KIL KOTAGIRI TEA and COFFEE ESTATE CO. LTD. vs COMMISSIONER OF INCOME TAX

Pasayat, C.J.

On applications by the assessee u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as ''the Act'') following question has been referred for opinion of this court, by the Tribunal, Cochin Bench, (hereinafter referred to as ''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 the case, the factual position is as follows:

The assessee is a Public Ltd. Co. owning tea and coffee plantations in Kil Kotagiri, Nilgiri District. For the two assessment years, assessments were completed by the assessing officer, wherein he disallowed the claim of deduction in terms of section 10(30) of the Act, relating to ''rejuvenation subsidy granted by the Tea Board''. Appeals before the Commissioner (Appeals) and the Tribunal were unsuccessful. On consideration of the application u/s 256(1) as indicated above, the question has been referred.

The learned counsel for the assessee submitted that u/s 10(30), which was inserted by the Taxation Laws (Amendment) Act, 1970, with retrospective effect from 1-4-1969, 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 1-4-1985 was clarificatory in nature. The 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 amendment by the Finance Act, 1984 reads as follows:

"(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 1-4-1985. So far as the other subsidies are concerned, the Taxation Laws (Amendment) Act, 1970, which became operative with retrospective effect from 1-4-1969, 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 1-4-1985 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.