Commissioner of Income-tax Vs. Travancore Rubbers Ltd. - Court Judgment

Excerpt:
- - it is fairly evident that the commissioner of income-tax (appeals) as well as the appellate tribunal, proceeded on the basis that, in the very case of the assessee, for an earlier year the income-tax appellate tribunal, in i.k.s. paripoornan, j.1. at the instance of the revenue, the following two questions of law have been referred to this court for its decision :'(1) whether, on the facts and in the circumstances of the case, the method of valuation of old rubber trees adopted by the tribunal for the purpose of computation of capital gains is legally correct ? (2) whether, on the facts and in the circumstances of the case, the appellate tribunal is correct in holding that, when an estate with yielding rubber trees is sold, capital gains could not be assessed treating the trees as an asset apart and separate from the land ?' 2. the respondent is an assessee to income-tax. the sole question that arises for consideration is the exigibility to capital gains on the sale of rubber trees. the assessment year is 1975-76. the commissioner of income-tax (appeals) adverted to the decision in the case of the assessee for an earlier year covered by the judgment of the appellate tribunal in income-tax appeal no. 5, of 1971-72, dated may 13, 1972. thereafter, the commissioner of income-tax (appeals) held in the case of the very same assessee that the value was fixed at rs. 50 per tree as on january 1, 1954, and there is no reason to depart from the said view. the appellate tribunal, by its order dated april 9, 1981, adverted to the decision of thecommissioner of income-tax (appeals). it was held that the value of the old rubber trees as on january 1, 1954, is covered by the order of the tribunal in the assessee's case for an earlier year and it should have been much more than that on the date of sale. in this view of the matter, the decision of the commissioner of income-tax (appeals) was affirmed. it is fairly evident that the commissioner of income-tax (appeals) as well as the appellate tribunal, proceeded on the basis that, in the very case of the assessee, for an earlier year the income-tax appellate tribunal, in i. t. a. no. 5 (coch.)/1971-72, by order dated april 13, 1972, decided that the value per tree as on january 1, 1954, is rs. 50.3. we heard counsel for the revenue and also counsel for the assessee (respondent). a copy of the judgment of the appellate tribunal in i. t. a. no. 5(coch)/1971-72 dated april 13, 1972, was made available to us. counsel for the assessee did not dispute that the appellate tribunal, in the said order, has not, in terms, fixed the value of the trees as on january 1, 1954, at rs. 50 per tree. if this be so, the basis on which the appellate tribunal held that the decision of the commissioner of income-tax (appeals) fixing the value of the trees at rs. 50 per tree as on january 1, 1954, is justified, is non est. on this basis, we have necessarily to hold that, in the matter of valuation of old rubber trees as on january 1, 1954, the basic factor regarding the value as on january 1, 1954, was wrongly assumed by the appellate tribunal. to that extent, the decision of the appellate tribunal dated april 9, 1981, is incorrect and illegal and so, unjustified. in the above view of the matter, we answer the first question in the following manner :'the valuation of the old rubber trees adopted by the tribunal as on january 1, 1954, for the purpose of determining the capital gains is factually incorrect. to this extent, question no. 1 is answered in the negative, in favour of the revenue and against the assessee. 4. at the time of the arguments, it was agreed that, when an estate with yielding rubber trees is sold, capital gains could not be assessed, treating the trees as an asset, apart from and independently of the land separately. this aspect of the matter is governed by the decision of this court in cit v. alanickal co. ltd. : [1986]158itr630(ker) . in the light of the above decision, we hold that the appellate tribunal was justified in holding so and we answer question no. 2 in the affirmative, against the revenue and in favour of the assessee.5. the income-tax reference is answered accordingly.6. a copy of this judgment under the seal of this court and the signature of the registrar may be forwarded to the income-tax appellate tribunal, cochin bench .