IN THE HIGH COURT OF KERALA AT ERNAKULAM
ITR.No. 11 of 2002()
1. THE COMMISSIONER OF INCOME TAX,TVM.
... Petitioner
Vs
1. THE PENISULAR PLANTATIONS TVM
... Respondent
For Petitioner :SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT
For Respondent :SRI.JOSEPH MARKOSE
The Hon'ble MR. Justice C.N.RAMACHANDRAN NAIR
The Hon'ble MR. Justice T.R.RAMACHANDRAN NAIR
Dated :28/02/2008
O R D E R
C.N.RAMACHANDRAN NAIR, T.R.RAMACHANDRAN NAIR, JJ.
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I.T.R No.11 of 2002
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Dated this the 28th day of February, 2008
J U D G M E N T
The question raised in the appeal filed by Revenue is whether
the tribunal was justified in granting exemption on Rs.5,00,000/-
assessed in the hands of the respondent assessee as short term
capital gains. The assessee entered into an agreement with another
company for purchase of a tea cum rubber estate. The possession of
the estate was given to the assessee by the seller because on the
date of agreement, assessee paid substantial amount of the
purchase price. Even though assessee took over possession and
enjoyed property for sometime, sale could not take place on account
of litigation by shareholders of the seller company. However, later,
in terms of the right to nominate a person for sale of the estate
contained in the sale agreement, assessee nominated another
company by name Travancore Rubber & Tea Company Limited for
sale of the estate by the seller company. Under agreement between
assessee and the ultimate purchaser, the assessee was reimbursed
the entire advance for purchase of the estate, cost of running the
estate during the period the estate was in possession of the
I.T.R.No. 11 of 2002
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assessee, and besides this an amount of Rs.5,00,000/- for
consideration for transferring the right to purchase the estate. It is
this Rs.5,00,000/- that is assessed in the hands of the assessee as
short term capital gains. Even though first appeal was dismissed,
the tribunal allowed the claim of exemption on the ground that, in
effect, the amount received represents consideration pertaining to
sale of agricultural land which is exempted from tax. Admittedly,
the assessee was a plantation company, engaged in agricultural
operation, and the property agreed to be purchased was also
plantation, which is agricultural land. The nomination for sale of the
estate by another company was made after the assessee enjoyed
possession of the estate and carried on agricultural operation for
some period. Even though the senior counsel for the Revenue relied
on the decision of the Supreme court reported in Keshav Mills Ltd.
v.Commissioner of Income-Tax, Bombay [(1953) XXIII ITR
230 (SC)] and Commissioner of Income-Tax v. United
Provinces Electric Supply Company [(2000) 244 ITR 764],
having regard to the finding above that the consideration is for
transfer of right in agricultural land, we feel the Tribunal rightly
held that the sum of Rs.5,00,000/- cannot be brought to tax as short
I.T.R.No. 11 of 2002
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term capital gains. We, therefore, dispose of the reference by
answering the question referred in favour of the assessee and
against the Commissioner of Income Tax. The Tribunal shall pass
consequential orders. The Registry is directed to forward a copy of
this judgment to the tribunal for compliance.
C.N.RAMACHANDRAN NAIR,
Judge
T.R.RAMACHANDRAN NAIR,
Judge
ms