TaxTMI 
TaxTMI 
2012 (11) TMI 892
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..../2004 shall also govern the disposal of the other connected appeals being ITA Nos.6/2004, 7/2004, 8/2004, 74/2003 & 75/2003, because in all these appeals common question of law is involved. (3) This is an appeal filed by the Commissioner of Income Tax (revenue) under Section 260-A of the Income Tax Act against the order dated 29.08.2003 passed by the Income Tax Appellate Tribunal, Nagpur Bench, Nagpur in ITA No.385/Nag/2001 (Assessment Year 1994-95). The appeal was admitted for final hearing on the following substantial questions of law: (1) Whether in the facts and circumstances of the case, learned Income Tax Appellate Tribunal was justified in holding that the receipts from the sale of trees/timber of spontaneous growth on a....
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....97-98) as to whether the income earned by the assessee from the sale of the trees be treated as capital receipt or revenue receipt in the hands of the assessee. In other words, the question arose as to what is the true nature of the income earned by the assessee out of the sale of these trees and whether it is chargeable to tax and if so under what head ? (6) The Assessing Officer was of the view that the income earned was essentially in the nature of revenue receipt in the hands of the assessee because it was a sale of forest produce of wild spontaneous growth of the Trees. The assessee felt aggrieved filed an appeal before the CIT (Appeal). The appellate authority did not agree with the view taken by the A.O. and held that the i....
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....n soil. Where trees are so felled and removed, and the stumps and roots are allowed to remain in the land with a view to regeneration of the trees, the intention of the owner would be to indulge in a profit- making activity, and the case falls within V. Venugopala Verma Rajah v. CIT (1970) 76 ITR 460 (SC). The receipts from sale of the trunks would be revenue receipts. But in the present case there was no intention to reserve the stumps and roots for the purpose of allowing regeneration of the trees. The intention and subsequent conduct of the assessee establishes that the stipulation against removal of the stumps and roots was intended to protect the surface of the land from indiscriminate injury because the land was to be applied to cu....
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....the purchaser, the regeneration of the trees was not to be allowed and, therefore, a profit-making activity could not be spelled out." (10) It would thus be clear by reading the law laid down quoted supra that if the trees which have a spontaneous growth are cut by the assessee from its root with no scope of its regeneration in future to give any kind of benefit to the assessee, then, the income earned out of sale of such trees can be regarded as capital receipt in the hands of assessee. If, however, a tree which has a spontaneous growth and easily capable of regeneration is cut in such a manner that it is regenerated in short span of time and start giving some benefits to the assessee then the income earned by sale of such tree can be i....
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....obtaining prior permission of the competent authority. Fifthly, the price of the trees was determined by the State authorities in which the assessee had no role to play. In other words, it was not a private sale between the two parties and hence, there was no scope for any price negotiations. Sixthly, the Rules provided that the trees had to be cut in a particular manner and the same was also done by the assessee accordingly. Seventhly, the certificate given by the Tahsildar (which was not disputed) in clear terms stipulated that so far as the trees in question are concerned, they would not regenerate in near future because they do not belong to the categories of a species which have a spontaneous growth. Eighthly, the land was put to....
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....re are no fetters on the powers of the State to probe any kind of illegalities, if found to have committed. So far as this appeal is concerned, the same has to be decided only on the basis of findings recorded by the taxing authorities from taxing point of view. This Court cannot travel beyond this and nor such issue can be made subject matter of this appeal. (17) So far as question No.2 is concerned, in our considered opinion, it is essentially a question of fact involving no issue relating to law much less substantial question of law. When the explanation given by the assessee of the investment made in the transaction found acceptance to the authority concern including to the Tribunal, then, this Court in its appellate jurisdiction can....