TMI Blog1993 (2) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... arises in regard to assessment for the year 1975-76. The assessee is a tea producing company having tea plantation, forest areas and other land. The assessee entered into an agreement with a sister concern on March 13, 1971, allowing the latter to cut trees from a part of the assessee's forest land for a consideration agreed to between the parties till December 31, 1973. The agreement was renewed on December 15, 1973, for the period expiring on December 31, 1976, for consideration out of which Rs. 5,00,000 was to be paid before December 31, 1974, that is in the previous year relevant to the assessment year 1975-76. In pursuance of this agreement, the other party to the agreement paid Rs. 5,00,000 to the assessee for cutting and removing ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltimately, the Appellate Tribunal set aside the reassessment proceedings and that was affirmed by this court in the decision reported in Tarajan Tea Co. (P) Ltd. v. CIT [1993] 200 ITR 12 [1992] 2 Gauhati LR 173. During the pendency of the reassessment proceedings for the earlier years, the Income-tax Officer decided to invoke section 147 of the Act and to issue notice under section 148 of the Act to the assessee for the assessment year 1975-76. Notice dated March 30, 1978, was duly issued. The assessee, by a written objection, contended that there was no failure on his part to disclose fully and truly all material facts necessary for the assessment and, therefore, the Income-tax Officer had no jurisdiction to invoke section 147 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sale of trees is to be regarded as a capital receipt or as income receipt have been discussed by the Supreme Court in CIT v. Ambat Echukutty Menon [1979] 120 ITR 70. The Supreme Court, after considering the earlier decisions of the court and of the. Privy Council, observed (at page 76 ) : " The return may be one and only one. But if the object of felling the trees leaving the root and stumps intact is for regeneration of income, then whether income is regenerated or not is immaterial. But in a case where the trees are sold by uprooting the roots nobody can say that there could be any object of regeneration of income from the trees growing again as there was no question of a second growth at all. Similarly, ordinarily and generally, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the exploitation was nine years, that Rs. 28,00,000 were derived during the nine years and the amount was very high compared to the value of the whole tea estate, that no standing trees were sold to any person other than the sister concern, that no new plantation was made for seven years from .1971, that the agreement is silent as to whether the stumps and roots are to be removed or not, that out of Rs. 28,00,000 only a small fraction was spent for garden development by way of replantation and new plantation and there was no substantial extension of area under tea and a major part of the proceeds of sale was utilised in advancing loans to sister concerns under the same management. Many of these circumstances were not at all relevant in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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