Rubber replantation expenditure is capital in nature and outside the limited deduction for replacement planting.

Rule 7A(2) allows deduction only for the cost of replacing rubber plants that have died or become permanently useless in an already planted yielding area. Expenditure on replantation of an entire rubber plantation after cutting and removing old trees is capital in nature and falls outside that limited allowance. The claim therefore was not allowable, and the lower authorities were correct to reject it. The computation was also required to remain consistent with the State agricultural income-tax scheme, which did not permit replantation expenditure except within a restricted allowance.

---

---

Issues: Whether expenditure incurred on replantation of rubber trees in an existing plantation was allowable as a deduction under Rule 7A(2) of the Income-tax Rules.

Analysis: Rule 7A(2) permits an allowance only for the cost of planting rubber plants in replacement of plants that have died or become permanently useless in an area already planted, that is, infilling in an existing yielding plantation. The expenditure claimed by the assessee was not for replacement of dead or useless plants in an existing area, but for replantation of whole areas after cutting and removing old trees. Such expenditure is capital in nature and does not fall within the scope of Rule 7A(2). The computation under the Central regime was also required to be kept in harmony with the State agricultural income-tax scheme, which did not permit deduction of replantation expenditure except by way of a limited allowance.

Conclusion: The claim for deduction was not allowable and was rightly rejected by the lower authorities.

Ratio Decidendi: Rule 7A(2) allows only the cost of replacing dead or permanently useless plants in an already planted yielding area, and replantation of an entire area after removal of old trees is capital expenditure outside its scope.

---