- (1.) 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 which it had purchased during the period in question, and had not been sold to prospective buyers, the assessee resorted to plantation of eucalyptus trees thereon, wherefor incurred an expenditure of Rs. 1,72,763/- in the assessment year in question, namely, 1986-87. The assessee claimed the aforesaid expenditure as revenue expenditure but it was not accepted by the assessing authority and he treated it to be an expenditure of capital nature. The appeal preferred by the assessee against the assessment order was dismissed by the Commissioner of Income-tax Appeals (Kanpur) vide order dated 6.4.1988 and relying on Apex Court s decision in Commissioner of Agricultural Income Tax, Kerala v. Kailas Rubber Co. Ltd. , Kerala High Court s decision in Travancore Tea Estates Co. Ltd. v. Commissioner of Income-tax , Madras High Court s decision in Beverley Estates Ltd. v. Commissioner of Income-tax, Madras and Kerala High Court s decision in Clen Leven Estates Ltd. v. Commissioner of Income-tax, Kerala , it upheld the view taken by the assessing authority. However, the Tribunal in the appeal of the assessee took a different view relying upon Apex Court s decision in 76 ITR 650 (though no such decision appeared in the said ITR at the page referred) and held that the decision relied upon by the Commissioner of Income-tax (Appeals) are distinguishable and has no application to the case in hand. Aggrieved 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.;