Kerala High Court
The Commissioner Of Income Tax vs The Penisular Plantations Tvm on 28 February, 2008
Bench: C.N.Ramachandran Nair, T.R.Ramachandran Nair
IN THE HIGH COURT OF KERALA AT ERNAKULAM
ITR.No. 11 of 2002()
1. THE COMMISSIONER OF INCOME TAX,TVM.
... Petitioner
Vs
1. THE PENISULAR PLANTATIONS TVM
... Respondent
For Petitioner :SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT
For Respondent :SRI.JOSEPH MARKOSE
The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice T.R.RAMACHANDRAN NAIR
Dated :28/02/2008
O R D E R
C.N.RAMACHANDRAN NAIR, T.R.RAMACHANDRAN NAIR, JJ.
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I.T.R No.11 of 2002
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Dated this the 28th day of February, 2008
J U D G M E N T
The question raised in the appeal filed by Revenue is whether the tribunal was justified in granting exemption on Rs.5,00,000/- assessed in the hands of the respondent assessee as short term capital gains. The assessee entered into an agreement with another company for purchase of a tea cum rubber estate. The possession of the estate was given to the assessee by the seller because on the date of agreement, assessee paid substantial amount of the purchase price. Even though assessee took over possession and enjoyed property for sometime, sale could not take place on account of litigation by shareholders of the seller company. However, later, in terms of the right to nominate a person for sale of the estate contained in the sale agreement, assessee nominated another company by name Travancore Rubber & Tea Company Limited for sale of the estate by the seller company. Under agreement between assessee and the ultimate purchaser, the assessee was reimbursed the entire advance for purchase of the estate, cost of running the estate during the period the estate was in possession of the I.T.R.No. 11 of 2002 -: 2 :- assessee, and besides this an amount of Rs.5,00,000/- for consideration for transferring the right to purchase the estate. It is this Rs.5,00,000/- that is assessed in the hands of the assessee as short term capital gains. Even though first appeal was dismissed, the tribunal allowed the claim of exemption on the ground that, in effect, the amount received represents consideration pertaining to sale of agricultural land which is exempted from tax. Admittedly, the assessee was a plantation company, engaged in agricultural operation, and the property agreed to be purchased was also plantation, which is agricultural land. The nomination for sale of the estate by another company was made after the assessee enjoyed possession of the estate and carried on agricultural operation for some period. Even though the senior counsel for the Revenue relied on the decision of the Supreme court reported in Keshav Mills Ltd. v.Commissioner of Income-Tax, Bombay [(1953) XXIII ITR 230 (SC)] and Commissioner of Income-Tax v. United Provinces Electric Supply Company [(2000) 244 ITR 764], having regard to the finding above that the consideration is for transfer of right in agricultural land, we feel the Tribunal rightly held that the sum of Rs.5,00,000/- cannot be brought to tax as short I.T.R.No. 11 of 2002 -: 3 :- term capital gains. We, therefore, dispose of the reference by answering the question referred in favour of the assessee and against the Commissioner of Income Tax. The Tribunal shall pass consequential orders. The Registry is directed to forward a copy of this judgment to the tribunal for compliance.
C.N.RAMACHANDRAN NAIR, Judge T.R.RAMACHANDRAN NAIR, Judge ms