M D JOSEPH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of an assessee to income-tax, the Income-tax Appellate Tribunal has referred the following question of law for the decision of this court:

(2.) THE respondent is the Revenue. We are concerned with the assessment year 1973-74 for which the accounting period ended on March 31, 1973. One Shri M.V. Dominic and his daughter-in-law purchased 403 acres of coffee plantation at Nelliampathi in Pollachi on March 26, 1968. Mr. Dominic was entitled to half share. THE daughter-in-law was entitled to half share, On January 26, 1973, an agreement was entered into between the said persons and one S. K. Abdul Wahab for the sale of shade trees and old coffee plants in an area of 225 acres for Rs. 6,25,000. THE question as to whether any capital gains arose to the assessee by virtue of the said deed is the subject-matter in issue. According to the Revenue, the deed dated January 26, 1973, though purporting to be an agreement to sell, is really a deed of sale. THE assessee agreed to sell specific trees in an identified area for the price mentioned in the deed, namely, Rs. 6,25,000. THE assessee contended that the deed dated January 26, 1973, is only an agreement and that the sale of the goods contracted for will be completed only on payment of the entire instalments. THE Income-tax Officer declined to accept this plea. However, he held that the sale value, though stated to be Rs. 6,25,000 in the deed dated January 26, 1973, stood reduced in view of subsequent litigation by a sum of Rs. 70,000. THE order of assessments dated March 6, 1976. In the appeal filed by the assessee, the Appellate Assistant Commissioner of Income-tax, Ernakulam, held that only a sum of Rs. 2 lakhs was received by the assesses for the transfer of the capital asset during the previous year relevant to the assessment year 1973-74 and there should be recomputation of the actual capital gains. THE Income-tax Officer was directed to recompute the capital gains in the light of the findings of the Appellate Assistant Commissioner contained in his order dated April 23, 1976. THE assessee, as well as the Revenue, took up the matter in appeal before the Income-tax Appellate Tribunal. THE above appeals were disposed of by a common order dated December 18, 1978. Construing the deed dated January 26, 1973, the Income-tax Appellate Tribunal held that the deed dated January 26, 1973, is a sale itself and the capital asset dealt with in the said deed was transferred on that day. THE Appellate Tribunal further held that though the consideration for the transfer was mentioned as Rs. 6,25,000, the Income-tax Officer himself held that, in view of subsequent compromise in a suit, it stood reduced by Rs, 70,000. THEre is a further plea before the Tribunal that another Rs. 55,000 was also reduced from the consideration stated in the deed. Holding that there was no proper or definite material on that score, the Appellate Tribunal held that the question as to whether a further sum of Rs. 55,000 was reduced from the consideration mentioned in the deed should be investigated by the Income-tax Officer and the matter will stand referred or remitted to the assessing authority for that limited question. THE Appellate Tribunal also held that though many items were claimed for deduction under Section 48 of the Act, only the expenditure incurred on four items is permissible. In view of the paucity of material to indicate the nature of the litigation for which expenses were claimed, the Appellate Tribunal held that the matter requires a fresh look and appraisal by the Income-tax Officer. So, in order to examine the eligibility as well as the quantum of the relief under Section 48 of the Act, the four items mentioned in paragraph 5 of the appellate order were directed to be examined. It is thereafter at the instance of the assessee that the question of law, formulated hereinabove, has been referred for the decision of this court, in pursuance of a direction given by this court to the Appellate Tribunal under Section 256(2) of the Income-tax Act.

(3.) THE further question was whether the capital asset was transferred for a specified sum of Rs. 6,25,000. That is the amount shown in the deed. THE Income-tax Officer himself reduced the consideration by Rs. 70,000. That was so in view of a compromise arrived at in court proceedings. THEre was a further plea that the consideration stood reduced by another Rs. 55,000. THEre was no material to determine whether the said plea is tenable or justified. THEre was paucity of material on that score. So, the Appellate Tribunal, expressing the view that necessary and proper materials are not before it, directed the Income-tax Officer to decide whether the value stood reduced by a further sum of Rs. 55,000. On the aspect regarding the total consideration or the price, the matter requires further evaluation and determination by the Income-tax Officer. So, the latter part of the question referred to us on the assumption that a capital asset was transferred on January 26, 1973, for Rs. 6,25,000 seems to have been made under a mis apprehension. THEre is no concluded decision of the Tribunal on that score. We decline to answer the question referred to us in the said limb of the question.