K.S Puttaswamy, J.:— M/s. Attikhan (Biligiri) Limited, Bangalore (“Attikhan”), a public limited company incorporated under the Companies Act, 1956, inter alia, owned an extensive coffee estates measuring about 427 acres in Chamarajnagar Taluk of Mysore District and by an order made by this court on June 19, 1981, that company had merged in another public limited company called Sanghameshwar Coffee Estates Limited, Bangalore (“Sanghameshwar”). As transferee of all the assets and liabilities of Attikhan, Sanghameshwar has filed these revision petitions before this court. We will, however, treat them as the assessee.

2. On the coffee estate owned by it, Attikhan had constructed and maintained a Hindu temple employing the services of a poojari or a priest and had incurred pooja expenses from time to time. For the assessment years 1976–77 to 1980–81 relevant to the corresponding previous years, the assessee filed its returns under the Karnataka Agricultural Income-tax Act, 1957 (Karnataka Act 22 of 1957) (“the Act”), before the Agricultural Income-tax Officer, Mysore Circle, Mysore, and, inter alia, claimed the following amounts as permissible deductions for the relevant assessment years.

Particulars CRP Nos. 1976–77 3556/83 1977–78 3554/83 1978–79 3558/83 1979–80 3557/83 1980–81 3555/83 Rs. Rs. Rs. Rs. Rs. 1. Salary to poojari of the temple 3,570-32 4,201-00 6,101-35 6,313-00 6,449-83 2. Pooja expenses 1,160.41 1,902.93 1,407.49 1,000.00 3. Stock exchage listing fees — 300.00 300.00 2,000.00 1,000.00 4. Expenditure incurred on serving food and other refreshments to officers of various Government Departments and audit staff 375-88 1,111.32 505.00 1,222.10 5. Auditor's fee for tax matters 86400 1,688.00 2,379.00 3,340.00 6. Donation to Cyclone Relief Fund, Karnataka 6,000.00 7. Auditor's fee for certification work 450.00 800.00 8. Salary paid to teachers of the school in the estate 2,662-82 2,74,500 — 9. Donation to Admar Mutt Education Council, Udupi 10,000.00 10. Profession tax 25000 Total 3,570.32 6,901.29 20,216.42 25,349.49 14,431.88

3. On different dates, the Agricultural Income-tax Officer completed the assessments and disallowed them. Aggrieved by the said disallowances made by the Agricultural Income-tax Officer, the assessee filed appeals before the Deputy Commissioner of Agricultural Income-tax (Appeals), Mysore Division, Mysore, who by his separate orders made on different dates did not interfere with them. Aggrieved by the said orders of the Deputy Commissioner of Agricultural Income-tax and the Agricultural Income-tax Officer, the assessee filed Appeals Nos. 1, 73 to 76 of 1981, before the Karnataka Appellate Tribunal, Bangalore, which by its common order made on June 18, 1983, has dismissed them. Hence, these revision petitions by the assessee under section 55 of the Act.

4. Sri K.P Kumar, learned advocate of King and Partridge, has appeared for the assessee. Sri S. Rajendra Babu, learned Government Advocate, has appeared for the Revenue. Both sides, in support of their respective contentions, have relied on a large number of rulings and we will refer to them at the appropriate stage.

5. Sri Kumar has urged that the salary paid to the poojari and the pooja expenses of the temple were allowable deductions under section 5(1)(k) of the Act and the Tribunal, the Deputy Commissioner of Agricultural Income-tax and the Agricultural Income-tax Officer were in error in disallowing them.

6. Sri Rajendra Babu has urged that salary paid to the “poojari” and the pooja expenses were not “expenditure” laid out or expended wholly and exclusively for the purpose of deriving agricultural income and the disallowances made were legal.

7. The claim of the assessee is founded on section 5(1)(k) of the Act which is the residuary provision and the same as it stood then reads thus:

“5. Computation of agricultural income.—(1) The agricultural income of a person shall be computed after making the following deductions, namely:—…

(k) any expenditure (not being in the nature of capital expenditure) laid out or expended in the previous year wholly and exclusively for the purpose of deriving the agricultural income:

Provided that the following amounts shall not be deemed to be expenditure laid out or expended for the purpose of deriving the agricultural income,—

(i) in the case of any firm, any payment of interest, salary, bonus, commission or remuneration made by the firm to any partner of the firm;

(ii) in the case of any company, any expenditure which results directly or indirectly in the provision of any remuneration or benefit or amenity to a director or to a person who has a substantial interest in the company or to a relative of the director or of such person, as the case may be, if in the opinion of the Agricultural Income-tax Officer any such expenditure is excessive or unreasonable having regard to the legitimate business needs of the company and the benefit derived by or accruing to it therefrom;

(iii) any sum paid on account of wealth-tax under the Wealth-tax Act, 1957 (Central Act XXVII of 1957).”

8. This section is analogous to section 37 of the Income-tax Act, 1961 (“I.T Act”), and a Division Bench of this court consisting of Jagannatha Shetty J. (as his Lordship then was) and Rajasekhara Murthy J. has expressed that view. But, in that case or in any other cases decided by the Supreme Court or this court brought to our notice, they had no occasion to examine a similar claim and pronounce on the same.

9. On the principles relevant to determine whether an expenditure is a business expenditure or not under the Income-tax Act, 1961, the predecessor Act of 1922 and the English Income-tax Act, there are numerous decisions and a reference to all of them and extracting the relevant passages from them that have some bearing in the construction of section 5(1)(k) of the Act are not very necessary. But, a reference to a passage in Halsbury's Laws of England, fourth edition (Vol. 23)— Income Taxation—at para. 305, that neatly summarises them will be useful and that passage reads thus:

“305. Disbursements or expenses wholly and exclusively laid out.—In order that trade disbursements or expenses may properly be deducted, the amount must be wholly and exclusively laid out or expended for the purposes of the trade, profession or vocation.

The question what is expenditure wholly and exclusively for the purposes of a trade is a question of law, but the commissioners' decision whether particular expenditure is deductible must stand if there was evidence on which a person properly instructed in the law could come to the conclusion at which they arrived. The Income-tax Acts do not necessarily allow as expenses or deductions all the deductions the prudent trader would make in ascertaining his profit. It is first necessary to inquire if a deduction is prohibited by the Acts, and, if not, to consider whether it is of such a nature that it is a proper item to be charged against the receipts in a computation of the balance of profits or gains for the year. Thus, money may be expended wholly and exclusively for the purpose of the trade and yet not be expended of necessity and with a view to a direct and immediate benefit to the trade, but voluntarily and on the grounds of commercial expediency, and in order indirectly to facilitate the carrying on of the trade. This rule must not, however, be applied too freely, but must be modified to the extent that only such expenses are allowable as are incidental to the trade, and which can be said to be expended as a cost of earning the trade receipts. Counter and indirect advantages are usually too remote to permit of the deduction of an expense connected with such advantages, and money so expended is not wholly and exclusively laid out or expended for the purpose of the trade.”

10. In examining the claims for deduction, that the terms “agricultural income” must be liberally construed and the expenditure incurred must have reasonable nexus to the same are well settled by several rulings. We must examine the claim of the assessee on salary paid to the poojari and pooja expenses and other expenses founded on section 5(1)(k) of the Act, with due regard to the above principles and the language of the section which is more important.

11. Before us, the Revenue has not disputed the genuineness and reasonableness of the expenditure incurred by the assessee on the salary to the poojari and pooja expenses. Even the Tribunal, the final fact-finding authority under the Act, had not doubted the same. We must examine only the legality of the claims made by the assessee.

12. A Hindu temple, a Muslim mosque or a Christian church are all places of worship by the followers of those religions or faiths. A company, which is only a juristic person, cannot claim to profess, practise or follow any religion or faith. Even assuming that the assessee is an individual, then also the faith of that assessee cannot and will not be the faith of all employees of the estate. At the highest, the Hindu temple constructed and maintained in the estate serves the religious beliefs or faiths of employees of the estate only. But, Sri Kumar has contended that it was also a welfare benefit and helps in having a satisfied worker. We are afraid that this is too far fetched. We cannot on any principle hold that it was a welfare measure and helps in maintaining a satisfied worker. We are clearly of the view that the same is in no way concerned with the maintenance and upkeep of the estate and help in deriving agricultural income from such estate and cannot, therefore, be allowed as a permissible deduction under section 5(1)(k) of the Act.

13. In Kolhapur Sugar Mills Ltd. v. CIT, [1979] 119 ITR 387, a Division Bench of the Bombay High Court consisting of Kantawala C.J and Tulza-purkar J. (as his Lordship then was) had occasion to examine whether expenditure incurred by an assessee under the Indian Income-tax Act, 1922, on “Satyanarayana Mahapooja” can be allowed as a deduction under section 10(2)(xv) corresponding to section 37 of the Income-tax Act. While doubting the correctness of the claims made by the assessee in that case, which has no relevance for us, on principle also, the court rejected the same in these words (at p. 389):

“It is impossible to accept the contention urged by Mr. Munim for the simple reason that the expenses cannot be regarded as expenses having been incurred wholly or exclusively for business purposes of the assessee-company…It is also difficult to accept the further submission of Mr. Munim that these expenses should be regarded as welfare expenses for labourers.”

14. We are in respectful agreement with these views.

15. In Atlas Cycle Industries Ltd. v. Commissioner Of Income-Tax, Patiala., [1982] 134 ITR 458, a Division Bench of the Punjab and Haryana High Court consisting of Dhillon and Sharma JJ. had occasion to examine the claim for allowing depreciation on the cost of construction of a temple in its factory premises under section 32(1)(iv) of the Income-tax Act which was disallowed by the authorities under that Act. On a reference made at the instance of the assessee, the court answered the question in favour of the assessee expounding thus (at pp. 465 & 466):

“It cannot be disputed that a satisfied worker is a great asset to the business and the satisfaction of the worker not only depends upon the pay packet which he receives at the end of the month, but also on the other amenities provided to him by his employer. When questioned, the learned counsel for the Revenue conceded that if the assessee had incurred some expenditure on the erection of a club for the workmen, it would have been entitled to claim a deduction from its taxable income, but he submitted that since the amount had been spent for a religious purpose, the assessee could not claim any benefit unless its case fell squarely within the ambit of section 80G of the Act. We are unable to accept this contention. If the workers can overcome their boredom by playing cards in a club, we see no reason for holding that they cannot achieve the same result by singing hymns in a temple. Besides, we see no reason to place any curbs on the discretion of the assessee to provide the type of recreation, which, according to it, would best advance the interests of its business. What we have to see is whether the recreation provided, even if it be in the nature of religious activity, has a direct nexus with the welfare of a class of workers engaged by the assessee or not. If the answer to this proposition is in the affirmative, it is wholly immaterial if the recreation provided is directly or indirectly connected with the religious tenets of a section of the society. The deductions envisaged in section 80G of the Act form a class by themselves and can be claimed whether they have any nexus with the business of the assessee or not. They are claimed because the law allows them to be claimed regardless of any business activity and not because the amount has been spent as a measure of business expediency. Faced with this situation, Mr. Awasthy raised a novel argument. According to him, as soon as the assessee built a temple and installed a deity therein, the temple became the property of the deity and the amounts spent on the temple likewise came to vest in the deity. This is an entirely new case which is being set up on behalf of the Revenue in these proceedings and the same cannot be allowed. Even otherwise, there is abundant evidence on the record to show that the assessee did not relinquish its title to this property. The fact that it has claimed depreciation for the building itself shows that it treated the building as belonging to it and there had never been any intention on its part to vest the title of the building in the deity.”

16. First, we are of the view that these principles enunciated in the language of the provisions of the Income-tax Act are not apposite. Even if they are apposite, then also for the very reasons on which we have reached a different conclusion, we find it difficult to subscribe to the views expressed by their Lordships.

17. On the foregoing discussion, we find no ground to interfere with the disallowance of salary paid to the poojari and pooja expenses claimed by the assessee.

18. Sri Kumar has urged that the authorities were in error in disallowing. “stock exchange listing fees for the years 1977–78 to 1980–81”.

19. The stock exchange listing fees is generally incurred to facilitate easy trading in the shares of a company. Both on principle and authority, it is not possible to hold that the same had been laid out wholly and exclusively for deriving agricultural income. We are of the view that the authorities were justified in rejecting this claim of the assessee.

20. Sri Kumar has urged that the expenditure incurred on serving food and other refreshments to officers of various Government Departments and audit staff that visited the estate was legitimate expenses incurred by the assessee and were allowable under section 5(1)(k) of the Act.

21. We are not here concerned with the correctness of the amounts spent or the desirability or otherwise of spending amounts on the officers visiting the estate. Both on principle and authority, it is not possible to hold that the expenses on officers visiting the estate had been laid out wholly and exclusively for deriving agricultural income. We see no merit in this contention of Sri Kumar and reject the same.

22. Sri Kumar has urged that the authorities had acted illegally in disallowing the auditor's fee for tax matters and certification work, viz., items Nos. 5 and 7 set out earlier.

23. In Nilgiri Plantations Limited v. State of Karnataka (C.R.P No. 1727 of 1980 decided on 10-2-1984), a Division Bench of this court consisting of Jagannatha Shetty J. (as his Lordship then was) and Raja-sekhara Murthy J. examining a similar claim had found that the same was an allowable deduction under section 5(1)(k) of the Act. Sri Rajendra Babu has not been able to point out any good ground for not applying the principles enunciated by this court in Nilgiri Plantations Limited's case. We are, therefore, of the view that these claims of the assessee deserve to be allowed.

24. Sri Kumar has urged that salary paid to teachers of the school maintained in the estate for the benefit of the children of the employees of the estate and profession tax paid to the Government were legitimate expenses allowable under section 5(1)(k) of the Act.

25. Sri Rajendra Babu has sought to support the orders of the authorities.

26. In a far flung area of a hill, cut off from the town where schools are generally maintained only by the Government and others, the maintenance of a school was undoubtedly in the interest of children of the employees. The maintenance of a school in the estate is a welfare measure and was in the interest of the employees. The salary paid to teachers cannot be said to be a fanciful claim and cannot be compared to the claim on salary paid to poojari of the temple and the pooja expenses. We are, therefore, of the view that the authorities were in error in disallowing this claim of the assessee.

27. The profession tax paid is an obligation fastened on the assessee under a State enactment called the Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976. When that is so, there is hardly any ground to disallow the same. We are of the view that the same should be allowed.

28. Sri Kumar has lastly urged that the donations of Rs. 6,000 to the Cyclone Relief Fund and Rs. 10,000 to the Admar Mutt Education Council, Udupi, were donations allowable under section 12(g) of the Act.

29. In support of these claims, the assessee has produced authenticated copies of receipts, the correctness of which is not disputed by the Revenue. The amount of Rs. 6,000 paid by the assessee to the Cyclone Relief Fund is an approved donation (vide Notification No. FD 84 CAX 77, dated December 5, 1977). Even the donation of Rs. 10,000 to the Admar Mutt Education Council, Udupi, was an approved donation (vide Notification No. FD 14 CAX 78, dated June 12, 1978). We are, therefore, of the view that on the language of section 12(g) of the Act and the aforesaid notifications issued by the Government, the authorities were in error in disallowing them.

30. In the result, we make the following orders and directions:

(a) We reverse the orders of the Tribunal, the Deputy Commissioner and the Agricultural Income-tax Officer in so far as they relate to items—

(a) auditor's fee for tax matters;

(b) donation to Cyclone Relief Fund, Karnataka;

(c) auditor's fee for certification work;

(d) salary paid to teachers of the school in the estate;

(e) donation to the Admar Mutt Education Council, Udupi, and

(f) profession tax for the relevant assessment years and modify those orders and allow them as claimed by the assessee and direct the Agricultural Income-tax Officer to suitably modify his assessments for those years.

(b) We dismiss these revision petitions in all other respects.

31. Civil Revision Petitions disposed of in the above terms. But, in the circumstances of the case, we direct the parties to bear their own costs.