TMI Blog2012 (11) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that so far as the trees in question are concerned, they would not regenerate in near future because they do not belong to the categories of a species which have a spontaneous growth and land was put to use for cultivation by the assessee after cutting the trees. looking to the nature of trees (Sagon) which were cut above the root, it did not result in its spontaneous growth. - held as capital receipt - not chargeable to tax - Decided in favor of assessee. Unexplained Investment - held that:- It is essentially a question of fact involving no issue relating to law much less substantial question of law. When the explanation given by the assessee of the investment made in the transaction found acceptance to the authority concern including to the Tribunal, then, this Court in its appellate jurisdiction cannot again probe in to sufficiency of factual explanation given. It will amount to examining the factual appreciation of issues which is not permissible - answered against the appellant as not arising in the case being question of fact and not of law - once we answer the main question in assessee's favour and against the revenue (appellant) then it is not necessary to examine th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee granted him conditional permission to cut and sell. In terms of the permission, the assessee was required to cut the trees in a manner so that the trees which are cut may regenerate in course of time and are not uprooted from all time to come and secondly, after cutting these trees, they will have to be sold only to the Forest Department of the State. The assessee ensured compliance of the terms of the permission so granted and after cutting them sold to the State (Forest Department) for Rs. 1,94,238/-. (5) The question then arose before the Assessing Officer in assessment proceedings for the assessment years under consideration (1993- 94 to 1997-98) as to whether the income earned by the assessee from the sale of the trees be treated as capital receipt or revenue receipt in the hands of the assessee. In other words, the question arose as to what is the true nature of the income earned by the assessee out of the sale of these trees and whether it is chargeable to tax and if so under what head ? (6) The Assessing Officer was of the view that the income earned was essentially in the nature of revenue receipt in the hands of the assessee because it was a sale of forest pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the land was to be applied to cultivation. Intention is a material factor in such cases, and each case has to be decided on its particular facts. Without evidence of the intention or object behind such a stipulation, the mere fact the trees were sold without stumps and roots cannot lead to the necessary inference that a profit-making activity was involved. Where the evidence shows that the land had been acquired for the purpose of cultivation, and that the prohibition on the purchaser against removing the stumps and roots was intended to prevent undue interference with the soil, and the assessee did not intend to permit regeneration of the trees, and that he had in fact later put the land to cultivation, the payments received on sale of the trunks cannot be regarded as taxable income. And yet the case is distinguishable from the facts in A.K.T.K.M. Vishnudatta Antharjanam v. Commr. of Agrl. I.T. (1970) 78 ITR 58 (SC). That was a case where the trees were sold with their roots, and it was held by this court that by removal of the roots the source from which the fresh growth of trees could take place had also been removed and, therefore, the sale of such trees affected the capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and selling was governed by the provisions of the Code and Rules framed thereunder which inter alia provided that no one could either cut or/and sell any tree without obtaining prior permission of the competent authority. Fifthly, the price of the trees was determined by the State authorities in which the assessee had no role to play. In other words, it was not a private sale between the two parties and hence, there was no scope for any price negotiations. Sixthly, the Rules provided that the trees had to be cut in a particular manner and the same was also done by the assessee accordingly. Seventhly, the certificate given by the Tahsildar (which was not disputed) in clear terms stipulated that so far as the trees in question are concerned, they would not regenerate in near future because they do not belong to the categories of a species which have a spontaneous growth. Eighthly, the land was put to use for cultivation by the assessee after cutting the trees. Ninthly, looking to the nature of trees (Sagon) which were cut above the root, it did not result in its spontaneous growth. This fact was ignored by A.O. and lastly, there was no evidence to show that any profit element ..... X X X X Extracts X X X X X X X X Extracts X X X X
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