's method of accounting nor its claim that there was a liability during the year were established and that, therefore, the claim was rightly rejected by the Agrl. ITO and the Asst. Commr. of Agrl. I.T For the assessment year 1974-75, the facts are more or less similar. The assessee claimed Rs. 11, 368 as provision for gratuity liable to be allowed as deduction. The assessing authority as well as the Asst. Commr. of Agrl. I.T. rejected this claim. The Tribunal, following its earlier order, sustained the disallowance as made by the Agrl. ITO and sustained on appealThe only further point that requires to be noticed as far as these revisions are concerned is that there is a provision for gratuity amounting to Rs. 1, 50, 875 in the balance-sheet as on 30th June, 1974. It may be mentioned that the company closes its books on 30th June, but for agricultural income-tax purposes has adopted the financial year ending on 31st March, as the previous year. The sum of Rs. 1, 50, 875 came to be credited substantially by a transfer from the general reserve to the extent of Rs. 1, 49, 033. It is not in dispute that this allocation was made after the two previous years under consideration

On behalf of the petitioner (assessee) the submission vehemently made by Mr. Rebello was that the respective amounts were liable to be allowed as deductions under s. 5(e) of the Tamil Nadu Agrl. I.T. Act, 1955. Section 5(e) of the Act runs as follows

"5. The agricultural income of a person shall be computed after making the following deduction, namely:-

(e) any expenditure incurred in the previous year (not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of the land." *

The point to be considered is whether there was any expenditure in the previous year and whether such expenditure was laid out or expended wholly and excl