Factual nexus for immature-plant expenses bars arbitrary acreage-based disallowance of common estate overheads.

Proportionate general charges and common estate expenses cannot be disallowed as relating to immature plants unless there is a definite and real factual nexus with the immature area. A mechanical apportionment of total estate overheads on an acreage basis was treated as arbitrary, because the enquiry depends on whether the expenditure was truly incurred for cultivation, upkeep or maintenance of immature plants. On the record, the acreage-based disallowance was not justified, and the issue was answered in favour of the assessee and against the department.

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Issues: Whether the proportionate general charges and common estate expenses were liable to disallowance by being apportioned on an acreage basis as relating to immature plants.

Analysis: The allowance or disallowance of expenditure connected with immature plants depends on whether the item was in truth laid out or expended for the cultivation, upkeep or maintenance of immature plants. That enquiry is essentially factual and requires a real and definite connection with the immature area. A mechanical division of total estate overheads by acreage and attribution of a proportion to the immature area was held to be an arbitrary method and not justified on the record.

Conclusion: The disallowance of the proportionate general charges was not justified and the question was answered in favour of the assessee and against the department.

Ratio Decidendi: Expenditure can be disallowed as relating to immature plants only when there is a definite and real factual nexus with the immature area, and not by a purely arithmetical acreage-based apportionment of common estate overheads.

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