Expenses on replantation without any expansion of plantation area or replantation in an abandoned area are not capital expenditure

ACIT Vs M/s Gillanders Arbuthnot & Co. Ltd. (ITAT Kolkata)

1. Expenses on replantation without any expansion of plantation area or replantation in an abandoned area are not 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 not can it be treated to be an investment or expansion adding to the capital already invested. On the other hand, it would be maintenance of the plantation itself and, therefore, is revenue expenditure.

Held by ITAT

We are of the view that in the light of the admitted factual position that expenses were incurred on plants and for replantation without any expansion of plantation area or replantation in an abandoned area, the expenditure in question cannot be regarded as a capital expenditure.

2. Employees’ contribution to PF paid on or before the due date of filing the return of income u/s 139(1) of the Act should be allowed as deduction

AO noticed that the employee’ contribution to provident fund in respect of tea division of the assessee amounting to Rs.7,00,683/- was deposited beyond the due date prescribed under the relevant law governing contribution to provident fund. The AO invoked the provision of section 36(1)(va) of the Income Tax Act, 1961 (Act) w.s.43B of the Act and added a sum of Rs.7,00,683/- to the total income of the assessee on the ground that employees share of contribution was paid beyond the due date and hence should not be allowed as deduction while computing income as per the provisions of Sec.43B of the Act.