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In the Matter of Jyotirindra Narayan Sinha Chowdhury

1945 (4) TMI 17 - CALCUTTA HIGH COURT

No 12 of 1942 - Dated:- 12-4-1945 - Derbyshire (CJ) And Gentle, JJ. For the Assessee : Atul Ch. Gupta, Rajendranath Bakshi and Santosh Nath Sen For the Agricultural Income-Tax Board : S. M. Bose, Advocate-General and Phanibhusan Chakravarthi JUDGMENT Derbyshire, CJ. This is a reference by the Board of Agricultural Income-tax for Assam under Section 28(2) of the Assam Agricultural Income- tax Act of 1939. The reference purports to set out the facts of the case and then formulates the question of .....

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ven 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 zemindar, owning the Parbatjoar Estate, P.O. Bagribari in Assam and the reference arises with regard to an item of ₹ 7,934 which has been included .....

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ed: "In Schedule A of the return under column 6(ii) only the mutation fees, etc., have been shown, but the amount collected as salamis or premia for waste land and abandoned holdings, viz., ₹ 9,331-9-4 pies has not been shown as under law the amount will not be subject to assessment." On receipt of that letter the assessee was asked why the item in question would not be subject to assessment and he replied by a letter dated October 6th, 1941, as follows:- "I have the honour .....

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e 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 salamis in question are in the nat .....

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that of "agricultural income" contained in the Indian Income-tax Act. The assessee has referred to the Privy Council case of Raja Bahadur Kamakshya Narain Singh v. Commissioner of Income-tax, Bihar and Orissa [1943] 70 I.A. 180; 11 I.T.R. 513. In that case the landlord had granted a lease to certain persons in respect of one coal mine and the payments to be made were (1) salami or premium, (2) a minimum royalty, and (3) royalties per ton. The question arose whether the landlord could .....

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roperly 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 a .....

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, machinery, dressing floors, buildings, workshops, store houses, cottages, godowns, coke ovens, furnaces, etc., and to form all such railways and tramways and other roads and communications, spoil heaps and other conveniences in, over and under the said lands as may be necessary in the premises and to hold the same for a period of 999 years from December 1st, 1915, paying them certain minimum royalties per ton of coal." Their Lordships agreed that salami, that is, the premium paid in respe .....

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yment on capital account and not income. Sir Dawson Miller, C.J., at p. 84 said: "There is a vast difference between a sum paid once for all for the lease of mineral rights and a rent or royalty paid annually to the lessor. The lessor in this 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 fo .....

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distinction is one of degree rather than of kind, recurring payments at short periods being treated as income and a single payment of a similar kind covering a long period being treated as capital, but after all this is a distinction acknowledged in Section 4 of the Act itself, and, as has been observed, the Income-tax Acts are not cast upon absolutely logical lines. Nor does there appear to be any reason why we should extend the exception made in the case of rent and royalty to the case of a no .....

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ce of Bihar v. Maharaja Pratap Udai Nath Sahi Deo [1941] 20 Pat. 699; 9 I.T.R. 313, there arose a question whether a single non-recurring premium or salami paid to the assessee once only as consideration for the settlement of agricultural land at the time of granting a lease can be held to be income within the meaning of the Bihar Agricultural Income-tax Act in which the words corresponding to "rent or revenue" in the Assam Act are "rent or income". The learned Chief Justice .....

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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 salami or premium received on settlement paid for the settlement of waste lands or abandoned holdings was income. In the latter case Sir Ashutosh Mookerjee who delivered the judgment referred to Section 2(1)(a) of the Indian Income-tax Act .....

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y source, specially of an extensive kind; income from any source but specially when large and not directly earned." Sir Ashutosh Mookerjee thought that "when a lease was granted, the amount fixed for periodical payment was not independent of the amount paid in a lump sum as premium. The capitalised value of the sum periodically payable, taken along with the premium constituted in the aggregate the consideration for the grant, so that the larger the one element, the smaller the other.&q .....

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