TMI Blog1940 (8) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) the income from non-agricultural sources connected with zamindari, and the question to be considered in this case relate solely to the last source of income. For the assessment year 1936-37 the Rani returned an income of ₹ 11,044-15-3 from this source of income, that is, non-agricultural income connected with zamindari, and filed statements in sport of it. The Income Tax Officer, after scrutinising the statements with the books of accounts, found several items of omission and required the assessee to file supplementary statements. In this supplementary statement an omission of ₹ 158 is shown as Nazrana payable for settlement of lands, and it is this sum of ₹ 158 that gives rise to the first question. I shall deal more fully with the facts relating to this sum later. The Income Tax Officer further found that the statements and supplementary statements were not satisfactory and further that a portion of the assessees zamindari was not in her won possession but was leased out to Mukarraridars who paid rents to her. In the statements filed before the Income Tax Officer no portion of this rent was shown as part of her non-agricultural income. It appears tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact payments of rent and, therefore, constitute income, and such is derived from a non-agricultural source it is taxable income under the Income Tax Act. In my judgment it is impossible to lay down any general rule that payments in the nature of salami or nazrana must be regarded as payments of rent and, therefore, income. The Income Tax authorities throughout in this case have assumed that such payments are payments of rent and have not considered any further facts. The Privy Council case relied upon by the learned Commissioner does not support his view, as that case did not deal with payments in the nature of salami or nazrana such as the payments in this case. The payments dealt with in the Privy Council case were very different from the payments in this case. The other cases, which were cases of Calcutta High Court, have not been followed in this Court. The most recent case of this Court dealing with this question is the case of the Commissioner of Income Tax v. Maharajadhiraj Kumar Visheshwar Singh. In that case it was laid down that where the premium or salami represents the whole or part of the price of the land it cannot be income. Income can notes a periodical monetary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es it might be payment of rent in advance, and in other cases it might well be a limp sum payment for the transfer of the lease-hold interest. In the present case the facts have never been ascertained. All that is disclosed in the record is the certain small payments were made for the settlement of certain lands in various places to various people. It is not known whether the lessees were to pay any rent, and if so what rent. It is not known whether these leases were for an indefinite period or for some fixed term. It is further not known what was the extent of the property which was made the subject-matter of the settlement. Until such facts and others are ascertained, it is impossible for any Court to come to the conclusion whether or not the nazrana or salami paid amounted to a payment of rent in advance or whether it amounted to a capital receipt. The question, as I have stated, is discussed in great detail by the learned Judges in the case of the Commissioner of Income Tax v. Maharajadhiraj Kumar Visheshwar Singh, and it is only after all the facts have been considered that a conclusion can be arrived at. The nature of these payments whether capital or income cannot be decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther hearing upon this question will be necessary. If he remits this tax on this sum for this particular year, it will in on way follow that he accepts the contention of the assessee that these payments must be in the nature of capital receipts. It will be open to the Income Tax authorities to contend otherwise when the question arises again. 2. Whether the sum of ₹ 2,000 received by the assessee for certain lands and other sources connected therewith from the Mukarraridars or permanent lease-holders is assessable to Income Tax or is it agricultural income within the meaning of section 2, Indian Income Tax Act, 1922 ? AS I have stated earlier, the assessee derived a large income from Mukarraridars and the Income Tax authorities held that a substantial part of the land leased to these various Mukarraridars was land used for non agricultural purposes. Of course, the rent payable by the various Mukarraridars was a lump sum payment and nothing was specifically apportioned to agricultural and non-agricultural land. As part of the land was non-agricultural, the Income Tax authorities were of opinion that part of the rent revived by the assessee was received in respect of non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not assessable. He has urged that the whole income payable by the Mukarraridar must be regarded as agricultural income and that the non agricultural income is taxed in the hands of the Mukarraridar. He collects agricultural and non-agricultural income and he is taxed on the non agricultural income which he receives. According to Mr. Manuk, to tax the assessee on the proportion of the total rent which represents rent from non agricultural land would be to tax the same income twice over. In my view there is no force whatsoever in this contention. It is clear that the land, which was made the subject-matter of these mukarrari leases, consisted in the main of agricultural lands but it was conceded that non agricultural lands of value were also included. A rent was agreed upon which is a rent payable for both types of land. The amount which the assessee received from the Mukarraridar she did not receive in respect of agricultural land only but she received it in respect of agricultural land and non-agricultural land. The amount which the assessee received from the Mukarraridar she did not receive in respect of agricultural land only but she received it in respect of agricultural lan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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