COMMISSIONER OF INCOME TAX Vs. KALPETTA ESTATES LIMITED

JUDGEMENT

(1.) THE questions raised in these cases relate to the existence or otherwise of capital gains on the sale of rubber trees which were in existence and were yielding as on January 1, 1954, or as on January 1, 1964. THE assessing authority took the view that these trees can be valued at Rs. 14 as on January 1, 1954, and at Rs. 20 as on January 1, 1964, and determined capital gains on the basis of the price fetched by them. THEy were sold as unyielding rubber trees during the accounting periods in question. THE Commissioner of Income-tax (Appeals), however, found that no capital gains accrue to the assessee on the facts and circumstances of the case. THE Tribunal, on appeal by the Revenue, followed the decisions of this court, one of which was referred to, namely, Income-tax References Nos. 315 and 316 of 1985 (CIT v. Midland Rubber and Produce Co. Ltd. [1991] 188 ITR 333), holding that no capital gains can be assessed on the sale of old and unyielding rubber trees since the fair market value of those trees as on January 1, 1954, or on January 1, 1964, as the case may be, would have been far higher since the trees were yielding trees in those days. Aggrieved by this order of the Tribunal, the Revenue sought reference of the following questions of law as arising out of the order of the Tribunal. But the Tribunal declined to refer these questions, namely :

(2.) WHETHER, on the facts and in the circumstances of the case, is not the order of the Tribunal vitiated-

(3.) WE do not think that this decision would support the case of the Revenue. What the Bench did was to affirm that the principles of res judicata will not apply to income-tax proceedings. Nevertheless, the Appellate Tribunal may place reliance on an earlier decision to support its conclusion. It could not therefore be said that the decision in the assessee's case before us, relating to the prior years, would operate as res judicata. The Tribunal is entitled to take a different view of the matter, if new materials were placed or on a closer and more intelligent analysis. It is evident from the various decisions placed before us that a different aspect of the matter has been presented for consideration, as laid down in the decisions mentioned earlier. The Tribunal was, therefore, entitled to have a fresh look at the matter based on the line of thinking disclosed by these decisions. That was what was done by the Tribunal in the instant case. WE are not, therefore, inclined to accept the contention that the assessment in the earlier years operates as res judicata or that it precludes the assessee from raising the plea as done in the instant case. WE overrule the contention. In the circumstances, we do not find any reason to refer the questions raised to this court under Section 256(2) of the Income-tax Act, 1961. These petitions are, therefore, dismissed.