TMI Blog1969 (4) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... tural Income tax Appellate Tribunal by the appellant company claiming that an amount of Rs. 55,708 received as an instalment of consideration payable under a deed dated February 19, 1962, was of the nature of capital and not income and was on that account not liable to be taxed. The Appellate Tribunal, on a review of the relevant covenants in the deed, 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 subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there were any attendant circumstances which indicated that the agreement did not record the covenant relating to the cutting of the trees and was intended to camouflage a grant of rights to tap latex from standing rubber trees. It was urged before the Tribunal that the wording of the agreement dated February 19, 1962, alone could not " be a criterion 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e document and determine the true legal character of the transaction on a consideration of extraneous evidence. The Tribunal did not say that it was not competent to determine the true intention of the parties camouflaged by false recitals. The Tribunal merely held that the covenants in the agreement represented a genuine bargain between the parties and 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 Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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