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TMI Blog2008 (5) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar , A.N.Mahajan , B.Agarwal , D. Awasthi , G.Krishna , R.K. Upadhyay and S.Chopra JUDGMENT The judgment of the court was delivered by Sudhir Agarwal, J. - At the instance of Revenue, the Income Tax Appellate Tribunal, Allahabad Bench, Allahabad has referred under Section 256(2) of the Income-tax Act, the following question of law for the opinion of this Court: "Whether on the facts and in the circumstances of the case, the Tribunal was justified in allowing the expenditure of Rs. 1,72,763/- incurred on agricultural operation by the assessee? 2. Brief necessary facts to understand the dispute are as under. The assessee M/s Kanpur Colonisers (Pvt), Ltd. is a coloniser dealing in purchase and sale of land. Certain land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved thereto the Revenue has got the aforesaid question referred for adjudication by this Court. 3. It is argued on behalf of the Revenue that the Tribunal has erred in relying on assessee's explanation that plantation of eucalyptus trees was not done on the land which was acquired and instead it was a new land and was treated to be stock in trade and, therefore, the expenditure incurred thereon was liable to be treated as revenue expenditure, and, the Tribunal without considering the issue which was up for consideration, has wrongly held that the expenditure in question was liable to be treated as revenue expenditure instead of capital expenditure. The citation it has given in support of its finding is non est. 4. We have heard le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeded to grow eucalyptus trees for sale as part of the land in the course of business of colonization. On the contrary, the intention clearly appears to be, for the time being, while the land was yet to be developed for the purpose of colonization, eucalyptus trees were planted so as to be sold subsequently. In order to ascertain as to what would constitute capital expenditure or revenue expenditure, one of the simple tests which is normally applied is whether the expenditure is incurred to preserve and maintain an already existing asset or to bring a new asset into existence or to obtain new advantage. Though in slightly different context, but when the expenditure can be said to have been incurred on current repairs wouold constitute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icult to uphold the contention of the assessee that eucalyptus trees planted by him could be treated to be stock in trade. The decision referred to by the Tribunal, i.e., 76 ITR 650 is a wrong citation as there is no such decision in the journal. In our view, the Apex Court's decision in Kailas Rubber Co., 60 ITR 435 (supra) would be more apt to be referred where the assessee was dealing in latex rubber and was getting income from rubber trees in the shape of latex. For the said purpose, he had planted rubber trees on the land but in the course of time, the old rubber trees ceased to be productive and being unyielding were sold. It was held that the said rubber trees formed part of capital asset of the respondent and was not taxable as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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