2003 (2) TMI 42

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....he 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. 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 ....

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....or dead plants by replanting the bushes within the plantation area. It had never claimed to have used these plants for expansion of the plantation. There was no suggestion at any point of time on the part of the Revenue that these plants were used for the purpose of expansion of the plantation. Learned counsel for the Revenue has pointed out many things in order to obtain an order of remission. But on a reference, the court cannot travel beyond the materials already on record. No additional evidence can be taken. Neither any submission made from the Bar can be looked into. Having regard to the order at page 51 of the paper book, we find that the expenditure of Rs. 4,68,615 was spent towards raising and maintenance of nursery in the vacancy ....

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....antation in an abandoned area, then it cannot be said to be a capital expenditure. Capital expenditure involves an investment increasing the capital for higher profit. The expansion means extension of plantation to an additional area. An area already abandoned, if replanted would be an expansion of the area under cultivation for the previous year concerned. The maintenance of an area already under cultivation cannot be treated to be an expansion of the plantation nor can it be treated to be an investment or expansion adding to the capital already invested. On the other hand, it would be a maintenance of the plantation itself and, therefore, is a revenue expenditure. In our view, neither the Assessing Officer nor the Commissioner of Incom....