LexTHE COMMISSIONER OF INCOME TAX, KERALA versus THE KILKOTAGIRI TEA AND COFFEE ESTATE CO. LTD.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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THE COMMISSIONER OF INCOME TAX, KERALA
A
v.
THE KILKOTAGIRI TEA AND COFFEE ESTATE CO. LTD.
FEBRUARY 13, 1996
B
[B.P. JEEVAN REDDY AND SUHAS C. SEN, JJ.J
Income Tax Act, 1961: Section 33-A(l)(a) and {b).
Income T~evelopment allowance--lncurred on clearing land and
planting tea bushes-Computation of-Part of the development expenses C
. dwing two previous years-Neither claimed nor allowed-Held : assessee
entitled to claim remaining part at second stage in assessment of third
succeeding previous year.
The respondent - assessee claimed Development allowance at 50% of D
the expenditure incurred for clearing land and planting of tea bushes
during the assessment year 1966-67 and 1967-68. For the 1967 clearing, the
respondent - assessee claimed that a part of the expenses of the first and
second year (1967 and 1968) which was neither claimed nor allowed in the
earlier assessment years should be taken into consideration. The Income E
Tax Officer disallowed the claim which was upheld by the Appellate
Assistant Commissioner. The Tribunal upheld his order. On appeal the
High Court reversed the order of the Tribunal. Aggrieved by the High
Court's judgment the appellant preferred the present appeal.
Dismissing the appeal, this Court
F
HELD : 1.1. The scheme of development allowance was to encourage
tea industry to expand. Unlike some other provisions of the Income Tax
Act, 1961 for expenditure incurred for planting tea bushes in one par-
ticular year, allowance under Section 33A of the Act may be given in a
subsequent year. In view of the specific provisions of Section 33A of the G
Act, the grant of the allowance cannot be limited only to the year in which
the expenditure was actually incurred or the immediate next year there-
after. This allowance is given "in respect of planting of tea bushes on any
land on which tea bushes had not been planted at any time earlier or on
any abandoned land". [607-D-E]
H
601
A
B
c
602
SUPREME COURT REPORTS
[1996] 2 S.C.R.
1.2. Development allowance is also permissible where fresh tea
bushes are planted in replacement of useless tea bushes or tea bushes that
have died. The basis of calculation of the allowance is a percentage of
"actual cost of planting" of tea bushes which has been defined by Section
33A(7) of the Act. The aggregate amount of the costs on the different heads
has to be reduced if any of these costs have been met directly or indirectly
by any person or aµthority. If any financial assistance or subsidy or any
other form of aid is received from the Government or any other agency or
person, that will go to reduce the amount of costs which will forni the basis
of calculation of development allowance. All these things may not take
place in one particular year. [607-F-H]
2.1. The very definition of "actual cost of planting" indicates that a
span of four years has to be taken into account for the purpose of
computation of development allowance. In computing the income of the
previous year following the previous year in which the land was first
D prepared for planting or replanting, the actual costs will be calculated and
in the assessment of the second year's income, development allowance will
be granted to the assessee provided he has taken the other steps for
claiming the allowance including creation of sufficient reserves. [608-A-C]
2.2. In the instant case, the assessee had made sufficient reserves for
E the claim he had made under clause (a) of Secfion 33A. But merely
because, the assessee had not claimed . the full amount of development
allowance in the first instance, will not disentitle him from claiming the
outstanding amount at the second stage under clause (b). Development
allowance under clause (b) has to be given by computing the actual costs
p
of planting once again. The assessee will be entitled to compute the
allowance once again on the basis of actual costs of.planting tea bushes at
the second stage in the assessment of the third succeeding previous year
reckoned from the previous year in which the land was prepared for
planting or replanting. [608-D-F)
G
2.3. There is nothing in Sectiori 33A to suggest that development
allowance for expenditure incurred in respect of first two ye~rs must be
calculated and claimed at the very first stage, i.e., at the stage of the second
year of assessment after planting of tea bushes. Because of the protracted
work involved in preparation of the landExcerpt shown. Read the full judgment & AI analysis in Lexace.