TaxTMI 
TaxTMI 
1965 (4) TMI 8
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....e by weeding out 30 acres of rubber plantation. The sum of Rs. 15,000 had been credited to the account headed " Estates and Properties ", and also went in reduction of the capital value of the estate entered in this account. The Income-tax Officer took the view that there was nothing to establish that this sum of Rs. 15,000 represented the value of useless rubber trees and that the claim to the deduction of Rs. 15,000 as cost of the fuel resulted in a disproportionate increase in the cost of fuel for the manufacture of tea as compared with the previous years. He accordingly, held that the sum of Rs. 15,000 should be a revenue receipt. The assessee contended before the Appellate Assistant Commissioner that these trees had been standing on th....
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....ncome liable to tax ? " Mr. Srinivasan, learned counsel for the assessee, brought to our notice a finding of the Commissioner of Inland Revenue, Ceylon, before whom the same question was mooted during taxation proceedings. That authority came to the conclusion that the value of the firewood could not be taken to be a revenue receipt in the ascertainment of profit and loss. Mr. Srinivasan does not deny that this finding is not conclusive as against the department, but only points out that an authority which was directly seized with the taxation of the income in Ceylon dealt with the question and accepted the contention of the assessee. The facts are not in dispute. That the assessee had purchased an estate of which a certain acreage was und....
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....hority. Learned counsel for the assessee has referred to the decision in Visalakshi Achi v. Commissioner of Income-tax. In that case, the assessee, whose estate was occupied by military authorities, claimed damages which included compensation for loss of cocoanut, areca and jack trees. It was held herein that the portion of the compensation, which was in respect of fruit-bearing trees with a life span of several years, was capital in nature. But, in that case itself, the learned judges observed : " In a large garden, certain trees grow old and as they reach the end of their useful age, young trees are planted below them to take their place. In such a case, it will be perfectly correct to say that the value of the old trees cut down cannot ....
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....e any income therefrom, sells the trees once and for all with their roots, the transaction is on account of capital and not of revenue, for by disposing of the roots of the trees, he has disposed of the source from which a fresh growth of wood would spring up." It is true that these decisions lend some colour of support to the contentions on behalf of the assessee. We are not however satisfied that the circumstances of the present case warrant the application of those decisions. A contrary view has been taken in Fringford Estates Ltd. v. Commissioner of Income-tax. In that case, the assessee-company purchased a tract of land, part of which had already been cultivated with tea and the rest of which was a jungle capable of being cleared and m....
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....e rubber trees had apparently become too old to be fully productive and they were, for all the use they were capable of being put to, nothing more than jungle trees. It would follow on the principle laid down in the decision above cited, that the income derived from the sale of such trees cannot be regarded as capital. The case of sale of forest trees was considered by the Calcutta High Court in Maharajadhiraja Bahadur of Darbhanga v. Commissioner of Agricultural Income-tax. In that case, the assessee, who owned extensive forest lands, sold the trees by public auction. The contract covered only sal trees of a particular girth and excluded fruit-bearing and valuable timber trees. The claim was made that it was not merely a right to cut and ....