1. The question in this case is whether the sale proceeds of standing blue-gum trees, a sum of Rs. 9,293.14, constituted agricultural income liable to tax. The Tribunal differing from the revenue and purporting to follow Commissioner of Agricultural Income-tax v. Kailas Rubber & Company Ltd., : 60ITR435(SC) , held that the sale proceeds did not constitute such income, but they should be treated as capital. There is no evidence one way or the other how the blue-gum trees came into existence on the dry land of the assessee. But the Tribunal proceeded thus :
' Blue-gum trees are generally known for the use of their leaves for obtaining eucalyptus oil. If they are cut and sold it is obvious that they were no longer of any use for getting eucalyptus oil. Cutting of the trees would therefore amount to the destruction of a capital asset and the sale proceeds of such cut trees would only be capital receipts and not revenue receipts.'
2. It seems to us that in & matter like this, it is not one test rather than the other that would conclude the question. Very much will depend upon the facts in each case, which have to be viewed in the light of the well-settled principles for ascertaining the character of the receipt. Even there, not all of such principles are capable of universal application. For instance, without an assessee having planted a mango tree, it might have spontaneously grown and might be yielding income. In that case, no one will say that the income is not agricultural in character. So too, in the case of cocoanut trees planted for raising cocoanuts, the proceeds of such trees cut may not be treated as revenue income either because they had been originally planted or because the urpose of raising them apart from getting cocoanuts was to derive timber, for the cocoanut trees are rarely used as timber as such. When a land is sowed with paddy crop, can such crop be treated as part of the land Similar problems arise which may require application of metaphysics in deriving the character of the proceeds.
3. Though our first impression in this case was to send the matter back to the Tribunal for collecting evidence which may bear upon the character of the receipt, on a more careful consideration, we are inclined to think that it is not necessary. Blue-gum trees are generally planted in Nilgiris. That is common knowledge. We do not say that blue-gum trees may not grow spontaneously. But that is not generally the case in that particular district. Also, it is common knowledge that blue-gum trees are not planted for purposes of getting timber for the timber value from such trees is very negligible. The governing purpose of planting blue-gum trees is to derive eucalyptus oil from their leaves by a process of manufacture. No light is forthcoming as to why the assessee cut the trees. But the Tribunal from the passage extracted by us assumed that they were cut because they were no longer of any use for getting eucalyptus oil. It may or may not be so. But the point is that, the blue-gum trees which were a source of income through manufacture of eucalyptus oil made from the leaves have been cut. When they are standing or the land, they are part of the land and hardly distinguishable from the character of the land. When they are cut and converted into money, it is no doubt income. But we doubt whether it is of a revenue character. We are inclined to agree with the Tribunal that cutting of such trees is truly destruction of a capital asset and the proceeds of the trees represent capital rather than revenue.
4. On that view, the tax case is dismissed with costs. Counsel's fee Rs. 250.