Law:

Section:

- Section 60 (1) - Agricultural Income-tax Act, 1950 - Section 42 - Indian Income-tax Act, 1922 JUDGMENT Isaac, J.-This is a reference made by the Kerala Agricultural Income-tax Appellate Tribunal under section 60(1) of the Agricultural Income-tax Act, 1950, on the application of the Commissioner of Agricultural Income-tax, Kerala. The questions referred are : "(i)On the facts and in the circumstances of the case, is the Tribunal right in holding that there is nothing in the agreement dated 19th February, 1962, to show that it was a composite agreement of lease and sale ? (ii)On the facts and in the circumstances of the case, is the Tribunal right in holding that the agreement dated 19th February, 1962, is an agreement for an outright sale of rubber trees ? (iii)Is the Tribunal right in giving a literal interpretation to the agreement without duly considering the attendant circumstances like the unreasonableness of the time allowed for cutting and removing the trees, the unreasonableness of the amount shown as consideration for the sale of the rubber trees, that the trees are capable of being tapped for two or three years more, etc., and how the parties acted under it ?" 2. This reference relates to the assessment year 1964-65, and the previous year is the one which ended on March 31, 1964. The assessee is an incorporated company, owning a rubber plantation. By an agreement dated 19th February, 1962, executed between the assessee and the Malabar Rubber Company, the assessee sold all the rubber trees standing on an area of 128.60 acres of land for a sum of Rs. 1,71,765. This was for the purpose of replanting the above area with rubber, after cutting and removing the old trees, which had apparently become non-yielding or unremunerative. The purchaser had paid an earnest money of Rs. 10,000 before the execution of the agreement ; and the provision regarding the payment of the balance amount was that it should be paid in 37 equal monthly instalments commencing from the last day of March, 1962, and ending with the last day of March, 1965. The agreement also provided, among other things, that the purchaser shall cut and remove the trees as soon as possible, and in…

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