DIGVERENDRASINHJI OF BANSDA H H Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) TWO questions arise in this reference :

(2.) THE assessee is the present Ruler of the former State of Bansda which merged in the Dominion of India in 1948 and which was attached to the former State Of Bombay. The assessee is the owner of certain forest lands situated in villages Sadaddevi, Ranifalia and Vaghai which were gifted to him by his father in Samvat year 2006, that the relevant previous year. He sold the trees and other forest produce existing on these lands for a sum of Rs. 72,611. The assessee claimed that he had spent during that year in the aggregate the sum of Rs. 22,950 for clearing the said forest which amount was allowed as expenses. The dispute, therefore, centered round the balance of Rs. 49,661.

(3.) THE assessee filed an appeal against the order of the Income -tax Officer before the Appellate Assistant Commissioner, and while the appeal was pending, he filed an affidavit of one Bhalchandra Hariprasad Upadhyaya, who was in the service of the Bansda State until about the year 1942. The affidavit was filed in support of the assessee's contention that the operations which he had carried out in the said forest lands constituted agricultural operations and that, therefore, the income derived by him from the said forest lands was agricultural income. In his affidavit, the said Upadhyaya stated that he was in the service of the Bansda State as a forest Office until about 1942, that thereafter he joined the service of the Baroda State and, at the date of the affidavit, was serving as a range forest officer at Songadh. According to the statements in that affidavit, the lands which were gifted by the assessee's father were forest lands and these forests were developed to his definite knowledge, employing therein human labour and skill, that the Bansda State, like other State Governments, had a forest department consisting of guards and other staff not only to protect the forest from human beings and animals, but also to carry out 'sylvicultural operations including marking of coupe, dibbling, planting, weeding, thinning and doing all types of cultural operations, pruning, digging, etc. and for these operations special skilled staff was kept and maintained by the then Bansda State for all the forests including those that stood on lands in the villages of Ranifalia Sadaddevi and Vaghai gifted by the then Bansda State to H. H. Digverendrasinhji.' He has also stated in that affidavit that the main source of revenue of the then Bansda State was from forests and, therefore, those forests were 'very systematically and scientifically developed and maintained.'