1983 (3) TMI 13

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..... tion of law has been referred to this court under s. 256(2) of the I.T. Act, 1961 : " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the receipts from clearing the forest trees for planting the cleared area with plantations and the sale proceeds of timber logs of such felled trees would only amount to realisation of capital ? " .....

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..... e assessee-firm entered into an agreement with one A. Sulaiman for clearing the forest for raising cardamom, coffee, tea, rubber plantations and betel nuts at varying rates per acre depending upon the situation of the land. The agreement also provided for the period during which the clearance has to be made by the contractor. Similar agreements have also been entered into between the firm and othe .....

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..... evenue took the matter in appeal in respect of the fifth year of assessment. The Tribunal having heard the rival contentions of both the parties held that all the receipts in these cases are only realisation of capital and they cannot be treated as revenue receipts. The Tribunal also referred to the terms of the partnership to find out the intention of the parties and after finding out that the i .....

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..... leared. On the basis of the affidavits filed by the contractor, the assessee and the officials of the Department, the operation of clearance was done only for the purpose of making the land fit for plantation purpose. Having regard to the object for which the clearance of the trees was effected, the receipts by the assessee from the contractor can only be considered as capital in nature. On the fa .....

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..... tation, the intention of the parties cannot be ignored, since the object of clearance of the trees was not regeneration of the trees, but the protection of the same eventually to be used for the purpose of cultivation. In view of the said decisions, we have to uphold the decision taken by the Tribunal in this case. The question is, therefore, answered in the affirmative and against the Revenue. Th .....

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