1 In pursuance of the directions contained in the order dated 17-3-1953 of the Travancore - Cochin High Court, in Income Tax Reference No. 1/1125, the Income Tax Appellate Tribunal, Madras Bench A has referred the following two questions for decision by this Court:
"(1) What is the legal implication of the term Obsolescence,' whether the term when applied to machinery will also include all cases of unfitness arising from whatever cause whether it is due to total destruction or supersession by new invention?"
"(2) Whether the transaction relating to the sale of shares is one involving revenue profit or capital appreciation, especially in the absence of a provision in the Memorandum of Association of the applicant to carry on trading in buying and selling of shares?"

2 The Assesses, The India Nut Company Ltd., Quilon (in liquidation) was a public limited company incorporated in 1937 for carrying on business in cashewnuts and extraction of oil from cashewnut and cashew shell.

3 In 1942, the Company installed a machinery for the extraction of cashew shell oil at a cost of about Rs. 6860-4-0. On 31st December, 1943, the whole of the said outlay of Rs. 6,860-4-0 was written off as old machin

Click Here to Read the rest of this document