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Issues:
1. Assessment of capital gains on the sale of old rubber trees for the assessment years 1979-80 and 1980-81. 2. Determination of fair market value of rubber trees as on January 1, 1964. 3. Whether the sale of old rubber trees constitutes a transfer of a capital asset under section 45 of the Income-tax Act. Analysis: 1. The case involved the assessment of capital gains arising from the sale of old rubber trees by a public limited company engaged in plantation business for the assessment years 1979-80 and 1980-81. The Income-tax Officer estimated the capital gains at Rs. 5,765 and Rs. 2,86,540 for the respective years, based on the value of a tree as on January 1, 1964, at Rs. 20. However, the Commissioner of Income-tax (Appeals) ruled that no capital gains on the sale of trees could be taxed for 1979-80 and directed the adoption of the tree value at Rs. 40 for 1980-81, leading to a remit. 2. The Tribunal, in line with its earlier decision, held that the sale price of an old rubber tree cannot exceed its market value as on January 1, 1964, and concluded that no capital gains arose from the sale of old rubber trees by the assessee. The Tribunal referred questions for both years, seeking justification on the limitation of sale price to the fair market value as on January 1, 1964. The High Court, guided by previous decisions, concurred with the Tribunal's view, affirming that no capital gains arise when old rubber trees are sold. 3. The Tribunal also referred a question regarding whether the rubber trees in question were 'capital assets' attracting capital gains tax under section 45 of the Income-tax Act. The High Court, relying on precedent cases, determined that since no capital gains arose from the sale of old rubber trees, the question of whether the sale constituted a transfer of a capital asset under section 45 was deemed academic and did not require an answer. The court declined to address the question referred at the instance of the assessee, thereby disposing of the references.
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