Rajesh Bindal, J. - (1.) Following questions of law have been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short 'the Tribunal'), arising out of its order dated 22.1.1995 in I.T.A.No. 8414/Del/90, in respect of the assessment year 1987-88:- 1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that the income derived from hiring of tractors and combines etc was agricultural income within the meaning of sub-sec (1A) of Section 2 of the Income-tax Act, when the immediate and effective source of such income was not land?
(2.) Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that the proviso to Section 43B, inserted by the Finance Act,
(3.) Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that bonus relatable to the employees and labour at agricultural farm whose income was non-taxable, can be allowed as a deduction against taxable income from the business. The assessee, which is a State owned undertaking, filed its return of income, for the assessment year in question, on July 31, 1987 declaring a loss of Rs. 131.93 lacs. As the return was not accompanied by audited Trading, Profit and Loss Account, a notice was issued under Section 139(9) of the Income Tax Act, 1961 (for short 'the Act') on August 12, 1987. Thereafter, the assessee filed another return on August 27,1987 alongwith audited Profit and Loss account and Balance Sheet. The assessee is running an agricultural farm at Hisar. A perusal of the the profit and loss account shows that a sum of Rs. 3,40,304/- had been shown as income from each tractors, trucks, combines and trollies which included a sum of Rs. 2/- charged from each labour for bringing them at the agricultural farm. According to the Assessing Officer, as there was no detail available, on estimate basis a sum of 25% of the total receipt was disallowed as agricultural income and was treated as business income. In appeal before the Commissioner of Income-tax (Appeals), the averment was upheld. However, the Tribunal accepted the appeal of the assessee and ordered for deletion of the above amount by holding that the amount charged was incidental or ancillary to the agricultural activity. As far as the question of charging Rs. 2/- each from labourers for bringing them to the farm was concerned, there was no evidence on record to establish that the assessee was doing any business of running the vehicle on hire and the receipt on this account was also held to be in connection with the agricultural operation. Learned counsel for the Revenue submitted that since the assessee had not produced any record to show the details of the amount charged, the authorities below were well within their right to make an estimation thereof and treat that part of the receipt as income. According to the counsel, the Tribunal had gone wrong in holding that this kind of receipt from the labourers for bringing them to the farm was part of agricultural receipt. However, it has not been disputed that the entire activity of the corporation was in connection with the agricultural operation.;