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TMI Blog2008 (5) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal was justified in allowing the expenditure of Rs. 1,72,763/- incurred on agricultural operation by the assessee? 2. Brief necessary facts to understand the dispute are as under. The assessee M/s Kanpur Colonisers (Pvt), Ltd. is a coloniser dealing in purchase and sale of land. Certain land which it had purchased during the period in question, and had not been sold to prospective buyers, the assessee resorted to plantation of eucalyptus trees thereon, wherefor incurred an expenditure of Rs. 1,72,763/- in the assessment year in question, namely, 1986-87. The assessee claimed the aforesaid expenditure as revenue expenditure but it was not accepted by the assessing authority and he treated it to be an expenditure of capital nature. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without considering the issue which was up for consideration, has wrongly held that the expenditure in question was liable to be treated as revenue expenditure instead of capital expenditure. The citation it has given in support of its finding is non est. 4. We have heard learned Standing Counsel appearing for the Revenue and perused the record. From the record it is evident that the assessee was not engaged in the business of agriculture or sale of agricultural products. It has undergone plantation of eucalyptus trees till the land in question is developed for onward sale. The question as to how in these circumstances, the expenditure incurred on plantation of trees would be dealt with, has to be considered in the light of admitted fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure is incurred to preserve and maintain an already existing asset or to bring a new asset into existence or to obtain new advantage. Though in slightly different context, but when the expenditure can be said to have been incurred on current repairs wouold constitute revenue expenditure or capital expenditure, came to be considered before the Apex Court in Ballimal Naval Kishore Vs. C.I.T. (1997) 224 ITR 414 and the Apex Court approved the test formulated by Hon'ble Chhagla, C.J. In New Shorrock Spinning and Manufacturing Co. Ltd. Vs. CIT (1956) 30 ITR 338 (Bombay) where it was observed: " The simple test that must be constantly borne in mind is that as a result of the expenditure which is claimed as an expenditure for repairs what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had planted rubber trees on the land but in the course of time, the old rubber trees ceased to be productive and being unyielding were sold. It was held that the said rubber trees formed part of capital asset of the respondent and was not taxable as agricultural income as defined under the Agricultural Income Tax Act, 1950. The aforesaid decision has been followed in Travancore Rubber & Tea Company Ltd. Vs. Commissioner of Income-tax Trivendrum, AIR 2000 SC 1980. 8. We, therefore, answer the question in favour of Revenue and against the assessee holding that the Tribunal erred in treating the expenditure incurred by the assessee towards the plantation of eucalyptus trees as revenue expenditure and the same could not have been treated to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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