1966 (8) TMI 19

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....in holding that Rs. 75,000 being income from felling of trees from forests is not subject to income-tax?" The reference is at the instance of the Commissioner of Income-tax, Kerala, Ernakulam. The contention of the department is that the Tribunal was wrong in treating Rs. 75,000, the amount received by the assessee from his lessees for the felling of trees in his forest, as a capital and not as a revenue receipt. There is no doubt that the sale of trees, together with their roots, can be treated as a capital transaction. An authority for the proposition is the decision of the Bombay High Court in Commissioner of Income-tax v. N. T. Patwardhan. The question for determination is whether Rs. 75,000 was received by the assessee for the....

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....d. Rule 7 of the rules provide that every permission granted for the cutting of trees under the clear felling, method shall be subject to the conditions mentioned in that rule. Condition (b) reads as follows : "All trees except casuarina shall be felled at a height not exceeding six inches from the ground, the bark being left intact on the stump and adhering to it all round the stump without being torn off or otherwise damaged. In the case of casuarina trees, the removal of the stump and root will also be permitted" ; and condition (e) : "The felled area shall be closed to grazing for a period of five years after felling." It is not contended by the assessee that Rs. 75,000 or any portion thereof was received for the felling ....