TMI Blog1996 (7) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... n in this batch of appeals. They are : (i) exigibility to capital gains (tax) when old and unyielding rubber trees were sold by the assessees ; (ii) whether the rubber replantation subsidy received by the assessee is a revenue receipt or not. Only in a few cases both the questions arise for consideration. In some other cases, one or the other of the above questions arises for decision. The appellants are assessees to income-tax. They own rubber estates. During the accounting years relevant to the assessment years in question for which they were assessed (1968-69, 1969-70, 1971-72, 1972-73, 1973-74, 1974-75, 1975-76, 1976-77, 1977-78 and 1978-79, as the case may be), the assessees sold old, unyielding and uneconomic rubber trees. The Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as followed in all the later cases including the cases in the present batch of appeals. The High Court also took the view that " capital gains " arose or accrued when old and uneconomic rubber trees were sold by the various assessees. it was concluded that the levy of capital gains in the circumstances, was sustainable. Similarly, the assessees had received rubber plantation subsidy from the Rubber Board. The Revenue treated the same as a revenue receipt and taxed the same as income of the assessees. The High Court in this batch of appeals upheld the said view of the Revenue. Aggrieved by the judgments rendered by the High Court on the above two aspects-(1) assessment of capital gains tax when old and uneconomic rubber trees were sold, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng exigibility to " capital gains " will not arise in this, group of cases. We, therefore, need not adjudicate as to whether the " method of valuation " adopted was correct or not, since no argument was addressed on this aspect. (D) In the rest of the cases, the sole question involved is whether the rubber replantation subsidy received by the respective assessees can be treated as a revenue receipt and brought to tax. The cases wherein this point is involved are Special Leave Petitions Nos. 11446 and 11447 of 1988, 11068 of 1988, 13321 of 1988, 11042 of 1988, 15742 and 15743 of 1988, 15744 and 15745 of 1988 and 15747 of 1988. (E) In Special Leave Petitions Nos. 15594 and 15595 of 1988, the question of allowances of depreciation and its quan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agraph 5 above (page 604). An identical question arose before the High Court of Kerala in Income-tax References Nos. 208 and 209 of 1987 regarding the assessability of capital gains, when a plantation company sold old uneconomic rubber trees. A Division Bench of the Kerala High Court in Income-tax References Nos. 208 and 209, of 1987 by judgment dated September 19, 1989, agreed with the finding of the Income-tax Appellate Tribunal to the effect that the fair market value of the old and uneconomic rubber trees, as they were in 1954 or later in 1964, as the case may be, will be either equal to or higher than the sale price it fetched at the time of the relevant sale, which took place later during the relevant accounting year, and that no ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue in Special Leave Petitions Nos. 15594 and 15595 of 1988-Harrison Malayalam Ltd. v. CIT available at pages 96 to 104, at pages 101 and 102, it is stated thus : " .... In this connection, it is submitted that in the assessee's own case for the assessment years 1977-78, 1978-79, the High Court in its order in Income-tax References Nos. 159 and 160 of 1988, dated January 30, 1991, and also in Income-tax Reference No. 2 of 1988, dated January 9, 1991, for the assessment year 1980-81 has held that replantation subsidy received by the planters from Rubber Board cannot be held to be a revenue receipt and taxed as income in view of its decision of the High Court in the case of Ruby Rubber Works Ltd. [1989] 178 ITR 181 (Ker) [FB]. The Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd unyielding rubber trees were sold no capital gains arose, has been accepted by the Department (Revenue). In the light of the above, we hold that the judgments of the High Court under appeals, coming within groups Nos. (A), (B) and (D) mentioned in paragraph 5 (see page 604) of this judgment, are unsustainable and the appeals covered by the said special leave petitions are allowed. The judgments of the High Court covered by groups (C), (E) and (F), mentioned in paragraph 5 (pages 604-605) above, do not require any interference and we, therefore, dismiss the cases falling under these three groups. We hold that when old and unyielding rubber trees were sold by the various assessees during the relevant accounting year, no capital gain aros ..... X X X X Extracts X X X X X X X X Extracts X X X X
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