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TMI Blog1977 (12) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ale during the relevant previous years of the standing shade trees grown by it are assessable under section 45 of the Income-tax Act of 1961 for the assessment years 1967-68 and 1969-70 ? " T.C. No. 328 of 1974 : " Whether, on the facts and in the circumstances of the case, it has been rightly held that the gains arising to the assessee by the sale of the standing shade trees grown by It are assessable under section 45 of the Income-tax Act of 1961 for the assessment years 1970-71 and 1971-72? " The assessee in both the cases is a public limited company owning three coffee estates known as Inglewood Estate, Puthur Estate and Beverley Estate in Yercaud. During the accounting year ending with June 30, 1966, the assessee sold to some par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in State of Kerala v. Karimtharuvi Tea Estate Ltd. [1966] 60 ITR 275 (SC) and that the amount realised by the sale of the car was also assessable to capital gains tax. After a discussion with the assessee's representative, the ITO found that a loss of Rs. 50 had been incurred by the sale of the car for Rs. 7,900, the purchase price of the car being Rs. 7,950 and that the entire sum of Rs. 28,425 realised by the sale of the trees was liable for capital gains tax in view of the above decision of the Supreme Court in State of Kerala v. Karimtharuvi Tea Estate Ltd. [1966] 60 ITR 275 (SC) and that no amount could be taken as the cost of the trees to the assessee in arriving at the capital gains on the ground that the expenses for growing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Salem Provident Fund Society Ltd. v. CIT [1961] 42 ITR 547 (Mad) and a decision of the Gujarat High Court, on the ground that the amount was shown in the profit and loss statement under the head " Miscellaneous sales and receipts " without any details to show that the sale proceeds of silver oak trees are included in the amount shown under that head. The AAC confirmed the order of the taxing officer that the sale proceeds of the shade trees constituted capital gains relying upon the Supreme Court's decision in State of Kerala v. Karimtharuvi Tea Estate Ltd. [1966] 60 ITR 275. But regarding the cost of the trees to the assessee, the AAC accepted the assessee's contention that the company's income from the coffee estates is not taxed and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent. of the sale proceeds in each of the assessment years 1970-71 and 1971-72 on the ground that the average girth of the trees sold in these years was more than that of the trees sold in the two earlier years. In the assessee's further appeal, the Tribunal followed its own earlier view in the appeal relating to the assessment years 1967-68 and 1969-70 and confirmed the order of the AAC but reduced the capital gains to 50 per cent. of the sale proceeds in each of the assessment years 1970-71 and 1971-72. We extract s. 147 of the I.T. Act, 1961, omitting the Explanations, which are not relevant for our present purpose : " Income escaping assessment.--If-- (a) the Income-tax Officer has reason to believe that, by reason of the omi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the bonus shares were not issued out of the premiums received in cash and the consequent result, in the light of the Finance Act No. 2 of 1957, were, however, not realised by the ITO at the time the assessment was made on the 19th November, 1957. The assessing officer came to know of that fact subsequently and issued a notice under s. 34(1)(b) of the Indian I.T. Act, 1922, and made a fresh assessment on 26th May, 1962. The assessee's contention was that the ITO had not received any information and the reassessment under s. 34 was illegal. The learned judges held that "to inform" means "to impart knowledge" and a detail available to the ITO in the papers filed before him does not become an item of information and that it is tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le in the papers filed before the Income-tax Officer will become 'information' only when its existence is realised and its implications are understood. Following these decisions, we hold that the ITO had "information" only when he came to know that the sum of Rs. 28,425 included in the amount shown in the profit and loss statement under the head "Miscellaneous sales and receipts" represented the sale proceeds of the shade trees, which was after the date on which lie completed the assessment for the assessment year 1967-68 in the first instance, that s. 147(b) of the I.T. Act, 1961, is attracted and that the reopening of the assessment under that section is valid. The Tribunal has relied upon the decision of the Supreme Court in State of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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