S KHADER MOHIDEEN Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) IN this writ petition, the writ petitioner, who is a forest contractor seeks the refund of a sum of Rs. 49,428 retained as tax for the assessment year 1991-92 by the first respondent which amount had been retained by the Department by invoking Section 44AC of the Act as it stood then. The validity of the said provision was upheld by the Supreme Court in the case of Union of INdia v. A. Sanyasi Rao , except to the extent, the non obstante clause in Section 44AC excluded the provisions of Sections 28 to 45C.

(2.) THE assessee is entitled to the benefit of the ruling of the apex court and the amount held has to be recalculated after applying the provisions of Sections 28 to 43C. Learned counsel for the petitioner, however, contended that the section itself is inapplicable to the petitioner as the auction is not of any goods but is only of the right to gather the forest produce within the forest. THE auction referred to is in respect of forest goods and can only be in the nature of an agreement to sell. Such an agreement it was submitted, falls outside the ambit of Section 44AC.

(3.) THE use of the words "right to receive" in Section 44AC(1)(b) has to be construed having regard to the object of the provision and its place in the scheme of the Act. THE provision is a special provision for computing the profits and gains from the business of trading in certain goods. One of the items of the goods specified is forest produce. THE transfer of title in the forest produce from one person to another in the course of trade is, therefore, to be governed by this provision. It covers not only the actual sale of goods but also the right to receive the goods of the nature specified in the table including forest produce. THE word "receive", therefore, in the context has to be construed as including the gathering of the forest produce from the forest as immediately after such gathering it is to be appropriated by the person who has been given the right to gather, as his own property. THE words "right to receive" have been used in the statutory provision to indicate the right to become the owner of the goods and not merely an instance of one person delivering goods to another without any intent to transfer the ownership therein. What is material is the transfer of title.