1969 (4) TMI 1

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..... eed, held that the transaction between the parties was one of sale of old trees which were unfit for tapping and that the price received for sale of rubber trees was not liable to be included in " agricultural income " as defined in section 2 of the Agricultural Income tax Act. The Tribunal further recorded that by the covenants of the agreement a right to cut and remove the trees and not to subject them to the process of tapping was granted, and the grant being, of trees and not of a right to tap trees, the company received no income out of the transaction. At the instance of the Commissioner of Agricultural Income-tax, Kerala State, three questions were referred to the High Court of Kerala. They were: " (i) On the facts and in the circu .....

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..... in deciding whether the actual intention was to cut and remove the trees or to subject the trees to slaughter tapping and remove the trees after so tapping them ". Counsel for the State had invited the attention of the Tribunal that the consideration fixed was also consistent with the agreement being one of a grant of a right to tap and not sale of trees. The Tribunal, however, held that " no extraneous motives could be imported into the terms of the agreement ". They observed that the agreement was one for sale of rubber trees and the sale proceeds of the rubber trees was a capital receipt. The question referred to the High Court could only arise out of the order of the Tribunal. The assumption made in the third question that in fact there .....

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..... on the effect of those covenants it had to determine the true relationship, and the true relationship was one of vendor and purchaser and not of lessor and lessee. In that view of the case, we are unable to uphold the judgment of the High Court recording an answer in the negative on the third question. We are of the view that the third question did not arise out of the order of the Tribunal and the High Court should have declined to answer that question. The appeal is allowed and the order passed by the High Court is set aside. It is ordered that question No. 3 does not arise out of the order of the Tribunal and is not answered. The appellant will be entitled to the costs of this appeal in this court and the High Court. Appeal allowe .....

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