The Commissioner Of ... v. T. Manavedan Tirumal...

The question referred to us by the Commissioner of Income-tax is:

“Whether the amounts received by sale of timber trees are income liable as such to income-tax.”

The assesses is the owner of unassessed forest lands in Malabar and was assessed by the Income-tax Officer, Palghat, for the year 1928-1929 on an income of Rs. 5,395 from property and Rs. 3,07,629 from fees received in respect of timber cut and removed from the forests and other miscellaneous receipts. The assessee objects to the latter assessment. Before the Commissioner his contention was that he had purchased the forest with trees growing therein and that as the trees were cut down and carried away the capital was thereby decreased. The Commissioner of Income-tax has pointed out that similar circumstances exist in the case of mines and quarries—this is conceded by Mr. Venkatarama Sastri who appears for the assessee—and that in neither of those cases is any deduction allowed by reason of the fact that as years go on the amount of coal under the land in the case of the mines is diminished and the amount of the stones to be quarried in the case of the quarry is diminished. Similar views have been taken in the English Courts with regard to minerals. Mr. Venkatrama Sastri here argues that this is not to be treated as assessable income at all although he admits that he can see no difference between the income derived from the sale of coal and the sale of stone quarried in a quarry or from income derived from the sale of paddy grown on land. Of course we are unable to distinguish between the income derived from the sale of paddy which is grown on land and the income derived from, the sale of timber cut in a forest; but the profits earned from the sale of paddy would be assessable to income-tax but for the special exemption given to that income in the Income-tax Act by reason of its being agricultural income. There is no such exemption in the case of income derived from the sale of timber. Under the circumstances, we answer the question referred to us in the affirmative. The assessee will pay Rs. 250 costs to the Commissioner of Income-tax.

N. R. R.Reference answered.