Revenue receipt: value of exhausted plantation trees treated as taxable income where trees were unproductive and akin to jungle growth.

Whether a sum credited as estimated value of rubber trees used as fuel is revenue or capital turns on whether the trees formed part of a continuing productive plantation or constituted exhausted/jungle growth; the court applied authorities distinguishing sale/removal of productive plantation trees (capital) from sale of wild or exhausted trees (revenue). Factual findings showed the rubber trees were old, unproductive and equivalent to jungle growth and the estate had not been operated as a plantation; applying the exhausted-plantation principle the HC upheld the Tribunal and treated the amount as a revenue receipt taxable as income.

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Issues: Whether the sum of Rs. 15,000 credited as the estimated value of rubber trees cut and used as fuel in the accounting year is income liable to tax (i.e., a revenue receipt) or a capital receipt reducing the capital value of the estate.

Analysis: The Court examined authorities distinguishing receipts from sale or removal of trees that are part of a continuing productive plantation (capital) and receipts from sale or removal of wild or exhausted/jungle trees (revenue). Decisions cited establish that profits derived from capital consumed or exhausted in the process of realisation (including sale of forest or jungle trees) are taxable income. The facts show the rubber trees were old, unproductive for several years, and effectively equivalent to jungle growth; the estate had not been operated as a rubber plantation in recent years. Applying the principle that income derived from sale or disposal of such exhausted or wild growth is revenue in nature, the Tribunal's conclusion treating the amount as taxable income was upheld.

Conclusion: The sum of Rs. 15,000 is income liable to tax (a revenue receipt); the assessee's contention that it was a capital receipt reducing the estate's capital value is rejected.

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