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TMI Blog1991 (3) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... come arising on the sale of timber cannot be treated as a long term capital gain. In fact the Madras High Court decision in Add1. CIT vs. Pandian plantation (1984) 38 CTR (Mad)334:(1984) 148 ITR 86 (Mad) relied upon by the appellant, does not support its case. In this decision, it was held that the receipts derived from contractors for clearing the forest lands for the purpose of raising plantation and for removing the trees with roots represented capital receipts. The other decisions referred to by the appellant relate to import entitlement, self generated goodwill, route permit, liquidated charges obtained for non purpose of the agreement, etc., which were treated as not representing capital assets. These cases are distinguishable on facts. In the instant case, there is absolutely no indication to show that the appellant had not spent even a pie on the growth of trees, which appeared to be quite large in number and which could be sold for such a substantial amount of Rs. 8,90,000. Even assuming that the trees were of spontaneous growth, as held in the High Court decision reported in province of Bihar vs. Maharaja Pratap udai Nath Sahi Deo of Ratugarh (1941) 9 ITR 313 (Pat), Raja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee while removing trees left roots in the soil for regeneration. The record clearly shows that trees were removed for making the land fit for cultivation of tea. The decisions cited by the learned CIT(A) to hold that income on sale of trees of spontaneous growth is taxable income are not applicable to the facts of the present case. In those cases the assessee was held to carry on activity of cutting and selling of forest timber as a regular revenue yielding activity. The ratio of decisions cited regarding placing of onus on the assessee to show that income is exempt is directly opposed to the ratio laid down in the case of CIT vs. Ambat Echukutty Menon (1979) 12 CTR (SC) 395 : (1979) 120 ITR 70 (SC). In the above case relating to sale of trees of spontaneous growth their lordship distinguished the decisions of the supreme Court in the case of V. Venugopala Varma Rajah vs. CIT (1970) 76 ITR 460 (SC) and Vishnudatta Antharjanam (A.K.T.K.M) vs. Commr. of Agrl. IT(1970) 78 ITR 58 (SC) and held that such receipts were of capital nature. The criterion to be applied was the intention with which trees were cut and sold with reference to onus to prove that receipts from sale of trees w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd(1986) 53 CTR (cal) 152: (1986) 26 Taxman 215 (cal) their Lordships of the Calcutta High Court relating to receipt of Rs. 1 lakhs as liquidated damages observed as under: "In the instant case, there was no cost involved in the acquisition of the impugned sum. Hence, it could not be deemed to be a capital gain at all. On the reasoning and findings of the tribunal, the sum received by way of liquidated damages was not in the nature of capital gain or a revenue receipt. There was no transfer in relation to a capital asset within the meaning of s. 2(47) nor did the sum conform to the concept of a capital asset. Therefore, the tribunal was justified." In its latest commentaries on income-tax, kanga and palkhivala 8th Edition at page 760 the authors have observed as under: "Applying the principle of Srinivasa Setty; the Bombay and Delhi High Court Courts have held that the relinquishment of tenancy rights the acquisition of which had cost nothing, would not result in taxable gain;...........Similarly, where an assessee gets an import entitlement, import licence or quota rights (which had cost him nothing in terms of money) the amount received by him on transfer cannot be taxe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tea seedlings, tools, timber and other articles—whatsoever lying in the said estate. The purchase deed did not indicate that any particular value was put on any particular item purchased. The document, however, showed that so-called spontaneous trees were purchased by the assessee in 1978, whatever may be the cost involved. It was thus evident from the purchase deed dt. 15th March 1978 that trees/timber which were sold were part of estate purchased in 1978. It is further claimed that assessee offered Rs. 7,40,106 as capital gain before the Assessing Officer and did not dispute the same and only before the CIT(A) assessee raised legal objection following the ratio of Supreme Court decision in (1981) 21 CTR (SC) 138 : (1981) 128 ITR 294 (SC) that capital gain was not taxable. The CIT(A), however, confirmed the assessment. The Revenue, therefore, did not have any grievance against the decision. The Revenue further did not have any opportunity to dispute facts as claimed by the assessee before CIT(A). The Revenue further could not dispute the claim of the assessee before the Tribunal as relevant record was not available with the departmental representative. The facts on record being co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have carefully considered the rival submissions of the parties. It is an admitted position that copy of the alleged purchase deed dt. 15th March, 1978 was not available to the Tribunal during the course of hearing of appeal. We have great doubt whether the said document can be produced in proceeding under s. 254(2) of IT Act and made part of 'record'. At any rate, the question whether 'record' for purposes of s. 253(2) would mean 'record' considered by the Tribunal at the time of hearing of appeal or all documents available with the record of the Assessing Officer is a debatable issue as more than one view of matter is possible. 5. We gave already extracted relevant observations of learned CIT(A) and the Tribunal. The Tribunal referred to observation of CIT(A) where it was observed that cases cited before him were distinguishable on facts. However, how cases were distinguishable was not elaborated. The Tribunal was influenced by the fact that Assessing Officer while taxing the receipt as 'capital gain' did not attribute anything towards cost of acquisition. It further held that authorities below and learned Departmental Representative in proceeding before the Tribunal could not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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