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Clen Leven Estates Ltd. Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberIncome-tax Reference Nos. 94 and 95 of 1970
Judge
Reported in[1973]91ITR391(Ker)
ActsIncome Tax Act, 1961 - Sections 2(14) and 45
AppellantClen Leven Estates Ltd.
RespondentCommissioner of Income-tax
Appellant Advocate P.F. Francis, Adv.
Respondent Advocate P.A. Francis, Adv.
Cases ReferredParameswaran Nadar Chellappan Nadar v. Krishnan Nair
Excerpt:
- - both these propositions, we think, try to extend the law of india, the proposition is based on the well-known latin maxim, quic quid inaedificatur solo solo cedit, in parameswaran nadar chellapan nadar v......follows:' whether, on the facts and in the circumstances of the case, the profits on the sale of cooly lines situated on agricultural lands are liable to be charged to income-tax under section 45 of the income-tax act ? does the exemption of ' agricultural land' from the definition of capital assets in section 2(14)(iii) take in buildings situated on agricultural land in view of the maxim that ' whatever is attached to the soil becomes part of it' ' from the assessment orders for the two years, annexure ' a ' and annexure ' a(1)', it is seen that the questions relate to the addition of a sum of rs. 12,658 as capital gains on the sale of buildings for the earlieryear, and the sum of rs. 15,829 for the second year. from the statement of the case it is seen that for the sale of ' cooly.....
Judgment:

Govindan Nair, J.

1. The question referred to us at the instance of the assessee for the two years 1965-66 and 1966-67 read as follows:

' Whether, on the facts and in the circumstances of the case, the profits on the sale of cooly lines situated on agricultural lands are liable to be charged to income-tax under Section 45 of the Income-tax Act ?

Does the exemption of ' agricultural land' from the definition of capital assets in Section 2(14)(iii) take in buildings situated on agricultural land in view of the maxim that ' whatever is attached to the soil becomes part of it' '

From the assessment orders for the two years, annexure ' A ' and annexure ' A(1)', it is seen that the questions relate to the addition of a sum of Rs. 12,658 as capital gains on the sale of buildings for the earlieryear, and the sum of Rs. 15,829 for the second year. From the statement of the case it is seen that for the sale of ' cooly lines ' it had received a sum of Rs. 30,000, for the year 1965-66 arid a sum of Rs. 24,500, for the year 1966-67. The questions referred to us also proceed on the basis that there have been sales of estates and ' cooly lines ' separately. So there is no scope for the argument for the first time raised before us by counsel that there was only a sale of an estate and that being the real transaction the consideration for such sale should not be bifurcated in an artificial manner so as to arrive at some figure which formed a part of the consideration as that applicable to the sale of a part of the property that was sold. In such cases whether there can be said to be a sale of agricultural land or, what is more important, whether there was a transfer of a capital asset does not arise for consideration in this case. Now, we shall read the relevant part of Section 2(14) of the Income-tax Act, 1961.

'2. (14) ' capital asset' means property of any kind held by an assessee whether or not connected with his business or profession, but does not include--. . . . (iii) agricultural land in India ;....'

Counsel on behalf of the assessee contended that ' cooly lines ' are structures erected for the housing of agricultural labourers who were working on agricultural land for the purpose of producing agricultural income and that it formed an intimate part of the agricultural land which formed the large bulk of the property transferred. He further urged that the ' cooly lines' being attached to - agricultural lands, 'cooly lines' themselves were agricultural lands and, therefore, fell within exemption (iii) to the definition ' capital asset' in Section 2(14) which we have read. The question is whether it is possible to say that the ' cooly lines ' are agricultural lands. It was contended that these 'cooly lines' were agricultural lands on the basis that the principle that what is attached to the land belongs to the land must not only be applied but the character of the property attached to the land must be taken to be the same as that of the land to which it is attached. This argument presses for acceptance two principles: one, that what is attatched to the land belongs to the land, and the other that the character of the thing attached to the land will be the same as the character of the land. Both these propositions, we think, try to extend the law of India, The proposition is based on the well-known Latin maxim, quic quid inaedificatur solo solo cedit, in Parameswaran Nadar Chellapan Nadar v. Parameswaran Pillai Krishnan Nair, [1963] K.L.T. 750, A.I.R. 1963 Ker. 297. The above principle of English law is not applicable to India and it has long been so established. So said the Privy Council in the decision in Vallabdas Narainji v. Development Officer, Bandra, A.I.R. 1929 P.C. 163. This court followed the decision of the Privy Council inSirkar v. Mahadeva Iyer Venkitasubramania Iyer, [1953] K.L.T. 559, A.I.R. 1953 Trav.-Coch. 349 and the Supreme Court also approved the decision of the Privy Council in the decision in Dr. K. A. Dhairyawan v. J. R. Thakur, A.I.R. 1958 S.C. 789 and further this court again in Parameswaran Nadar Chellappan Nadar v. Krishnan Nair, reiterated the position. It appears to us, therefore, impossible to contend that what is attached to the land belongs to the land. It is even more difficult to accept the contention that the nature of the thing attached to the land must be the same as the nature of the land to which it is attached. No decision has been quoted before us which supports this submission.

2. We have, therefore, to answer the two questions referred to us against the assessee and in favour of the department. Our answer to the first question is in the affirmative and that to the second is in the negative.

3. We direct the parties to bear their respective costs.

4. A copy of this judgment under the seal of the High Court and the signature of the Registrar will be sent to the Appellate Tribunal as required by Sub-section (1) of Section 260 of the Income-tax Act, 1961.


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