Revenue receipts from forest tree sales taxable where accounting treatment and facts show income, not capital realisation.

Receipts from repeated annual sales of spontaneously grown forest trees on gifted land were treated as revenue receipts, not capital receipts, because the trees were sold without evidence of any diminution of a capital asset. The assessee's own accounting treatment, including crediting the net proceeds to profit and loss account and claiming related expenditure, supported the income character of the receipts. In a taxability dispute, the department ordinarily bears the burden of bringing the receipt within the taxing provision, but where the source and accounting treatment indicate income, the taxpayer must justify any capital claim. The proposed apportionment between capital and revenue lacked evidentiary basis, so the full sale proceeds were taxable.

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Issues: Whether the receipts from sale of forest trees grown spontaneously on gifted forest land were capital receipts not liable to tax, or revenue receipts chargeable to income-tax.

Analysis: The receipts arose from repeated annual sales of trees from forest land gifted to the assessee. The assessee maintained the proceeds in his accounts as income, claimed expenditure in connection with the sales, and credited the net receipts to the profit and loss account. Although the forest trees were of spontaneous growth, there was no material to show that the trees were sold together with roots or that the sales involved diminution of a capital asset. In a taxability dispute, the department must ordinarily establish that a receipt falls within the taxing provision, but once the source of the receipts and the manner of dealing with them indicate income character, the assessee must support the claim that they are capital in nature. On the facts, the attempt by the Tribunal to apportion the receipts mechanically between capital and revenue had no evidentiary basis.

Conclusion: The entire sale proceeds were revenue receipts chargeable to tax, and no part of them could be excluded from the assessee's total income.

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