TMI Blog1965 (4) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... -55. During the account year which ended on March 31, 1954, the assessee, in its return of income, claimed a deduction of Rs. 15,000 as the cost of fuel. Admittedly, fuel had been extracted from the estate of the assessee 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case, the sum of Rs. 15,000 representing the credit in the estate and property account for the estimated value of the rubber trees on the assessee's estate cut and used as fuel in the year of account is income 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 se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that, therefore, it should be regarded as a capital and not as a revenue receipt. So stated, the argument is attractively simple. The question however is not free from difficulty, but it is not altogether devoid of authority. 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, ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the facts and circumstances of the case and it seems to us that in a case like the present, where a man, on whose lands a wild growth of trees had stood for a number of years without any attempt being made by him to realise 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 Fringf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old and useless rubber trees. It is not denied by the learned counsel on behalf of the assessee that the petitioner did not work the plantation as a rubber plantation for several years. Even when it purchased the plantation, the 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 ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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