FRINGFORD ESTATES LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question that has been referred to us is whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 11242 derived by the assessee company on sale of timber was assessable Income.

(2.) THE facts that have led up to this reference are these. THE assessee is a limited company. Its main business is to cultivate and sell tea, coffee, cardamom etc. in its estates. It purchased a tract of land part of which had already been cultivated with tea, the rest of it being a jungle capable of being cleared and maae fit for plantation. THE company cleared the jungle of trees in order to make the land fit for cultivation and sold the trees in order to make the land fit for cultivation and sold the trees in the open market. THE accounts of the company showed an income of Rs. 11242 received from sales of timber cut down from the jungle and sold. THE Clearing operations started in 1939 and the trees that were cut were stocked in the estate of the assessee. In October 1941 the company entered into an agreement with one Ma-mmu Hajee, a timber merchant, for clearing the rest of the jungle of all trees and for the sale of the timber in the market.

(3.) WE therefore answer the question referred to us in the affirmative and against the assessee. The assessee will pay the costs of the Commissioner of Income-tax on this reference which we fix at Rs. 250/-.