TMI Blog1968 (8) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... Kerala Agricultural Income-tax Appellate Tribunal under section 60(1) of the Agricultural Income-tax Act, 1950, on the application of the Commissioner of Agricultural Income-tax. Kerala. The questions referred are: "(i) On the facts and in the circumstances of the case, is the Tribunal right in holding that there is nothing in the agreement dated 19th 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 circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o executed another agreement dated April 7, 1961, with one Yusuff in respect of 150 acres of rubber plantation. Under this agreement, the assessee sold the rubber trees standing in the said area together with the right of slaughter tapping for a sum of Rs. 2,19,000. The price of the trees was fixed it Rs. 24,000 and the consideration for the slaughter tapping 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 autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said amount was income. The assessee appealed before the Appellate Tribunal. It held that the agreement dated February 19, 1962, between the assessee and the Malabar Rubber Company evidenced an outright sale of the rubber trees, that it was " incorrect to import any extraneous motives in the terms of the agreement and construe it as a composite one of lease 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 cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acter of the transaction by taking into account the real facts. Question No. 3 raises this point, though it has not been framed in a satisfactory form, and we shall proceed to answer this question. There is a very lucid and instructive discussion of the question whether the liability to tax, when the transaction is embodied in a document, depends upon the meaning 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he suggestion that in revenue cases ' the substance of the matter ' may be regarded as distinguished from the strict legal position. The question which arose for decision in that case was whether the " Kanadukathan Bank " which was carrying on business in British India, can be assessed under section 42 of the Indian Income-tax Act, 1922, as agent of the " Pudukottai 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 part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, arise for decision in this case. The decision of this court in E. J. John v. State of Kerala is authority for the position that amounts received by slaughter tapping of rubber trees constitute income. On a perusal of this decision, it appears to us that all that was decided in that case is that, where rubber trees are sold together which the right of slaughter tapping. that part of the amount which represents the value of the trees is a capital receipt and not agricultural income.. The question whether the amount received by slaughter tapping is capital or agricultural income was neither raised nor decided in the above decision. In the result, we decline to answer questions Nos. 1 and 2; and we answer question No. 3 in the negativ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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