Supreme Court Of India
Kanthimathi Plantations Ltd. vs. The State Of Tamil Nadu
Section TN Agrl. 2
Asst. Year 1975-76, 1976-77, 1977-78
S.P. Bharucha & S. Rajendra Babu, JJ.
Civil Appeal Nos. 1763 to 1765 of 1987
3rd December, 1998
D.A. Dave with K.J. John, for the Appellant : R. Mohan with A. Mariarputham, for the Respondent
BY THE COURT :
The appeals are directed against the judgment and order of a Division Bench of the High Court of Madras. The issue relates to the sale of unyiedling rubber trees by the appellant plantation during the asst. yrs. 1975-76, 1976-77 and 1977-78.
There were two agreements by which the appellant sold the unyielding rubber trees. One agreement, dt. 30th March, 1974, expressly split the consideration thereunder between that for latex and that for fuel. The High Court held that in the face of the specific recital in this behalf in that agreement, appellant was not justified in contending that the entire amount payable thereunder relate only to the fuel value of the rubber trees and not to the value of the latex and was, thus, a capital receipt. This, in our view, is an unassailable conclusion.
In regard to the second agreement, dt. 17th Feb., 1975, however, the High Court noted that the consideration thereunder had not been so split and there was no recital in this behalf. Even so, the High Court said that the fact that the earlier agreement had treated practically 2/5th of the consideration as payable for the latex, that portion of the consideration payable under the second agreement should be presumed to relate to the latex and should be taxed as a revenue receipt. In this regard, we cannot agree with the High Court. We do not think that such a presumption was justified in the absence of a recital in the agreement or any other factor which indicated that latex was present and recoverable from the unyielding trees covered by the second agreement.
In the circumstances, the appeals are allowed only to the extent hereinbefore stated. There shall be no order as to costs.
[Citation : 254 ITR 785]