COMMISSIONER OF INCOME TAX Vs. TASATI TEA LTD

JUDGEMENT

(1.) The following question was referred for our answer :

(2.) Learned counsel for the Revenue has submitted that there was no evidence to show that the nursery was maintained by way of replantation of dead or useless plants within the meaning of Rule 8(2) of the Income-tax Rules, 1962. He has pointed out from the paper book that there was no such evidence. Therefore, the allowance by the Tribunal under Rule 8(2) of the expenses for maintaining nursery cannot be sustained and the question referred is to be answered in the negative in favour of the Revenue.

(3.) Learned counsel for the assessee, on the other hand, points out that even though it is a stage prior to the replantation, still it comes within the ambit of Rule 8(2) since without a nursery there cannot be a replantation. The application of Rule 8(2) cannot be confined only to the stage of replantation, which includes the raising of plant as well. Alternatively, he claimed that even if it does not come under Rule 8(2) the expenditure incurred for raising plants in a nursery for the purpose of replantation without expanding the plantation is a revenue expenditure otherwise allowable. According to him, there is no material to show that the plants raised in this nursery were utilised in the relevant year for expansion of the plantation conferring the character of capital expenditure on the said transaction. Therefore, according to him, the question should be answered in the affirmative or, in the alternative, if that cannot be done then the order should not be interfered with.