TaxTMI 
TaxTMI 
1996 (2) TMI 3
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....g that the assessee was not entitled to development allowance at 50 per cent. on the sum of Rs. 71,500 being a part of the expenditure incurred during the assessment years 1966-67 and 1967-68 on 1967 tea clearing under the provisions of section 33A of the Income-tax Act for the assessment year 1971-72 ? " Section 33A of the Income-tax Act, 1961, provides for development allowance for clearing land and planting of tea bushes by a tea company. In this case, the clearing of the land and planting of the tea bushes were done in July, 1967 (within the accounting year ended on October 31, 1967). The expenses for that year and the subsequent year ended on October 31, 1968, were taken into consideration in the assessment for the assessment year 1....
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.... on the following figures : 1967 clearing : Rs. Unclaimed expenses of 1967 and 1968 71,500 Expenses for 1969 and 1970 1969 clearing : 62,004 1st and 2nd year expenses 33,861 1,67,365 50 per cent. thereof 83,682 The company had created a reserve of Rs. 70,000." For the assessment year 1971-72, the Income-tax Officer allowed the claim in respect of the 1969 clearing, i.e., the expenses in respect of the first and the second year at that clearing. For the 1967 clearing, the assessee claimed that a part of the expenses of the first and the second year (1967....
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....) contemplated a recomputation of the actual cost of planting. The High Court was of the view that if after the computation, it was found that the recomputed amount exceeded the amount allowed as deduction under clause (a), the excess will have to be allowed as deduction. This provision, according to the High Court was mandatory. The High Court, therefore, concluded that the claim of the assessee should have been allowed by the Tribunal, The question referred to it was answered in the negative and in favour of the assessee. The Commissioner of Income-tax has now come in appeal against the decision of the High Court. Section 33A(1) provides,-- "33A. Development allowance.--(1) In respect of planting of tea bushes on any land in India o....
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....se may be : Provided that no deduction under clause (i) shall be allowed unless the planting has commenced after the 31st day of March, 1965, and no deduction shall be allowed under clause (ii) unless the planting has commenced after the 31st day of March, 1965, and been completed before the lst day of April, 1970." Sub-section (2) provides for set-off and carry forward of unadjusted development allowance to the following assessment years. Sub-section (3) provides that the deduction under sub-section (1) shall be allowed only if the prescribed particulars had been furnished by the assessee and a reserve was created of an amount equal to 75 per cent. of the development allowance to be actually allowed. Having regard to the object and c....
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....n or authority. In other words, 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 form the basis of calculation of development allowance. All these things may not take place in one particular year. 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. Section 33A(1)(a) and (b) makes it clear that deduction on account of development allowance will be granted in two stages. The first stage is under clause (a) under which the development allowance will have to be computed "in the first instance" a....