TMI Blog1964 (7) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the assessment of agricultural income-tax on companies. The facts of the case as found by the authorities below, including the Appellate Tribunal, can be briefly put down. The company was formed under its memorandum of association for raising casuarina plantations in the lands belonging to the company in Chidambaram Taluk, South Arcot District, and realising the income from the sale of such casuarina plantations. Though it was not specifically referred to in the memorandum of association, it is common ground that charcoal was also manufactured and sold by the company as part of its activities. The company went into voluntary liquidation on December 28, 1958, and a liquidator was in charge thereafter. During the periods December 28, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have no application to the sale proceeds of such machinery and plant. It is also necessary to state that in the Supreme Court case, the machinery and plant were sold during the proceedings of winding up, and in the accounting year it was found that the company never had used the machinery and plant for the purpose of manufacturing sugar, which was the business for which the company had been formed, except to keep them in trim and in running order. But, apart from this, there are certain other observations of the Supreme Court in the self-same decision at page 275 of the report, which lends support to an inference that even after winding up had commenced, there can be occasions where the liquidator can carry on the business of the company. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of liquidation of a company, or the winding up of the affairs of a trader, has been held to be trading... 211. The cases illustrating the questions arising in such circumstances can be divided into two categories, first, those where the sales formed part of trading activities, and, second, those where the realisation was not an act of trading. As pointed out by the Supreme Court, the difficulty in deciding whether a particular case involves a mere realisation of assets by the liquidator or a trading activity has to be decided on the facts of each case. It is not as if, after the commencement of liquidation, all trading activity should be considered to have ceased. There could be trading activity and whether a transaction was a tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the liquidation. When the assessing authority estimated the deduction for cultivation expenses at a certain figure the assessee on appeal succeeded in getting determined in his favour a higher figure for cultivation expenses in the year of account on the proportion basis. The assessee did not attempt to show that the sale of charcoal and casuarina was for a slump price, nor did he attempt to show that casuarina seedlings even of immature growth were all plucked up and sold at the sales, which would be induced to prove that it was a liquidation sale and not a trading sale. Had these additional factors been placed before the Tribunal, the conclusion might have been different. The position before us is that to all intents and purposes the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be imported for the purpose of assessing agricultural income under section 2(a) of the Act of 1955 and that, under the definition in that Act, agricultural income would include whatever is realised by a cultivator or the receiver of rent-in-kind of any land by the sale of the produce raised or received by him. He argued that since the sale proceeds of casuarina and charcoal fall in this definition, they would automatically be assessable as agricultural income, without any question as to whether they were received in the process of winding up as a result of a realisation sale, or after a sale partaking the nature of a trading activity. But, in the view we have taken, of the scope of the official liquidator's sales in the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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