Shah, J. - (1.) In computing the income of the appellant's father to tax for the assessment year 1959-60 the Income-tax officer included Rs. 75,000 received under an agreement for cutting and removing trees from 500 acres of Mangayam Katchithode forest. The Appellate Assistant Commissioner after calling for a report on certain facts confirmed the order. But the Tribunal held that the receipt was of a capital nature and deleted it from the taxable income.
(2.) At the instance of the Commissioner of Income-tax, the Tribunal referred the following question to the High Court of Kerala: "Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in holding that Rs. 75,000 being income from felling of trees from forests is not subject to income-tax - The High Court answered the question in the negative.
(3.) We are of the view that the facts found by the Tribunal are not sufficient to enable us to record an answer to the question referred. The Income-tax officer held that the income was taxable because 500 acres of forest land was leased for "clear felling" by the father of the appellant and this fetched an income of Rupees 75,000. What the expression "clear felling" meant was not investigated by the Income-tax officer. The Appellate Assistant Commissioner in dealing with the contention raised by the appellant that the receipt was of the nature of a capital, observed: "The claim is based on the reasoning that the clear felling of forest trees amounts to sterilisation of a capital asset. In other words clear felling is said to involve total destruction of the forest. It is admitted that the trees are of spontaneous growth and it has not been established that removal of trees has in any way affected the value of the property. As a matter of fact, clear felling is resorted to make the land more productive and more valuable. At any rate the claim has not been substantiated beyond doubt and hence there is no scope for any relief." ;