COMMISSIONER OF INCOME TAX Vs. VENUGOPALA VARMA RAJA

JUDGEMENT

(1.) This is a reference by the Income tax Appellate Tribunal, Madras Bench, under S.66(2) of the Indian Income Tax Act, 1922. The assessment year concerned is 1959-60; and the accounting period, the twelve months ended on 31 3 1959. The question referred is:

(2.) 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 the 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.

(3.) 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, ( 1961 (41) ITR 313 ).