Law: Income Tax Act, 1961

Section: 2(14),45

(a) Income-tax-- ----Capital gains---Capital asset---Shade trees in coffee estate constitute capital assets---Indian Income Tax Act, 1961, Ss.2(14) & 45. (b) Income-tax--- ----Capital gains---Computation of capital gains---Cost of acquisition of capital asset---Difference between shade trees in coffee estate and goodwill of business---Cost of acquisition of shade trees can be calculated---Capital gains arising on sale of shade trees which are cut are taxable as capital gains---Indian Income Tax Act, 1961, Ss.45 & 48. (c) Income-tax--- ----Capital gains---Computation of capital gains---Deductions---Cost of improvement of capital asset---Cost must be proved and claimed by assessee---No claim regarding cost of improvement in shade trees and no material to show that expenses had been incurred in such improvement---Cost of improvement not allowable---Indian Income Tax Act, 1961, Ss.45 & 48. (d) Income-tax--- ----Capital gains---Exemption---Condition precedent---Investment in specified securities--- Investment made prior to sale of capital asset--¬Exemption cannot be claimed---Indian Income Tax Act, 1961, S.54-E. The term "Capital asset" is defined by section 2(14) of the Income Tax Act, 1961, and means "property of any kind" held by an assessee whether or not connected with his business or profession excluding those set out in the said provision. The expression "property of any kind" held by an assessee gives the widest possible import to the term "capital asset" and would mean and include all conceivable kinds of property or rights in such property that an assessee may hold or be capable of holding or enjoying except of course those as are specifically excluded from the definition of the term "capital asset" by section 2(14) of the Act. Having regard to the wide definition of the expression "capital asset" there is no reason why shade trees growing in a coffee estate should not be deemed to be covered by the said expression. Shade trees are absolutely essential for the protection of the coffee bushes. These trees prevent the soil from becoming hot anti dry and help in maintaining an even temperature considered conducive for proper growth of the coffee…

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