- (1.) These appeals are from the judgment and order of the High Court of Bombay dated 22nd/24th April, 1970. These are by certificate granted by the High Court under Section 66A(ii) of the Indian Income-tax Act, 1922. The judgment under appeal is reported in , [1971]81ITR777(Bom) .
(2.) The familiar yet not always easy to answer question whether a particular receipt is capital or revenue looms large in these appeals arising out of the assessment to income-tax for the assessment years 1950-51, 1951-52 and 1953-54, the accounting years respectively ending on 31st May, 1950, 31st May, 1951 and 31st May, 1953.
(3.) The assessee is a public limited company limited by shares. It derived income from several sources including certain business operations. These operations were carried out in India and abroad and used to be carried out, inter alia, in Burma and Siam. The assessee company carried on business in Burma from 1862 onwards. In connection with its business of selling timber, the assessee-company had to enter into contracts which are mentioned as 'forest leases' with the Government of Burma. In the year of account ending on 31st May, 1950 the assessee-company was the owner of about 15 forest leases. The agreed position between the parties was that all the forest leases contained provisions and clauses exactly similar to the specimen copy dated 28th October, 1925, which was taken into consideration by the High Court. It may be mentioned, however, that the forest leases were for the duration of 15 years and in respect of large areas. Under these leases, the assessee-company was authorised to fell the teak trees and convert them into the logs and, upon completion of the extraction thereof, to remove the logs after payment of royalty to the Government of Burma for its own purposes. Clause 27 in these leases authorised the assessee-company even after the expiry of the period of 15 years of the lease to remove the logs in respect whereof extraction had been completed upon payment of royalty. The period for such removal under Clause 27 was fixed at three years after the expiry of the lease period mentioned in Clause 4. These leases contained renewal clauses. The forest leases of the assessee-company did not commence on the same date and related to different parts of the forests in Burma. These leases were made as mentioned hereinbefore, in 1862 first and had been continuously renewed from time to time.;