TaxTMI 
TaxTMI 
1969 (2) TMI 18
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....he Tribunal held that the receipt was of a capital nature and deleted it from the taxable income. At the instance of the Commissioner of Income-tax, the Tribunal referred the following question to the High Court of Kerala : " Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in holding that Rs. 75,000 being income from felling of trees from forests is not subject to income-tax ? The High Court answered the question in the negative. We are of the view that the facts found by the Tribunal are not sufficient to enable us to record an answer to the question referred. The Income-tax Officer held that the income was taxable because 500 acres of forest land was leased for " clear fell....
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....se before them, and on that account they upheld the claim of the appellant. The High Court observed that " it was agreed that the Mangayam Katchithode forest was within the ambit of the Madras Preservation of Private Forests Act, 1949, and the statutory rules on the subject and that the expression 'clear felling' is an expression with a definite and specific meaning as far as such forests are concerned ". They then proceeded to quote rule 7 framed under the Madras Preservation of Private Forests Act, 1949, and after setting out conditions (b) and (c) observed that " the felling of the trees under the 'clear felling " method will not permit a removal of the trees along with their roots. On the other hand, the clear indications were that th....
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....nd not removal of the roots so that there would be regeneration, future growth of the roots and the stumps and on that account the receipt was of revenue nature. It appears that before the Income-tax Officer the agreement dated September 11, 1957 was not produced. After the Appellate Assistant Commissioner remanded the case to the Income-tax Officer the latter submitted the " remand report " and at that time the agreement was produced. The Tribunal in support of its conclusion referred to the preamble of the document and the conditions thereof. The learned judges of the High Court observed that they did not place any reliance on the extracts in the lease given in paragraph 2 of the statement of the case for coming to the conclusion they....
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....sion "clear felling ". The Income-tax Appellate Tribunal has submitted a supplementary statement of the case. The Tribunal has set out the relevant terms of the agreement and has also observed that the import of the expression " clear felling " is that " all trees except Casuarina are to be felled at a height not exceeding six inches from the ground, the barks being left intact on the stump and adhering to it all round the stump without being torn off or otherwise changed. " There is no suggestion that there were any Casuarina trees in the forest lands let out to the lessees. It is common ground also that the trees in the forest were of spontaneous growth. The Tribunal has found that by the use of the expression " clear felling " it was s....
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....rees of spontaneous growth growing on land which is assessed to land revenue is not agricultural income within the meaning of section 2(1)(a) of the Income-tax Act and is not exempt from income-tax under section 4(3) (viii) of the Act. In Raja Bahadur Kamakshya Narain Singh v. Commissioner of in tax, a similar view was expressed by the Patna High Court. In Fringford Estates Ltd. v. Commissioner of Income-tax it was held that profits realised from the sale of timber were trade profits and were liable to income-tax. In that case the assessee-company formed with the object of purchasing, clearing and improving of estates and the cultivation and sale of tea, coffee, etc., in such estates, purchased a tract of land part of which had already ....
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....f affording shade to tea plants is capital receipt and not revenue receipt. The court observed : " The gravelia trees were grown and maintained for the sole purpose of providing shade to the tea bushes in the tea estates of the assessee. That such shade is essential for the proper cultivation of tea cannot be disputed and the trees should hence be considered to be as much a part of the capital assets of the company as the tea bushes themselves or the equipment in its factories. Some of the gravelia trees became old and useless with the efflux of time and they naturally had to be cut down and sold. The sale proceeds of such trees cannot possibly amount to a revenue receipt......... " In Commissioner of Income-tax v. H. B. Van Ingen the M....