TMI Blog1960 (11) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... iness and of 123 and odd acres of immature plants. The coffee plantation consisted of nearly 2,500 acres of mature coffee plants as against roughly 300 acres of immature plants. During the year of assessment 1955-56, a revenue expenditure of ₹ 13,37,353 was allowed, but the claim of ₹ 52,420 and ₹ 8,176 respectively, spent on the upkeep of immature tea and coffee clearings, was disallowed. The Agricultural Income-tax Officer rejected the claim on the basis that its was capital expenditure, observing: All expenditure on new clearings till they come to bearing is capital expenditure. This view was accepted in appeal by the Assistant Commissioner, and also by the Appellate Tribunal, which held that the expenditure could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany and its profits were derived from the cultivation and sale of rubber. A sum of 2,022 was claimed as a proper deduction being the expenses incurred in superintendence, allowances, weeding and so on. Revenue objected to this deduction on seventh year, and that, therefore, only one-seventh of these expenses would be deductible expenses as relating to trees which actually yielded rubber; that is to say, the expenses of maintenance and upkeep of the immature trees was thought note to be a proper deduction on the ground that the expenses should be solely referable to the; profit which was read within the year. This proposition was charcterised by the learned judges as absurd. They noticed [1910] 5 Tax Cas. 529, 535: It would mean this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital expenditure as against what is income expenditure to say that capital expenditure is a thing that a going to be spent once and for all, and income expenditure is a thing that is going to secure every year. Therefore prima facie weeding, which does occur every year seems to me to be an income expenditure. This decision is in clear support of the view that in the case of income derived from plants or trees, the expenses of maintenance and upkeep of immature trees before they come to bear is not capital expenditure. This aspect of the matter has also been considered in a decision of the Kerala High Court in Commissioner of Agricultural Income-tax v. Pullangode Rubber and Produce Co. Ltd. [1960] 40 I.T.R. 681 (Ker.). The view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less income from a business. The applicability of the Vallambrosa decision in so far as the deduction of expenses relating to immature tea and coffee plants is concerned is not affected by reason of this agricultural income being derived from a business, that is the business of running the plantation. This should be sufficient to dispose of the present revision petition. We, however, feel that it is necessary to decide whether this expenditure could properly fall with the scope of section 5(a) or section 5(g) of the Act. In a similar case where the question of the deduction of the amount spent on the upkeep and maintenance of immature rubber trees arose, the Kerala High Court in the decision cited above came to the conclusion that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rees is not capital expenditure. Where a plantation is for the first time laid out, the various items of expenses which go to bring the plantation into being, including the initial planting thereof, would obviously be capital expenditure. But, in a case where trees which have ceased to yield have to be replaced, the proviso to section 5(g) clearly states that such expenses of replanting shall be regarded as revenue expenditure, allowable, of course, within certain limits. If that be the case, then it should necessarily follow that the subsequent upkeep or maintenance of those replanted trees till they come to bearing would also be within the scope of the expression contained in section 5(g), viz., of cultivating the crop from which the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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