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2018 (12) TMI 331 - HC - Income TaxExemption from computation of income as per Section 115JB - proceeds from the sale of agricultural land and rubber trees could be deemed to be agricultural income under Section 10 - when the proceeds received out of the sale of rubber trees, for reason of the trees having become old and unyielding; whether the amounts credited in the profit and loss account could be included in the computation of book profits as per Section 115JA - Held that:- The proceeds from the sale of the estate not being an income of a current or recurring nature, was shown as an exceptional item in the profit and loss account and the same adjusted against the losses of the previous years as per accounting standards. We see that the Assessing Officer had considered the aspect and ruled against the assessee. However, the Tribunal has not considered this specific issue and had merely followed the decision in Harrisons Malayalam Ltd. to grant exemption to the profit received on sale of estate from computation of the book profits. We are of the opinion that the aforesaid appeals have to be remanded back to the Tribunal to consider the issue afresh. We do this despite the fact that the assessee has not filed an appeal, which was not necessary since the Tribunal had allowed the appeal on a different ground which we have answered against the assessee following the Division Bench judgment of this Court. Disallowance of employees' contribution to Provident Fund and Welfare Fund made u/s 36(1) (va) and Section 224(1) - Held that:- Question to be decided against the assessee and in favour of the Revenue in Popular Vehicles and Service (P) Ltd. v. Commissioner of Income Tax [2018 (8) TMI 133 - KERALA HIGH COURT]. Hence the aforesaid question has to be answered in favour of the Revenue and against the assessee. Whether the sale of Boyce Estate has to be treated as capital gain under Section 50B - Held that:- on a reading of the said decision, we find that therein also the consideration agreed was the aggregate value for the land, building, machinery and all equipment with liability specifically mentioned in the agreement entered into between the parties. The facts are quite distinct in this case. The liabilities were not sold and the sale agreement did not include investments and deposits was the clear finding of the Tribunal. All the investments, deposits, receivables, stock and such other current assets in the form of financial and other assets remained with the assessee Company along with the liabilities. Only those assets enumerated in the Schedules and Annexure were sold to the vendee. The consideration had also been specifically assigned to the sale of immovable property and separate consideration has been assigned to the sale of movable properties including vehicles, buildings and so on and so forth. We do not find any reason to interfere with the finding of fact by the Tribunal that there is no case of slump sale for a lumpsum consideration. However, the consideration is not attributable to any particular item of asset. We hence decline to answer the question framed for reason of the findings of facts being unassailable raising no question of law. Long term capital loss suffered on sale of shares was assessable as speculation loss within the meaning of Explanation to Section 73 - Held that:- Assessing Officer assessed it as capital gains, while the CIT appeals directed it to be treated as speculation loss. The Tribunal found that the assessee had held the shares as an investment and not as a stock in trade. The loss arising out of the sale of shares would hence be in the nature of capital loss and not in the nature of speculation loss, was the clear finding. There was also no evidence on record to show that the assessee was indulging in the business of buying and selling of shares. The shares held by the assessee Company were clearly investments and on finding no dispute on facts, the Tribunal directed it to be treated as capital gains. Again, we refuse to answer the third question raised for reason of the Tribunal having answered it on facts and there arising no question of law. When the third question is thus answered in favour of the assessee, necessarily the fourth question also, in the matter of set off, has to be answered in favour of the assessee and against the Revenue. Addition made by the AO invoking the provisions of Sections 37 and 14A - Held that:- The AO found that the expenditure was dis-allowable under Section 14A of the Act. In this context, the decision of the Hon'ble Supreme Court in Commissioner of Income Tax v. Essar Teleholdings Ltd. [2018 (2) TMI 115 - SUPREME COURT OF INDIA], which held that the applicability of Section 14A can only be from the assessment year 2007-08 has to be noticed. We, hence, answer the question in favour of the assessee and against the Revenue, upholding the order of the Tribunal. Treating the consideration received on sale of shade trees as long term capital loss entitled to be carried forward from the earlier years - We see that the Tribunal had considered the facts and had held that the order of the CIT (Appeals) directing deletion of such deduction in the capital gains has to be set aside, on facts. The Tribunal has also held that it being long term capital loss, is entitled to be carried forward. We do not see any question of law arising from the order of the Tribunal and, hence, uphold the order to that extent. Income from the sale of old rubber trees, the decision to treat it as subjected to Central Income Tax would go contrary to the findings of a Division Bench of this Court in CIT v. Thiruvambadi Rubber Company [2011 (6) TMI 452 - KERALA HIGH COURT]. We, hence, do not think that any interference can be caused to the order of the Tribunal on that count. Issue of indexation allowed of sale proceeds of Grevellea trees - the Tribunal has found that the said issue was the subject matter of an appeal before the CIT (Appeals) and then before the Tribunal. Under Clause (c) of Explanation to Section 263(1) since the issue was subject matter of appeal, there could not have been any suo motu power exercised by the Commissioner under Section 263. We are in agreement with the findings of the Tribunal and we answer the question of law against the Revenue and in favour of the assessee. Expenditure incurred in connection with the transfer of shares - Held that:- The Tribunal has found that as a matter of fact the said expenses have been incurred in connection with the maintenance of share-holders' register. The Tribunal has relied on the instructions issued by the CBDT, vide F. No. 10/25/63-IT(A. a) dated 18. 06. 1964, wherein it was clarified that "the remuneration paid by the Company to its Registrar for performing duties in connection with the Company's legal obligations to be discharged under the Company Law, should be regarded as revenue expenditure". We do not think that the finding on the said issue also calls for any interference.
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