KALPETTA ESTATES LTD. vs COMMNR. OF INCOME-TAX, COCHIN

The Supreme Court addressed two primary issues regarding the taxation of capital gains under Section 55(2) of the Income Tax Act. It held that capital gains arise when old and uneconomic rubber trees are sold, affirming the High Court's decision that the valuation principle adopted by the Income Tax Officer was valid. Additionally, the Court upheld the Revenue's classification of the rubber replantation subsidy as a revenue receipt, thus subject to taxation. The appeals were dismissed, affirming the High Court's rulings on both counts.