JUDGMENT appeal is directed against judgment and order dated May 6, 2004, by which learned Tribunal allowed plantation expenditure as revenue expenditure following its earlier judgment in case of assessee itself. Revenue has come up in appeal. Assessing Officer disallowed expenditure for following reasons: "3.1. assessee incurred sum of Rs. 14,78,231 on ucalyptus tree plantation. assessee is manufacturer of papers. course of manufacture of papers entails pollution by chimneys of fluent discharge and use of chemicals. paper factory is basically based on forest wood. As bamboo trees are used in paper industries ecological and environmental balances are destroyed, it was laid down in National Forest Policy of 1988 that all forest-based industries must take up plantation so that forest ecology is maintained. discharge of effluent water used in manufacture causes erosion of land in catchment areas. Plantation of tree is one of methods of controlling atmospheric pollution. plantation being developed in immediate vicinity of factory is also used as disposal media for waste generated during manufacturing process, it is estimated that one hector of mixed waste growing hard plantation has carbon take up capacity of 7.5 tonnes of carbon per acre. This provides sink for green house gas like carbon dioxide. land disposal technology called'high rate exaporisation system' was developed by National Environment Research Institute, Nagpur. trees planted around factory was done on land including waste land. When trees outgrow and started losing greenery same are used as raw materials. It was further submitted by assessee that different States have set up special pollution board and other environmental agency to monitor and ensure that each industry minimise atmospheric pollution and comply with directions of board to industries. plantation expenditure were incurred for observing guidelines and directions given by this agency in respect of assessee's manufacturing unit. It is, therefore, urged that expenditure should be allowed as deduction from total income. 3.2 It is found that learned Commissioner of Income-tax WB-I in his order under section 263 for assessment year 1993-94 has held that such expenditure is not allowable in computing total income of assessee. It is also found that amount was disallowed in assessment year 1996-97. Income-tax Appellate Tribunal has allowed said expenditure. However, issue has not become final. Following reasons given by Commissioner of Income-tax in his order for assessment year 1993-94 and reasons given in assessment order for assessment year 1996-97, I disallow sum of Rs. 14,78,231." Commissioner of Income-tax (Appeals), however, reversed order disallowing expenditure holding that expenditure was allowable under section 37. In appeal from order of Commissioner of Income-tax (Appeals) preferred by Revenue, Appellate Tribunal concurred with views of Commissioner of Income-tax (Appeals). Revenue has once again come up in appeal proposing following questions: "(a) Whether, in facts and in circumstances of case, learned Income-tax Appellate Tribunal erred in law in not appreciating that payments under VRS inures long-term advantage to assessee having capital expenditure in nature and in confirming order of Deputy Commissioner of Income-tax (Appeals-IV) whereby Deputy Commissioner of Income-tax (Appeals-IV) set aside disallowance by Assessing Officer claim of respondent-assessee on account of VRS payments as revenue expenditure? (b) Whether, in facts and in circumstances of case, learned Income- tax Appellate Tribunal erred in law in not appreciating that pre-plantation expenditure are of capital nature and in confirming order of Deputy Commissioner of Income-tax (Appeals-IV) allowing pre-plantation expenditure claimed by respondent-assessee as revenue expenditure?" Mr. Das, learned advocate appearing for assessee-respondent, drew our attention to judgment of Madhya Pradesh High Court in case of Hindustan Electro Graphites Ltd. v. CIT reported in [1996] 218 ITR 688 (MP) wherein following views were taken (headnote): "Held, that expenditure did not result in any gain to assessee and did not enhance value of establishment. expenditure was intended to make atmosphere pollution-free. Tribunal did not record any categorical finding that expenditure resulted in any appreciation of assets or was unrelated to business activities of assessee. Plantation in such factory is necessary to avoid pollution of environment and create congenial atmosphere. Tribunal disallowed expenditure on wrong premises. amount expended was wholly and exclusively for purposes of business and was not in nature of capital expenditure or personal expenses of assessee. amount was deductible under section 37 of Income-tax Act, 1961." Mr. Chowdhury, learned advocate appearing for appellant, did not dispute correctness of opinion expressed by Madhya Pradesh High Court. In that view of matter, question No. (b) is answered in negative. In so far as question No. (a) is concerned, Mr. Das once again drew our attention to judgment of CIT v. Simpson and Co. Ltd. (No. 1) reported in [1998] 230 ITR 703 (Mad) which was also considered by learned Tribunal, wherein following views were taken (headnote): "Held, that amount paid to employees under Voluntary Retirement Scheme was allowable deduction as expenditure was incurred on grounds of commercial expediency and expenditure was laid out wholly and exclusively for purposes of business of assessee." Mr. Chowdhury did not dispute correctness of views expressed in aforesaid case. Therefore, question No. (a) was really not pressed. appeal is thus disposed of. *** Commissioner of Income-tax v. Orient Paper and Industries Ltd