Kil Kotagiri Tea and Coffee Estate Co. Ltd. vs Commissioner of Income Tax

Arijit Pasayat, C.J.—On applications by the assessee u/s 256(1) of the Income Tax Act, 1961 (in short "the Act"), the following question has been referred for opinion of this court, by the Income Tax Appellate Tribunal, Cochin Bench (in short "the Tribunal").

"Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the ''rejuvenation subsidy'' received from the Tea Board was not exempt from tax u/s 10(30) of the Income Tax Act ?"

The two references shall be governed by the common judgment, as the dispute is similar and only two different assessment years, i.e., 1984-85 and 1985-86 are involved.

As set out in the statement of case, the factual position is as follows : The assessee is a public limited company owning tea and coffee plantations in Kil Kotagiri, Nilgiri District. For the two assessment years, the assessments were completed by the Assessing Officer, wherein he disallowed the claims of deduction in terms of Section 10(30) of the Act relating to "rejuvenation subsidy granted by the Tea Board". The appeals before the Commissioner of Income Tax (Appeals) (in short the "CIT (Appeals)") and the Tribunal were unsuccessful. On consideration of the application u/s 256(1) of the Act, as indicated above, the question has been referred.

Learned counsel for the assessee submitted that u/s 10(30) of the Act, which was inserted by the Taxation Laws (Amendment) Act, 1970, with retrospective effect from April 1, 1969, subsidy received from the Tea Board under any scheme was allowed as a deduction. As a matter of clarification, subsidy relating to rejuvenation was also included for the purpose of deduction. The provision for grant of deduction existed and the insertion by the Finance Act, 1984, with effect from April 1, 1985, was clarificatory in nature. Learned counsel for the Revenue submitted that the provisions were specific and, therefore, the question of adding anything into the provisions of Section 10(30) is impermissible.

Section 10(30) at the relevant point of time before the amendment by the Finance Act, 1984, reads as follows :

"10. (30) in the case of an assessee who carries on the business of growing and manufacturing tea in India, the amount of any subsidy received from or through the Tea Board under any such scheme for replantation or replacement of tea bushes as the Central Government may, by notification in the Official Gazette, specify :

Provided that the assessee furnishes to the Assessing Officer, along with his return of income for the assessment year concerned or within such further time as the Assessing Officer may allow, a certificate from the Tea Board as to the amount of such subsidy paid to the assessee during the previous year."

The expression "or for rejuvenation or consolidation of areas used for cultivation of tea" was inserted by the Finance Act, 1984, with effect from April 1, 1985. So far as the other subsidies are concerned, the Taxation Laws (Amendment) Act, 1970, which became operative with retrospective effect from April 1, 1969, specified the scheme for replantation or replacement of tea bushes in relation to subsidy received from the Tea Board. If the intention, as contended by the assessee, was to cover rejuvenation, there was no necessity for bringing in the expression into the statute subsequently. This cannot be said to be a clarificatory inclusion. Therefore, with effect from April 1, 1985, the benefit is available, in terms of the Finance Act, 1984. That being the position, for the assessment year 1984-85, the benefit is not available. But it shall be available for the assessment year 1985-86. The Tribunal''s conclusion for the former year was in order, but not for the latter year.

We accordingly answer the references.