Title to standing trees passes on contract date when sale is integrated and payment by instalments is only a pricing arrangement.

Specific or ascertained goods sold under an integrated contract pass on the contract date where the agreement shows no intention to postpone transfer of property. Here, the sale of standing rose-wood trees was treated as one transaction for a single price, and the instalment schedule was held to govern payment only. Clauses requiring permission to fell and remove the trees, and the seller's assistance, were treated as ancillary to transferability, not as conditions delaying sale. Applying sections 19 and 20 of the Sale of Goods Act, 1930, the Court held that title passed on execution of the agreement, so the full consideration was taxable as capital gains in the relevant year.

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Issues: Whether, on a true construction of the agreement for sale of standing rose-wood trees, the entire consideration of Rs. 7,25,000 accrued and the property in the trees passed on the date of the agreement so as to attract capital gains on the whole amount in the assessment year 1971-72.

Analysis: The agreement identified the trees by number, location and character and fixed one integrated price for the sale of 200 standing trees. The instalment schedule was held to regulate payment only and not the passing of title. The clauses requiring the purchaser to obtain permission to fell and remove the trees, and the seller to assist, were treated as dealing with the nature and transferability of the property and not as conditions postponing the sale. Applying sections 19 and 20 of the Sale of Goods Act, 1930, the Court held that the parties intended the property in specific or at least ascertained goods in a deliverable state to pass on execution of the agreement. The argument that the transaction consisted of several distinct sales or that only the trees actually felled and paid for in the year could be taxed was rejected.

Conclusion: The entire sale of 200 trees took place in the year ended 31 March 1971, and the full consideration of Rs. 7,25,000 was liable to be taken as the value of the transfer for capital gains purposes; the answer was against the assessee.

Ratio Decidendi: Where specific or ascertained goods are sold under an integrated contract and the contract shows no intention to postpone transfer of property, title passes on the contract date despite payment by instalments or later physical removal of the goods.

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