Law:

Section:

Section 45 of the Income-tax Act, 1961 - Capital gains - Chargeable as - Assessment year 1973-74 - There was an agreement for sale of shade trees and old coffee plants - As per agreement, vendor had agreed to sell specific shade trees, etc. in area specified in schedule and purchaser was allowed to cut and remove trees within period of twelve months from date of deed - Whether reading of said agreement as whole clearly showed that it was sale deed itself and not an agreement to sell and, therefore, there was a transfer of asset exigible to tax as capital gains - Held, yes FACTS The assessee and his daughter-in-law purchased coffee plantation on 26-3-1968. On 26-1-1973, an agreement was entered into between the said persons and one 'SK' for the sale of shade trees and old coffee plants for Rs. 6,25,000. The assessee contended that the deed was only an agreement and that the sale of the goods contracted for would be completed only on payment of the entire instalments. The ITO treated it as sale deed and declined to accept the assessee's plea. He brought the capital gains to tax in the assessment year in question. However, he held that the sale value, though stated to be Rs. 6,25,000 in the deed dated 26-1-1973 stood reduced in view of the subsequent litigation by a sum of Rs. 70,000. The assessee, however, claimed that the gains were not assessable in the assessment year in question and also claimed that sale consideration had further to be reduced by Rs. 55,000 and that it was entitled to relief under section 48 on some of the items. The AAC held that only a sum of Rs. 2 lakhs was received by the assessee for the transfer of the capital asset during the previous year relevant to the assessment year in question and there should be recomputation of the actual capital gains. On cross appeals, the Tribunal held that the said deed was a sale itself and the capital asset dealt with in the said deed was transferred on that day. Holding that there was no proper or definite material, the Tribunal held that the question as to whether a further sum of Rs. 55,000 was reduced from the consideration mentioned in the deed should be investigated by the ITO and remitted the…

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