M S M M MEYYAPPA CHETTIAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee purchased an estate in 1938 and planted it with rubber in 1941. THE rubber plants reached maturity only in January, 1947, and started yielding thereafter. During the year ended April 13, 1947, which was the previous year for the assessment year 1947-48, an expenditure of 14,237 dollars was incurred on the maintenance of the immature plantation, the expenditure having been actually incurred between April 13, 1946, and November 30, 1946. THE Income-tax Officer disallowed these expenses; the only reason that is found in the order of assessment is that "the estate had to begun to yield. THE expenditure will, therefore, be treated as of a capital nature." THE disallowance of this expenditure was canvassed in appeal before the Appellate Assistant Commissioner, who stated :

(2.) WHEN the matter came before the Appellate Tribunal, the matter was disposed of shortly in these words :

(3.) A clear line of demarcation has thus been drawn between capital expenditure and revenue expenditure in relation trades of this kind. When once the plantation has been laid, that is to say, the land has been acquired, made fit for planting and the trees actually planted, the stage of capital expenditure ceases, and, whatever is spent thereafter upon the maintenance, such as weeding, superintendence, etc., should appear to be in the nature of revenue expenditure, notwithstanding that the trees have not started to yield and will not yield for as long as six years thereafter.