Commissioner of Income Tax vs Rajagiri Rubber and Produce Co. Ltd. (No. 2)

K.S. Paripoornan, J.—At the instance of the Revenue, the Income Tax Appellate 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 u/s 147(b) of the Income Tax 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 Section 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 u/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 Commissioner of Income Tax (Appeals) held that the reopening of the assessment was bad in view of the decision of the Supreme Court in Indian and Eastern Newspaper Society, New Delhi Vs. Commissioner of Income Tax, New Delhi, . He also held that the subsidy amount received was only agricultural income and that it cannot be brought to tax under the Income Tax Act. The Appellate Tribunal confirmed the findings of the Commissioner of Income Tax (Appeals) 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 Commissioner of Income Tax Vs. Ruby Rubber Works Ltd., Travancore Rubbers Ltd. and Smt. M. Fathima, , 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 u/s 147(b) of the Act is valid. We decline to answer question No. 1 in the above circumstances.

A copy of this judgment under the seal of this court and the signature of the Registrar shall be forwarded to the Income Tax Appellate Tribunal, Cochin Bench.