Kerala H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the reopening of the assessment under s. 147(b) of the IT Act, 1961, is not valid and that the opinion or advice of the Law Ministry cannot be considered to constitute information for the purpose of s. 147 ?

High Court Of Kerala

CIT vs. Rajagiri Rubber & Produce Co. Ltd.

Sections 147, 147(b)

Asst. Year 1974-75

K.S. Paripoornan & Varghese Kalliath, JJ.

IT Ref. No. 452 of 1985

16th October, 1989

Counsel Appeared

Menon, for the Revenue : C.N. Ramachandran Nair, for the Assessee

S. PARIPOORNAN, J.:

At the instance of the Revenue, the Tribunal has referred the following two questions of law for the decision of this Court :

“(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the reopening of the assessment under s. 147(b) of the IT Act, 1961, is not valid and that the opinion or advice of the Law Ministry cannot be considered to constitute information for the purpose of s. 147 ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that rubber replanting subsidy is not assessable to tax ?”

The respondent is an assessee to income-tax. The matter arises out of the assessment for the year 1974-75, for which the previous year ended on June 30, 1973. The assessee received a sum of Rs. 56,865 as rubber replantation subsidy. In the original assessment, this was not treated as the income of the assessee. The assessment was reopened under s. 147(b) of the Act, being alerted by an audit note. In the reassessment, the subsidy amount was included in the income of the assessee and was brought to tax. In appeal, the CIT (A) held that the reopening of the assessment was bad in view of the decision of the Supreme Court in Indian & Eastern Newspaper Society vs. CIT (1979) 12 CTR (SC) 190 : (1979) 119 ITR 996 (SC). He also held that the subsidy amount received was only agricultural income and that it cannot be brought to tax under the IT Act. The Tribunal confirmed the findings of the CIT (A) regarding the validity of the reassessment and also the non-exigibility to tax of the amount received by way of subsidy. Thereafter, at the instance of the Revenue, the questions of law formulated hereinabove have been referred for the decision of this Court.

We heard counsel. At the time of hearing, it was agreed, that in the light of the Full Bench decision of this Court in CIT vs. Ruby Rubber Works Ltd. (1989) 78 CTR (Ker) 75 : (1989) 178 ITR 181 (Ker), the rubber replantation subsidy received by the assessee cannot be called a revenue receipt assessable as income.

In the light of the above Full Bench decision of this Court, we answer question No. 2 in the affirmative, against the

Revenue and in favour of the assessee.

We have answered question No. 2, which is on merits in favour of the assessee. In the light of the above answer, it is purely academic to give an answer on question No. 1, as to whether the reopening of the assessment under s. 147(b), of the Act is valid. We decline to answer question No. 1 in the above circumstances.

[Citation :182 ITR 508]

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