TMI Blog2012 (2) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... the said herbal plant. Consequently they sustained loss and in turn the assessee sustained loss. The said cultivation expenses was ₹ 90.64 Lakhs. Therefore the assessee claimed the said amount as revenue expenditure as the said expenditure was incurred to facilitate its business and due commercial expediency. As such the loss are primarily attributable to the business which the Assessee is carrying on and the said expenses are wholly and exclusively for the purpose of business. The said cultivation expenses incurred by the Assessee is in the nature of revenue expenditure in the course of business and the Assess is entitled to deduction of the same as business expenditure. Therefore the Tribunal is justified in uploading such claim gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and exclusively for the purpose of its business. Therefore the Tribunal held that authorities below were not justified in disallowing the cultivation expenses of ₹ 90.64 Lakhs claimed by the Assessee. Aggrieved by the said order. Revenue is in appeal. 3. The learned Senior Counsel appearing for Revenue assailing the impugned order contended that the Tribunal has recorded a finding that Assessee was involved in agriculture activity in fact. It has advanced money to the farmers for growing coleus crop. The expenses incurred in connection with the cultivation of said crop could be set-off against the income which was exempted from payment of Income Tax. But it cannot be constructed as an expenditure incurred in carrying on the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmers free of cost. ii) Supply of farm inputs free of cost iii) Arranging payments to them. To propagate its intention to supply seeding from its nursery to other farmers it had entered into agreements and supplied coleus seeding to the farmers with a condition to recovery the cost of coleus seeding at 10 paise per seeding at the time of harvest. However the Assessee was not able to achieve the desire of generating sufficient quantities of coleus. Instead it had rather gone to purchase sapree of coleus seeding in a large scale from other farmers. Therefore the assessee did not generate any agricultural income of the said income. In fact they did not involve themselves is any agricultural activities but they encouraged cultivation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree English judgments, it was held to be use of money in the course of the company s business and not an investment of capital at all. The cases referred to therein illustrate the distinction between an expenditure by way of investment and an expenditure in the course of business which has been described as current expenditure, the first may truly be regarded as on the capital side but not the second. The amount was an advance against price of one crop. The oppigedars were to get the assistance not as an investment by the assessee company in its agriculture but only as an advance payment of price. The amount so far as the assessee company was concerned represented the current expenditure towards the purchase of sugarcane thus purchased was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Assessee would be entitled for allowance of the said cultivation expenses as revenue expenditure. 10. In the instant case, material on record disclose, the Assessee is in the business of manufacture and export of standardized herbal extracts as well as in the manufacture of fine chemicals. In order to carry on their business they were in need of herbal coleus plants, they thought of roping the farmers for growing said herbal plant. They provided seeding, fertilizer and financial assistance to the farmers with an agreement to deduct the expenses out of the cost of the plant sold by the farmers. But, even the farmers could not grow the said herbal plant. Consequently they sustained loss and in turn the assessee sustained loss. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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