Law: Income Tax Act, 1922

Section: 3

Section 4 of the Income-tax Act, 1961 [Corresponding to section 3 of the Indian Income-tax Act, 1922] - Income-chargeable as - Assessee purchased a coffee estate consisting of tress - He cleared trees for purpose of planting coffee and sold it and claimed deduction of sale proceeds as capital receipts - ITO as well AAC held that same was income - Tribunal, however, found that assessee did not either inherit or purchase forest, he only parted with his capital to acquire a coffees estate and, accordingly, in question sale proceeds was a capital receipt - Whether order of Tribunal was justified - Held, yes FACTS The assessee purchased a coffee estate wherein a coffee plants had been planted in a portion of that estate and the rest was jungle. The assessee cleared portions of the jungle for the purpose of planting coffee and sold it and claimed deduction of sale proceeds. The ITO and the AAC came to the conclusion that the same was 'income'. On appeal, the Tribunal found that the assessee did not either inherit or purchase a forest, he only parted with his capital to acquire a coffee estate consisting of trees which were sold and, accordingly, held that the sale proceeds was capital receipt. On reference: HELD It was not the finding of the Tribunal that the trees sold had spontaneously grown after the purchase was made; nor was there any finding that the trees sold were immature on the date of the purchase and that they became mature on the date of sale. From the finding of the Tribunal it was seen that the very trees purchased as part of the purchase transaction were sold. On the basis of this finding, the only conclusion possible was that the price realised by the sale of those trees was a capital and not a revenue receipt. Note: The case was decided in favour of the assessee. JUDGMENT Hegde, J.-This is a reference under section 66(1) of the Indian Income-tax Act, 1922. The question of law referred is: "Whether, on the facts and circumstances of the case, the sum of Rs. 5,872 is a…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492