AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (6) TMI 452
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....Tax Act on the income derived on the manufacture of rubber products. On comparing the income returned by the assessee for all the assessment years involved in these appeals with the book profit, the Assessing Officer felt that assessment has to be completed on book profit as provided under Section 115JA of the Income-tax Act (hereinafter called "the Act"). The assessee also raised no objection for the assessments made on book profit under Section 115JA of the Act. However, the claim made by the assessee in the assessment which was rejected by the Assessing Officer is exclusion of income derived on sale of old and unyielding rubber trees credited in the Profit and Loss Account prepared by the assessee under the provisions of the Companies Ac....
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....Companies Act, 1956, is the basis for computation of book profit and in order to arrive at the book profit on which tax is assessable, the additions and deductions permissible are only those provided under Explanation to Section 115JA(2) of the Act. The Tribunal, however, referring to few decisions of this court, that of the Bombay High Court and the Honourable Supreme Court, which arc considered in detail hereinbelow, held that sale proceeds of old and unyielding rubber trees is "agricultural income" and, therefore, it is an item to be excluded in the computation of book profit under clause (ii) of Explanation to Section 115JA(2) read with Section 10(1) of the Act. It is against these orders the Revenue has filed these common appeals raisi....
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....tta Estate Ltd. v. CIT [1996] 221 ITR 601/87 Taxman 281. It may be noticed that capital gain is determined by deducting from the sale proceeds the market value or cost of acquisition with cost of improvement as on the base year. This court held that base year value of the rubber tree has to be determined by taking into account future yield from the rubber tree until it becomes old and unyielding and if so taken, base year value will be more than the sale proceeds of old and unyielding tree sold as wood. It is only by applying this principle this court held that there can be no capital gain on sale of old and unyielding rubber trees. Counsel for the assessee relied on these decisions before us also and contended that no capital gain is asses....
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....isions of this Act, where in the case of an assessee, being a company, the total income, as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1997 but before the 1st day of April, 2001 (hereafter in this section referred to as the relevant previous year) is less than thirty per cent of its book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to thirty per cent of such book profit. (2) Every assessee, being a company, shall, for the purposes of this section prepare its profit and loss account for the relevant previous year in accordance with the provisions of Parts II and III of ....
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....xigible to agricultural income tax will have to pay agricultural income tax which assessee has not admittedly paid. Besides this, the finding of the Tribunal is exactly contrary to the decision of the Honourable Supreme Court in CAIT v. Kailas Rubber & Co. Ltd. [1966] 60 ITR 435 wherein the Honourable Supreme Court held that rubber tree is a capital asset. Any one familiar with rubber cultivation very well knows that rubber tree takes 6 to 7 years for maturity and on maturity, tapping starts to take yield in the form of latex from the tree and the tree can be economically tapped for 20-25 years and thereafter when the yield is very low and the tree becomes old, it is sold for use as wood. Therefore, rubber tree is the agricultural asset fro....
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....he Income Tax Act and is not an item falling under Chapter III to permit exclusion under clause (ii) to Explanation to Section 115JA(2) of the Act as held by the Tribunal. Since we do not find any provision in clauses (i) to (ix) of Explanation to Section 115JA(2) to exclude capital gain from Profit and Loss Account, we cannot uphold the order of the Tribunal allowing deduction in computation of book profit. In our view, it is immaterial whether capital gain included in the Profit and Loss Account prepared under the Companies Act is otherwise assessable to income tax or not for the purpose of book profit. Since the assessee has included the sale proceeds of assets as income in the Profit and Loss Account prepared under Part II and Part III ....