TMI Blog1980 (7) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... that ended on March 31, 1972. The assessee is an owner of a coffee estate and it transpires that there were some sandalwood trees in that estate. By virtue of the provisions of the Karnataka Forest Act, 1963, and the earlier enactments repealed by it, sandalwood trees, wherever grown in the State, belonged to the State Government and the owner of any private land on which any sandalwood trees stood, would not be entitled to then. In the relevant previous year six sandalwood trees were cut and extracted from the assessee's land by the forest department and a sum of Rs. 17,482 was paid to the assessee by way of bonus as provided in r. 114 of the Karnataka Forest Rules, 1969. The said rule reads as follow: " 114. Bonus.-(1) The owner of a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s land and as and when they were cut and removed. It also made an observation that the receipt could not be divorced from the assessee's occupation as a planter or as the owner of the coffee estate from which the trees were cut and removed and there was an obligation on his part to look after sandalwood trees and, therefore, could not come under the exemption provision in s. 10(3) of the I.T. Act, 1961. But, while making such an observation, the Tribunal pointed out that the assessee had not claimed that the income was an agricultural income. Section 84 of the Forest Act provides that notwithstanding anything contained in any law, contract, grant or other instrument or judicial decision -(i) all sandal trees which may grow in any land aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belonging to or in the occupation of private persons. Rule 114 above referred to can be brought within this provision only under the term " disposal of trees " belonging to Government, but grown on lands belonging to or in the occupation of private persons. It appears to us that the view of the Tribunal that the payment was a sort of remuneration for any service is not warranted by the provisions of the Forest Act and the Rules. If its observation that the receipt could not be divorced from the assessee's occupation as a planter or as the owner of the coffee estate is of any significance, then the receipt should be attributed to the character of the assessee as owner or occupier of the land. In that case, it would be difficult to dissociate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and for all, a part of the assets is disposed of. The sale proceeds on account of their disposal cannot constitute revenue because by removing the roots the source from which fresh growth of trees can take place is also removed. The sale of such trees thus affects capital structure and cannot give rise to a revenue receipt." It appears to us that the ratio of this decision is applicable to the facts in the instant case. The payment by the Government is at the stage where the sandal trees have been removed, root and branch and the payment is on the basis of the net value of the sandalwood as may be fixed by the Government. The provision in this behalf appears to be for compensating the assessee in respect of an interest he might have had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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