ivil Appeal No 2705 of 1977
From the Judgment and Order dated 28101975 of the Madras High Court in Tax Case No 492 of 1975
AND Civil Appeal No 512NT of 1989
From the Judgment and Order dated 1321978 of the Madras High Court in Tax Case No 332 of 1975
R Mohan and RA Perumal for the Appellant
ATM Sampath for the Respondent in CA No 2705 of 1977
Mrs Janaki Ramachandran for the Respondent in CA No 5 12 NT of 1989
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
The question involved in these two matters is the same
So we ant leave in SLP 2440 of 1979 and proceed to dispose of both the appeals together
The respondent assessee in each of these cases acquired a reserve forest
It is common ground that the acquisition was effected with a view to raise a coffee and cardamom plantation thereon
For doing this the assessee had to clear a portion of the forest and in the process fell the unwanted trees standing thereon as natural growth
The cut trees were sold by the assessee in the form of firewood as well as in the form of cut sizes of timber as well as sleep ers
Some of the growth was also converted into charcoal and the resultant charcoal sold
On these facts the question arose in each of these cases whether the price 411 realised by the assessee on the sale of firewood timber sleepers and charcoal was assessable to sales tax
We are concerned with the assessment year 1969 70
The assessee s turnover in respect of these items in the case of Shanmugha Estate was Rs30039616 which included a turnover in charcoal of Rs8682924
In the case of Shakti Estate the disclosed turnover was as follows Firewood 19868708 Sized timber 8349089 Sleepers 28
16400 _____________ 3104797 _____________ The Deputy Commercial Tax Officer added 5 towards omissions and assessed a turnover of Rs32585907
The further facts disclosed in the case of Shakti Estate are these
The assessee is a firm of 10 individuals
It had not purchased the forest but had got a lease which entitled them to enjoy the usufruct of the forest by its exploita tion
Clause 4 of the partnership deed recites that the firm will carry on the development and exploitation of the lands
The firm had been functioning for the past 7 years and had been paying sales tax on its sales of firewood timber and sleepers
But for the first time in assessment year 1968 69 it put forward a claim that the above turnover was not assessable in its hands
The full facts in the case of Shanmugha Estate are not on record but except for the fact that this was a case of a purchase of a forest by the assessee and that the plantation does not seem to have started yielding crops the facts are broadly similar to those in the case of Shakti Estate
The assessing officers and the first appellate authorities held the turnover in question to be taxable
But the Tribunal reversed this and held that the turnover was not liable for assessment to sales tax
The High Court had dismissed the revision filed by the State in the case of Shakti Estate in respect of assessment year 1968 69 by a short order which read We are of the view that the Tribunal was right in its order
This was a case of a lease
It did not involve any sale of trees
Merely because the trees cut were sawn to sizes that would not by itself make out a sale
 412 In respect of assessment year 1969 70 also the States revision was dismissed following the above order
In the case of Shanmugha Estate the department challenged the Tribunals finding only in respect of sales of sized timber
The suggestion that the sizing of trees into timber or their conversion into sleepers would make a difference was not accepted by High Court which following the decision of the Kerala High Court in Kuttirayin  Co vs State 1976 38 STC 282 affirmed the Tribunals order by its judgment re ported in 1979 43 STC 226
The State appeals from the judgments in both the cases
The answer to the question posed depends on the inter pretation of the expressions dealer and business as defined under the Tamil Nadu General Sales Tax Act
These definitions read thus Business includes i any trade or commerce or manufacture or any adventure or concern in the nature of trade commerce or manufacture whether or not such trade commerce manufacture adventure or concern is carried on with a motive to make gain or profit and whether or not any profit accrues from such trade com merce manufacture adventure or concern and ii any transaction in connection with or incidental to ancillary to such trade com merce manufacture adventure Or COnCern
 Dealer means any person who carries on the business of buying selling supplying or distributing goods directly or otherwise whether for cash or for deferred payment or for commission remuneration or other valuable consideration and includes i a local authority company or Hindu undi vided family firm or other association of persons which carries on such business ii a casual trader    It is seen that in the case of Shakti Estate the planta tion has 413 started functioning and there is turnover in coffee and cardamora to the extent of Rs58000 while it is stated that the Shanmugha Estate has not yet started deriving income from its plantation
The principal contention of the asses sees is that they are or may no doubt become dealers in coffee or cadamore or other crops grown or to be grown on the estates but that they are by no means dealers in fire wood timber sleepers or charcoal
They say that their intention in acquiring the forest or rights therein was not to deal in the forest produce whether as firewood timber charcoal or otherwise but to start a plantation thereon
That business could not be started or carried on without clearing the forest trees and so the activity of clearing the jungle was one that was not only unconnected with the assessees business as such but was something the assessees were constrained to indulge in
This amounted to nothing more than a mere realisation by an owner of a part of his property to the best advantage and cannot be described as a trading activity or as partaking of the character of an adventure or concern in the nature of trade
We do not however think that the above contention of the assessees can be accepted
The facts show that each of the assessees has acquired a huge forest area which contains a large number of trees
When the asseessee purchased the forest or got it on lease for starting a plantation thereon it was aware of the existence of trees some of them quite valuable on the land and the price paid must inevitably have included some value for these trees as well
The asses sees also knew full well that before they could start the plantation as well as during the running of it they would have to clear the forest in stages by cutting off the trees standing thereon and disposing of the same from time to time
Each of these assessees is a firm the purpose of which is to carry on business
It will be quite proper and natural to infer that the intention of the assessees at the time of purchase included not only an intention to grow and sell coffee and cardamom and other crops but also an intention to dispose of the trees standing on the land to the best advan tage in the circumstances
Indeed the lease deed in the case of Shakti Estate clearly talks of an intention of develop ment and exploitation of the lands words which cannot be merely confined to the cultivation of commercial crops thereon
In the face of such a declared purpose it is of no relevance whether the exploitation and development was under the terms of a lease deed or a purchase deed and the dis tinction made by the High Court between the two would appear immaterial
The extent of the lands acquired or leased out is so vast that the clearance has to be done in stages and the sale of forest trees extends over several years
Indeed it is bound to be a 414 recurring feature even after the plantation starts working as there will always be a certain number of trees retained in the plantation as shade trees and the like
The nature of the task undertaken by the assessee is really one in the nature of a venture to carry out sustained systematic and organised activities in the nature of business
These activ ities do not merely cover the running of a plantation
They commence right from the beginning when the assessee went in for the land with a view to developing it
They fully in tended as a first stage in the business which they intended to start to exploit the trees standing on the land to the maximum advantage
Moreover they did not merely sell the forest trees haphazardly
They took steps to exploit them in a commercial manner
When the trees yielded timber the assessee not only had them sawn and cut to sizes but even converted them into sleepers and sold them
They reduced a part of the jungle growth to charcoal and sold the same
Taken all together one is left in no doubt that when the assessees went in for a purchase or lease of the forest for starting a plantation they also knowingly let themselves in for engaging in a trade in the forest produce
The fact that the assessees are business entities the size of the tract developed the extent and value of the trees standing on the land the inevitability of the jungles having to be cleared and the standing trees disposed of before commercial crops could be grown the manner in which the forest trees were disposed of are all we think insignia that mark out the entire set of activities as a concern in the nature of trade
It is true that in the area of income tax law it has been held that no adventure in the nature of trade can be spelt out where all that a person does amounts to a mere realisation of his capital assets
It has been held thus that an owner of a huge estate who does not want to retain it any longer cannot be taxed on the surplus accruing to him on the sale of his capital assets even though he might carry out the realisation to best advantage in a commercial manner such as by forming a company developing the lands plotting them out advertising them for sale waiting for a favour able market and selling them over a period of several years
But this line of cases is of no help in the context of the facts of the present case and in the view we have taken above of the assessees transactions
Here the assessees did not merely realise the value of a capital asset belonging to them
They went in for the acquisition of an asset fully realising its potentialities for exploitation not merely as a plantation but also incidentally by disposing of the existing growth on the land
It seems impossible to say that they did not intend to do this also while going in for the acquisition
If one purchases an asset with a view to turn it to account in such manner we 415 think one is certainly carrying out an adventure in the nature of trade
Moreover we have also to give full effect to the defi nitions in the statute we are concerned with
The definition of a business also includes any transaction in connection with or incidental to or ancillary to a trade and thus even on the assessees own arguments these activities were incidental and ancillary to the business which the assessee was carrying on or definitely intended to carry on
It is also immaterial on this definition that the assessees may not have had a motive of making a profit or gain on these sales though on the facts it is clear that such motive must have existed and in any event could not be ruled out
The reference to a casual dealer in the second definition also renders it immaterial that the assessees may not have in tended to be regular dealers in sleepers timber firewood or charcoal but that this was something casual or incidental to the acquisition and exploitation of a forest for running a plantation
Before concluding we may refer to the decisions cited before us
The decisions of the High Court in the present cases and in Kuttirayin s case supra support the assesses contention but for reasons given above we are unable to accept them as correct
The decision of the Madras High Court in LN Plantation Co vs State 1981 47 STC 210 supports the department s contention and we approve of the same
In Tamil Nadu Trading Co vs State 1981 52 STC 7 the Madras High Court was dealing with a case where the assessee was found to be a dealer in timber
But in the course of their judgment the Court made the following observations which support the case of the department Even if it were to be assumed without ac cepting for the sake of argument that the assessee purchased the land for the purpose of coffee plantation the sale of timber and firewood fall under any transaction in connection with or incidental or ancillary to the business of coffee plantation and would therefore fail within the definition of business under section 2d of the Act
 We agree
There decisions of this Court were also referred to by counsel
State vs Burmah Shell 1973 31 STC 426 and Dis trict Controller of Stores vs Assistant Commercial Tax Officer 1976 37 STC 423 were cases where an assessee carrying on a business had to dispose of unserviceable or useless material and such disposals were held taxable 416 as business sales the transactions being incidental or ancillary to the principal business carried on by the asses see
The disposals effected by the Shakti Estate whose plantation business had started in full swing will certainly fall squarely within the principle of these decisions
But as we have discussed above in our view even the sales effected before the plantation started yielding results would be covered by the definitions as the venture undertak en by the assessee has to be considered as an integral whole and there can be no doubt that the sale of the forest pro duce was part of the activities in the contemplation of the assessees right from the beginning
As against the above decisions reliance was placed on behalf of the assessees on Deputy Commissioner vs Palampa dam Plantation 1969 24 STC 231 where it is said it was held that an assessee could not be held taxable as a dealer on the sale of trees of spontaneous growth in a plantation
But that decision clearly turned on the specific language of the definition of dealer contained in section 2viiie of the Kerala General Sales Tax Act 1963 and does not lay down any general proposition as contended for on behalf of the assessees
For the reasons discussed above we allow the appeals and set aside the order of the High Court and Tribunal in these cases
In the result the turnovers in dispute in the two cases before the High Court will stand included in the assessees turnover and the assessments modified accordingly
We however make no order regarding costs
NVK Appeals allowed


Summary:
This was an appeal by the defendants in a suit for possession on redemption of certain mortgages instituted in the Court of the Special judge exercising jurisdiction under the Sangli State Agriculturists Protection Act 1 of 1936
Their case was that the mortgaged properties had been sold at auction and purchased by their father who had sold most of them to other persons more than 12 years before the institution of the suit and as such the suit was barred by limitation
The trial Court dismissed the suit
On appeal the High Court of Sangli permitted the plaintiff to amend the plaint originally filed so as to include the relief for redemption and remanded the suit
The trial court thereafter decreed the suit in part holding that the claim in respect of portions only of the mortgaged properties was barred by limitation
Both the parties appealed to the High Court of Bombay and the appeals were heard together
The High Court dismissed the defendant s appeal and allowed the plaintiff s appeal holding that article 148 and not article I34 Of the Limitation Act applied
In the result the plaintiff s suit was decreed in its entirety
Held that the preliminary objection that the Special judge had no jurisdiction under the Sangli State Agriculturists Protection Act to entertain the suit must be overruled
The fixing of 915 as the date line by the Act had reference to such reliefs as could be had only by way of reopening of closed transactions and could not therefore preclude the Special Judge from granting other reliefs in respect of transactions entered into prior to 1915
Nor could it be contended in bar that the plaintiff was bound in the first instance to set aside an auction sale of the mortgaged properties in execution of a money decree in which she was not substituted in place of her deceased father as his true heir and legal representative nor made a party and no controversy was raised by the parties nor decided by the Court as to who was the true legal representative
The plaintiff was entitled to ignore the sale and the suit was not barred under article 12 of the Limi tation Act
480 Malkarjun Bin Shidramappa Pasare vs Narhari Bin Shivappa 1900 LR 27 IA 216 doubted and distinguished
In order that article I34 of the Limitation Act might be attracted to a suit for possession on redemption it was necessary for the defendant to prove affirmatively that the mortgagee or his succesor in interest had transferred a larger interest than was justified by the mortgage
Where as in the present case this was not done article 134 could not apply and the only other article which could apply was article 148 Of the Limitation Act
Under the Mitakshara School of Hindu Law partition may be either 1 a severance of the joint status of the coparcenary by mere defining of shares but without specific allotments or 2 partition by allotment of specific properties by metes and bounds according to shares
The latter if reduced to writing becomes compulsorily registrable under section I71b of the Indian Registration Act but the former does not
Consequently in the present case such unregistered docu ments as were adduced by the plaintiff for the limited purpose of proving partition in the former sense did not fall within the mischief Of section 49 of the Indian Registration Act and were admissible in evidence