9911796707
TMI Blog2012 (11) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... gain for sale of rosewood and silver oak trees, all these appeals are clubbed together and disposed off by this common order. 3. The appellant is a Public Limited Company owning lands under Coffee and Tea plantation in Pollibetta, Kodagu District, which was purchased m the year 1943. For the purpose of providing shade to the coffee plantation, shade trees were planted which includes silver oak, rosewood, eucalyptus and other trees. The shade giving trees have overgrown to the need of providing shades to the coffee plantation. Unless, the shade giving trees are removed, coffee trees will not grow. Accordingly, overgrown trees were cut and removed, fresh saplings were planted to replace the shade trees. The trees, which are removed, were subsequently sold and the sale proceeds are considered for the purpose of capital gain. The trees have been held to be capital assets and part of the fixed structure of a coffee or tea plantation. For the assessment years 1997-1998 to 2001-2002, the appellant has sold rosewood, silver oak and other trees. The statement of quantum of the capital gain on the sale of rosewood, silver oak and other trees was furnished along with the return of income, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly, CIT (Appeals) allowed the appeals and directed the Assessing Officer to work out the market value of the assets as on 1-4-1981 with regard to sale of silver oak and rosewood fees. Further the Assessing Officer was also directed to obtain the specific Notification from the office of the Conservator of Forests with regard to the market value of rosewood and silver oak trees as on 1-4-1981 and to work out the capital gain by working out the indexed market value. With regard to the eucalyptus and other miscellaneous trees are concerned, the CIT (Appeals) upheld the order passed by the Assessing Authority taking into consideration 70% of the sale proceeds as the cost of acquisition. The Revenue being aggrieved by the order passed by . the CIT (Appeals) filed an appeal before the Income Tax Appellate Tribunal, contending that the order passed by the CIT (Appeals) is contrary to law. The Assessing Officer was right in estimating the capital gain at 30% of the sale proceeds following the decision of the Pullengode Rubber & Produce Co. Ltd. case (supra) and the assessee is not entitled to exercise the option provided under Section 55(2)(b) of the Act. The Income Tax Appellate Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee before 1-4-1981, means the cost of acquisition of the assets to the assessee or the fair market value of the asset as on the first day of April 1981 at the option of the assessee. In the instant case, the assessee has exercised the option under Section 55(2)(b) of the Act taking the market value as on 1-4-1981. The finding of the Tribunal that the shade trees would not reach maturity before 30 to 40 years, as the trees have been planted as on 1-4-1981 is erroneous in law. The judgment made in Pullengode Rubber & Produce Co. Ltd. case (supra) is not applicable to the facts of these appeals and is applicable only when the fair market value is not able to be ascertained. In the instant case, as per the Government Notification, the fair market value has been fixed as Rs. 12,400/- per cubic meter in respect of rosewood and Rs. 360/- in respect of silver oak trees. The appellant has assessed the market value of rosewood and silver oak trees on the basis of the notification issued by the State, Government. Hence, he is entitled for indexation under Section 55(2)(b) of the Act. The CIT (Appeals) after considering the matter in detail has passed the order, and the same is ought not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(b) reads as under: Mode of Computation 48. The income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely:- (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto: Sec.55(2)(b) in relation to any other capital asset (i) Where the capital asset became the property of the assessee before the [1st day of April 1981], means the cost of acquisition of the asset to the assessee or the fair market value of the asset on the [1st day of April, [1981], at the option of the assessee. (ii) Where the capital asset became the property of the assessee by any of the modes specified in [sub-section (1) of] section 49, and the capital asset became the property of the previous owner before the [1st day of April, [1981], means the cost of the capital asset to the previous owner or the fair market value of the asset on the [1st day of April, [1981], at the option of the assessee. (iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , no other materials has been produced before the authorities. We find that the order passed by the Income Tax Appellate Tribunal in setting aside the order passed by the CIT (Appeals) wherein the Commissioner has directed the Assessing Authority to reconsider the matter is contrary to law. The Appellate Tribunal has also not examined the market value of the assets as on 01-04-1981. Hence, the matter has to be re-examined by the Assessing Authority by working out the indexed market value in respect of rosewood and silver oak trees. Hence, the order passed by the Appellate Tribunal cannot be sustained. 11. Accordingly these appeals are allowed without expressing any opinion on the substantial questions of law framed in these appeals. The order passed by the Appellate Tribunal is set aside and the appeals are remanded back to the Assessing Authority to reconsider the same and pass appropriate orders in accordance with the directions issued by the CIT (Appeals) after obtaining specific notification from the office of the Conservator of Forests with regard to market value of rosewood and silver oak trees as on 01-04-1981 and to work out capital gain by working out the indexed market v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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