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TMI Blog1968 (8) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... February, 1962, to show that it was a composite agreement of lease and sale? (ii) On the facts and in the circumstances of the case, is the Tribunal right in holding that the agreement dated 19th February, 1962, is an agreement for an outright sale of rubber trees? (iii) Is the Tribunal right in giving a literal interpretation to the agreement without duly considering the attendant circumstances like the unreasonableness of the time allowed for cutting and removing the trees, the unreasonableness of the amount shown as consideration for the sale of the rubber tries, that the trees are capable of being tapped for two or three years more, etc., all, how the parties acted under it? " This reference relates to the assessment year 1964-65, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng was fixed at Rs. 1,95,000. This sum of Rs. 24.000 was received by the during the accounting year ended March 31, 1964. For the assessment year 1964-65, the assessee claimed that the aforesaid two sums of Rs. 55,708 and Rs. 24,000 received by it on account of sale of old rubber trees were capital receipts and not income. The Inspecting Assistant Commissioner, who was the assessing authority, rejected the assessee's claim. Regarding the amount of Rs. 55,708 received from the Malabar Rubber Company, he stated that, in view of the fact that the value of the rubber trees sold from 128.60 acres of land to the above company was fixed at Rs. 1,71,765 as against Rs. 24,000 fixed as the value of the trees sold from 150 acres to Yusuff, his predece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and sale ", and that the amounts received by the assessee under the said agreement were capital receipts. In the opinion of the Tribunal, the document is the sole determining factor, and the revenue is not entitled to go behind the document, and determine the real character of the transaction on a consideration of facts not stated in, or disclosed, by the document. The learned counsel for the revenue contended before us that the above opinion of the Tribunal is wrong. He submitted that the revenue is entitled to ignore the apparent form of the transaction as engrossed in the document, and to determine its real character in the light of the true facts and circumstances of the case. He also submitted that the stand taken by the revenue t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning and effect of that document or the substance of the transaction in article 63 (pages 49 to 51), Simon's Income-tax, second edition, volume 1. In Inland Revenue Commissioners v. Wesleyan and General Assurance Society, Viscount Simon stated the principles in these words: " It may be well to repeat two propositions which are well established in the application of the law relating to income-tax. First, the name given to a transaction by the parties concerned does not necessarily decide the nature of the transaction. To call a payment a loan if it is really an annuity does not assist the taxpayer, any more than to call an item a capital payment would prevent it from being regarded as an income payment if that is its true nature. The questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank ", which was carrying on business in an Indian State in respect of the income from six loans given by the Pudukottai Bank to certain branches of the Kanadukathan Bank in Burma. Their Lord ships examined the true character of the loans, and held that they were loans really given by the Pudukottai Bank to the British Indian branches of the Kanadukathan Bank, though the parties treated them in their books, of account as loans by the Pudukottai bank to the Burma branches of the Kanadukathan Bank. This decision does not, therefore, support the contention of the learned counsel for the assessee. On the other hand, it shows that what is relevant is the true legal character of the transaction, and not its apparent form. It is open to a tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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