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TMI Blog2012 (11) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. Except the letter dated 31-3-1981, no other materials has been produced before the authorities. Thus the order passed by the ITAT 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 the order passed by the Appellate Tribunal cannot be sustained. 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 - in favour of revenue by way of remand. - IT APPEAL NOS. 57 & 1092 OF 2006 and 396 OF 2007 - - - Dated:- 24-9-2012 - K. SREEDHAR RAO AND B. MANOHAR, JJ. Sarangan and K.S. Ramabhadran for the Appellant. M. Thirumalesh for the Respondent. JUDGMENT B. Manohar, J. - The assessee has filed these appeals under Section 260-A of the Income-tax Act, ('the Act' for short), being aggrieved by the order dated 02-09-2005 made in ITA No.301/BNG/2001, order dated 02-03-2006 made in ITA Nos. 1500-1501/BNG/2004 and the order dated 15-12-2006 made in ITA Nos. 3466 3528/BNG/2004 passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) to Section 48 of the Act. With regard to the eucalyptus and other miscellaneous trees are concerned, the cost of acquisition was adopted to the extent of 70% and 30% has been taken as capital gain. 4. The Assessing Officer did not accept the assessment made by the appellant. Relying upon the judgment of Kerala High Court reported in the case of CIT v. Pullengode Rubber Produce Co. Ltd., [1991] 189 ITR 580 worked out the capital gain at 30% of the sale proceeds and did not allow any cost of indexation. The Assessing Officer held that the option exercised by the assessee as provided under Section 55(2)(b) to determine the cost of acquisition was not proper. Further the Assessing Officer held that the trees sold during the assessment years is not the same which was existing before 1-4-1981 and accordingly assessed the capital gain. The appellant being aggrieved by the assessment order passed by the Assessing Authority, preferred an appeal before the Commissioner of Income Tax (Appeals), Bangalore (hereinafter referred to as CIT (Appeals). The CIT (Appeals) after considering the matter held that the order passed by the Assessing Authority is contrary to law. The assessee has righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the case of the appellant? (iii) Whether the determination by the Tribunal of the capital gains on the sale of shade trees was not contrary to scientific data and materials on record? (iv) Whether the Tribunal was in error in not allowing indexation and thus contrary to the second proviso to section 48 of the Income-tax Act, 1961? (v) Whether the Tribunal was right in law in setting aside the order of CIT(A) and restoring the order of Assessing Officer? 6. Sri. Sarangan, learned Senior Advocate appearing for the appellant contended that the orders passed by the Appellate Tribunal is contrary to law and materials on record. The appellant has purchased the estate in the year 1943. The shade giving trees were overgrown and need to be removed. Accordingly after obtaining necessary permission from the Competent Authority, the assessee has removed the excess shade giving trees. The said trees were sold in the Government auction. The appellant is not a timber merchant. The rosewood, silver oak and other trees were existing as on the date of purchase of the Estate. Some of the trees are of more than 100 years old as per the report submitted by the Deputy Conservator of Fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present cases. The sub-section would normally be applicable when the assessee acquires the concerned asset by payment of costs. In the instant case, the price of the capital assets was continuously raising. In such cases, the assessee would opt to choose the original cost of acquisition. However, sub-clause would not apply where the capital assets become the property of the assessee after the date specified in Section 55(2) of the Act. In the present cases, the property which as sold in the financial year, relevant to the present assessment year was rosewood timber which was cut from the stem during the year. This goes to prove that before 01-04-1981, timber was nothing but a tree, may not be matured, only to be used as timber. Hence, the property sold was not the same, which was there before 1981. In view of that the appellant cannot exercise the option of Section 55(2)(b) of the Act. The CIT (Appeals) has not properly appreciated case. Accordingly, the said order has been set aside by the Appellate Tribunal and the orders does not call for interference by this court and sought for dismissal of the appeals. 8. We have carefully considered the arguments addressed by the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, silver oak, eucalyptus and other trees. The appellant contended that the judgment of Pullengode Rubber Produce Co. Ltd. case (supra) is not applicable and the said judgment is applicable when the market value of the capital asset was not readily available. In the instant case, there was no dispute with regard to the fair market value determined by the State Government as on 01-04-1981 at the rate of Rs. 12,400/- per cubic meter. The appellant's entire case is relied upon the letter dated 31-3-1981 written by the Deputy Conservator of Forests. Whether the said letter is genuine or not, is not examined by the authorities below. It is not in dispute that the trees are held to be the capital asset and part of the fixed structure of a coffee or tea plantation. When the trees have been cut and removed, the capital gain has to be assessed on the basis of Section 48 of the Act. In the instant case, the cost of acquisition of the assets has not been properly examined by the authorities below. Solely on the basis of some letter written by the Officer of the Government Department, the cost of acquisition of the assets cannot be assessed. Accordingly, the CIT (Appeals) while setting aside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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