Rehabilitation Plantations Limited Vs State of Keral (Kerala High Court)
The Kerala High Court (Kerala High Court) considered two sets of tax cases filed by an assessee under Section 78 of the Kerala Agricultural Income Tax Act, 1991. The first set challenged multiple orders passed by the Kerala Agricultural Appellate Tribunal between March and May 2022, while the second set challenged the Tribunal’s order dated 12.03.2024 rejecting review petitions filed by the assessee.
The core issue before the Court was whether the assessee was entitled to deduction of expenditure incurred on replantation or replacement of rubber trees and their upkeep, with reference to the provisions of the Kerala Agricultural Income Tax Act read with Rule 7A of the Income Tax Rules, 1962. The Tribunal had rejected the assessee’s claim by relying on an earlier Division Bench judgment of the High Court in Rehabilitation Plantations Ltd. v. Commissioner of Income Tax (2012).
The assessee contended that the 2012 Division Bench judgment had subsequently been doubted and referred to a Full Bench of the High Court. The Full Bench, in Rehabilitation Plantations Ltd. v. Commissioner of Income-Tax (2023), held that expenditure incurred on upkeep and maintenance was revenue in nature and therefore eligible for deduction under Section 37 of the Income Tax Act, 1961. The Full Bench also held that the earlier Division Bench judgment did not lay down the correct law.
