TMI Blog1970 (5) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... 1922 (which will hereinafter be referred to as the "Act"). Along with its statement of case, the Tribunal submitted two questions to the High Court for its opinion. They are: "(1) Whether, on the facts and in the circumstances of the case, the sums of Rs. 2,55,733 and Rs. 3,00,332 receivable by the assessee as arrears of royalty and rent were assessable as the income of the assessee for the assessment years 1948-49 an 1950-51 respectively ? and (2) Whether, on the facts and circumstances of the case, the sum of Rs. 2,80,000 being the surplus derived by the assessee on sale of property was assessable as the income of the assessee for the assessment year 1950-51 ?" The facts set out in the statement of the case, in brief, are as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 1948-49, the Income-tax Officer assessed the entire amount of arrears of rent and royalty, receivable from the said lessees, from September 1, 1946, up to the date of conveyance, namely, December 22, 1947, as the assessee's income for the previous year ended on the 31st March, 1948. The net amount included in the assessment under that head was Rs. 2,55,733. In the previous year ended on December 31, 1949, relevant for the assessment year 1950-51, the assessee purchased another lot of villages from the Raja of Ramgarh as per the conveyance dated January 24, 1949, in pursuance of the agreements already referred to for a consideration of Rs. 2 lakhs with all arrears of rent and royalty which on December 31, 1948, amounted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by that order, the Commissioner of Income-tax, West Bengal, has come up in appeal to this court. We are in agreement with the High Court that the purchase of the right to collect arrears of rent and royalty cannot be considered as an income. It is true that the assessee purchased the lessor's right from the Raja of Ramgarh in pursuance of the agreements entered into by the Raja of Ramgarh with third parties whose rights had been acquired by the assessee. The assessee-company had been incorporated, as seen earlier, on January 23, 1947. Therefore it could not have got any right in the property prior to the conveyance in its favour on December 22, 1947. As per the terms of the said conveyance, the assessee became entitled to the arrears of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the subsequent sale were in the nature of a trading adventure. The circumstance that the memorandum of association of the assessee permitted the assessee to acquire, and sell and dispose of and deal with mining properties is an inconclusive one. It is not shown that the assessee had acquired or sold any other property. The fact that the assessee sold property purchased by it for profit is not decisive in finding out whether the sale was effected in the course of the business of the assessee. From the fact that the assessee could not undertake large-scale and profitable mining in the area which was in its possession, no inference may be drawn that lands were acquired with a view to sell later on, nor the circumstance that the properties ..... X X X X Extracts X X X X X X X X Extracts X X X X
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