SABALGARH INDUSTRIES LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under section 66(1) of the Income-tax Act. The question which has been referred to us for opinion is :

(2.) THE only facts stated by the Tribunal in the statement of the case are : THE assessee is a private limited company incorporated on October 27, 1944, for carrying on the business of dealing in timber and other products of the forest and also to carry on the business of cattle breeding. It took leases of three forests known as Salwan forest, Dhak forest and Chiryapur forest. THE first two leases were executed on June 17, 1948, and the third lease on June 30, 1948. THE first lease was for a period of thirty years and the second and the third leases were for a period of six years each. THE question is whether the lease monies paid by the assessee are admissible expenditure under section 10(2)(xv). THE authorities below treated the expenditure as capital expenditure and disallowed the deduction. THE Tribunal, however, at the instance of the assessee has stated the case to us on the question mentioned above. THE Tribunal has only made annexures of the three lease deeds and its appellate order and has made no attempt whatsoever to incorporate in the statement any facts or findings. When the reference came up for hearing before this court on an earlier occasion it, by an order dated October 24, 1960, asked the Tribunal for a further statement of the case in respect of the particular amounts and the dates on which they were paid in regard to particular leases and which were claimed as admissible deductions in the two years in question. That statement has since been submitted to this court by the Tribunal and is contained in the supplementary paper book in a tabular form.

(3.) THE lessee was liable to keep the jungle safe from fire (paragraph 12); to cut the jungle on all sides within a line of 60 feet (paragraph 13); to look after the young plants which were planted after the date of the lease (paragraph 16); to pay the lease money regularly and to restore the jungle after the expiry of the term of the lease. THE lessor was entitled to shoot game in the jungle and to give leave to his friends and relatives to use the jungle similarly for that purpose and the lessee was bound to help them and not to stop them (paragraphs 14 and 15). THE lessor was also entitled to take out one garifuel from the jungle every day without paying any consideration for it.