TMI Blog1945 (4) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... references made under this Act and probably due to lack of previous experience the case is not stated in the manner in which cases are stated under the Indian Income-tax Act. In the facts of the case reference is made to certain letters and to certain orders made departmentally, and certain facts are stated in the opinion of the member which are derived from certain departmental figures given in previous returns. The form of the first question is one which makes it difficult for us to give the answer, but we propose to give the answer to the question which relates to the liability to tax of the sum in question for this particular year and to give our reasons for the same. The assessee is Mr. Jyotirindra Narayan Sinha Chowdhury, a zeminda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is fixed at the rate of 11 annas per bigha plus usual local rate. This rate of rent is never changed. Salami increases or decreases according to the demand of the land which cannot be regarded as part of the rent in any view. That sets out the dispute between the assessee and the Income-tax Board. There is one further matter to which I must refer. The total agricultural income is assessed by the Income-tax Officer for the year in question at ₹ 89,633 which includes the item of ₹ 7,934, referred to previously. The Board in their letter of reference state that in the two years previous to the year of assessment the receipts from salamis were respectively ₹ 9,527 and ₹ 3,258. The assessee contends that the salami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may properly be regarded as a capital asset, and the money paid to purchase it may properly be held to be a payment on capital account. But the royalties are on a different footing. The lease in question stated as follows:- In consideration of the salami or premium of ₹ 37,040 being at the rate of ₹ 40 per standard bigha on 926 bighas in respect of the premises the lessor would grant to the lessees all and singular the underground coal mining rights of and in all those lands and premises specified in schedule hereto and all the estate right title interest claim and demand of the lessor into and upon the same and every part thereof with full liberty and power to the lessees to search for, work, make merchantable and car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case who holds an unfettered right of disposal would appear, in granting these leases, to have had two objects in view which are distinguishable. In so far as rent and royalty are reserved, he is founding an annual increment to the income of the Raj for himself and his successors, but with regard to salami it is the price he demands for parting with his direct enjoyment of the property by himself and his successors for a period of 999 years. He is parting with the capital to persons who, whilst not purchasers of the fee simple, are undoubtedly purchasers of a large interest therein. The purchase price is presumably not based upon the estimated outturn but is paid in exchange for the long term transferred. Possibly it may be objected that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arris was of the opinion at p. 722 as follows:- Salami cannot be regarded as income as a matter of law. Salami may in certain cases be regarded as payment of rent in advance, and in such cases the salami could rightly be regarded as income. Where, however, salami cannot be regarded as payment of rent in advance, it cannot be regarded as income and would, therefore, not be taxable. The learned Chief Justice decided that in that case the salami paid in respect of the grant of an agricultural lease was not income within the meaning of the Bihar Agricultural Income-tax Act and declined to follow the case of Birendra Kishore Manikya v. Secretary of State for India [1921] 48 Cal. 766 where a Special Bench of this Court decided that sala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent from the two cases cited in which salami or premia were paid for the grant of mining leases. Those were leases for a long period. They were not granted every day and they involved the right to commit waste, in the legal sense, upon the property. In the present case, however, the leases are for relatively small areas of land for the purposes of cultivation for periods which are not fixed. It would appear from the letter that the holdings so granted are at times abandoned. Therefore they may be let again by the zemindar. When they are let salamis may be charged. The salami is not based upon any idea of damage done to the land. It is estimated to be charged according to the demand that there is for the land. The rent so called is a fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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