Actual Cost of Planting - Definition / Legal Terminology - Income Tax

For the purposes of section 33A(7) of the Income tax Act 1961, Actual Cost of Planting means the aggregate of- ( i ) the cost of preparing the land; ( ii ) the cost of seeds, cutting and nurseries; ( iii ) the cost of planting and replanting; and ( iv ) the cost of upkeep thereof for the previous year in which the land has been prepared and the three successive previous years next following such previous year, reduced by that portion of the cost, if any, as has been met directly or indirectly by any other person or authority: Provided that where such cost exceeds- ( i ) forty thousand rupees per hectare in respect of land situate in a hilly area comprised in the district of Darjeeling; or ( ii ) thirty-five thousand rupees per hectare in respect of land situate in a hilly area comprised in an area other than the district of Darjeeling; or ( iii ) thirty thousand rupees per hectare in any other area, then, the excess shall be ignored. Explanation .-For the purposes of this proviso, district of Darjeeling means the district of Darjeeling as on the 28th day of February, 1981, being the date of introduction of the Finance Bill, 1981, in the House of the People. From the section 33A(7), it is clear that the development allowance is granted for the process of planting or replanting any land with tea bushes. The process is a continuous one, spread over a length of time, and involving alteration and readjustment of ideas and operations from time to time. The reckoning of the actual cost incurred for planting and replanting must, in the nature of things, await the finalisation of the plans and ideas and termination of the process of planting and replanting. It is only thereafter that an allowance can be given for the actual cost of planting as defined in section 33A(7): Any cost worked out till the final evolution of ideas and their execution must, in the nature of things, be only tentative. [KIL KOTAGIRI TEA AND COFFEE ESTATES LIMITED Vs CIT, ERNAKULAM - 1977 (11) TMI 49 - KERALA HIGH COURT]