High Court Of Madras
CIT vs. Stanes Amalgamated Estates Ltd.
Asst. Year 1982-83
R. Jayasimha Babu & K. Gnanaprakasam, JJ.
T.C. No. 940 of 1990
11th June, 2001
T. Ravikumar, for the Revenue : P.P.S. Janarthana Raja for M/s Subbaraya Aiyar, for the Assessee
R. JAYASIMHA BABU, J.:
The assessee is a company which carries on the business of growing and manufacturing of tea. It had claimed development allowance under s. 33A of the IT Act for the asst. yr. 1982-83 at the rate of Rs. 35,000 per hectare, the rate at which that allowance could be claimed for the asst. yr. 1982-83. That claim was negatived by the AO on the ground that the assessee had cleared and planted the estate in the years 1977-78 and 1979-80 and in those years the development allowance was allowable only at the rate of Rs. 12,500 per hectare. The assessee having taken up the matter in further appeal to the Tribunal which accepted the assesseeâs contention, the Revenue is now before us questioning the correctness of the Tribunalâs view.
2. The Tribunal while considering the question before it referred, inter alia, to the decision of the Kerala High Court in the case of Kilkotagiri Tea and Coffee Estate Ltd. vs. CIT 1978 CTR (Ker) 82 : (1978) 113 ITR 729 (Ker) : TC 28R.467 which interpreted s. 33A as permitting the claim for development allowance in the assessment year subsequent to the years in which clearing and planting had taken place, at the rate prevailing at the time of the claim. That decision of the Kerala High Court was subsequently confirmed in appeal by the Supreme Court in CIT vs. Kilhotagiri Tea and Coffee Estate Co. Ltd. (1996) 133 CTR (SC) 70 : (1996) 219 ITR 249 (SC) : TC S28.2926. The apex Court in that decision pointed out that development allowance under s. 33A may be given in asubsequent year and that allowance cannot be limited only to the year in which expenditure was actually incurred or the immediate next year thereafter. The Court observed that the very definition of the actual cost of planting indicates that a span of four years has to be taken into account for the purpose of computation of development allowance. The development allowance under s. 33A was to be granted in two stages. The first stage under cl. (a) provides for the computation in the first instance and will be limited to that portion of the actual cost of planting which was incurred during the previous year in which the land was prepared for planting or replanting, as the case may be. The development allowance under cl. (b) has to be given by computing the actual cost of planting once again as that clause provides that development allowance shall again be computed with reference to the actual cost of planting. The Court further went on to hold that there is nothing in s. 33A to suggest that development allowance for expenditure incurred in respect of the first two years must be calculated and claimed at the very first stage, that is, at the stage of the second year of assessment after planting of tea bushes.
3. The claim for allowance is to be in accordance with the rate at which such claim can properly be made in the year in which the claim was made. The assessee had the option to defer making the claim which it obviously had exercised. Before it made the actual claim the amount of the development allowance was enhanced. The assessee is entitled to claim the benefit of the enhanced amount as it is well settled that the law applicable to any assessment is the law that prevails as on the first of April of the relevant assessment year. The fact that some of the activities in relation to which the claim was made had been undertaken in the earlier years does not come in the way of such claim being made. It is the duty of the AO to apply the law as it stood in the year of assessment and it is not open to the Revenue to deem a repealed figure for an earlier assessment year as deeming to remain in the statute book in respect of the assessments in which the activity in relation to which the claim has been made had been undertaken in the earlier years. The Tribunal was, therefore, correct in the view it took and the question referred to us : “Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the assessee is entitled for the claim for deduction under s. 33A(7), proviso (ii), of the Act as amended w.e.f. 1st April, 1982, at the rate of Rs. 35,000 per hectare ?” is answered in favour of the assessee and against the Revenue.
[Citation : 251 ITR 861]