Rosewood tree sale treated as capital gains, since processing into logs did not convert fixed assets into stock-in-trade.

Sale proceeds from rosewood trees treated as fixed assets were assessable as capital gains, not business income. Felling, dressing and sizing the timber into logs did not change the character of the asset, because those steps merely facilitated transport and sale. The transaction was found to be an isolated sale of a capital asset and not part of any timber business carried on by the assessee. On that basis, the proceeds retained their capital nature and were brought to tax under the capital gains head.

---

---

Issues: Whether the sale proceeds of rosewood trees, after felling, dressing and sizing into logs, were assessable as capital gains or as business income.

Analysis: The trees were treated as fixed assets owned by the assessee, and the mode of sale did not alter their character. Cutting, dressing and sizing the timber only facilitated transport and sale and did not convert the trees into stock-in-trade. The finding of the Tribunal was that the transaction was an isolated sale of a capital asset and not part of any timber business carried on by the assessee.

Conclusion: The sale of the rosewood trees attracted capital gains tax and was not taxable as business income.

---