TMI Blog1965 (10) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... suggested that they are non-recurring. Appeals dismissed - - - - - Dated:- 28-10-1965 - Judge(s) : K. SUBBA RAO., J. C. SHAH., S. M. SIKRI JUDGMENT The judgment of the court was delivered by SHAH J.--- On December 11, 1947, the appellant granted to the Shivrajpur Syndicate Ltd. rights for mining manganese ore from lands in two villages, Shivrajpur and Bhat. The following are the material terms of the indenture of lease : " . . . In consideration of the rents and royalties, covenants and agreements by and in these presents and in the Schedule hereunder written, reserved and contained and on the part of the lessee to be paid, observed and performed, the lessor hereby grants and demises unto the lessee all those the mines, beds, veins, and seams of manganese ore ... situate, lying and being in and under the land . . . ... To hold the premises ... granted and demised unto the lessee for the term of twelve years which shall be deemed to have commenced from the first day of December one thousand nine hundred and forty-five ... Yielding and paying therefore unto the lessor the several rents and royalties mentioned in Part V of the Schedule at the respective time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment and submitted the following questions for the opinion of the High Court of Bombay : " (I) Whether the sum of Rs. 16,309/Rs. 39,515 received by the assessee from the syndicate is 'income' for the purpose of the Indian Income-tax Act, 1922 ? (II) If the answer to the above question is in the affirmative, whether the income-receipt is exempt under section 4(3)(vii) of the Act by reason of its being of a casual and non-recurring nature ? " In compliance with an order of the High Court, the Tribunal submitted a supplementary statement of the case observing that the lands in question which were " alienated villages " between August 1, 1950, and August 15, 1950, had ceased to be alienated villages in consequence of the application of the Bombay Taluqdari Abolition Act, 1949 (62 of 1949), that the total amount of assessment payable in respect of these villages was Rs. 1,222.92 and the local fund cess due in respect of the lands was Rs. 270.45 nP., that the total Jama payable to the appellant was Rs. 504.45 nP. and that the appellant had under the Bombay Local Boards Act, 1923, to pay the cess as a percentage of land revenue and not of the Jama. The High Court, in the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Act 6 of 1923 it is provided that the cess described in section 93 shall be levied, so far as may be, in the same manner, and under the same provisions of law, as the land revenue. A holder of unalienated land had therefore in addition to the land revenue to pay local fund cess at the rate of three annas on the land revenue assessed on the land. In respect of alienated lands, the land revenue assessed on the land may be wholly or partly remitted, but the local fund cess is levied as a fraction of the land revenue. Under the terms of the lease with the syndicate it was stipulated that the syndicate shall pay all taxes, rates, assessments and impositions of a public nature. The effect of the covenant was that the syndicate will reimburse the appellant for local fund cess and other taxes paid by him. The local fund cess payable for the two villages demised by the appellant was, according to the finding of the Tribunals, Rs. 270.45 being 3/16ths of Rs. 1,222.92 the amount of land revenue assessed on the lands. But the amounts paid by the syndicate for the two years in question considerably exceeded the local fund cess payable in respect of the lands. The syndicate believed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an inferior holder under the appellant. The appellant was the holder of the land and he had granted a lease in respect of the land to the syndicate, and our attention has not been invited to any provision of the Bombay Land Revenue Code, 1879, which imposes liability to pay local fund cess upon the lessee who holds land under a lease from the landholder. Liability to pay land revenue and the local fund cess is imposed by the Bombay Land Revenue Code upon the appellant. Under the terms of Part VII, clause 1, of the indenture of lease, the syndicate had agreed to pay to the appellant the amount of land revenue and local fund cess which the latter may have to pay to the Government. But by collecting the amount from the syndicate under the terms of his contract, the appellant was not constituted an agent of the Government for recovering either the land revenue or local fund cess. There is nothing in the Income-tax Act which prevents the revenue authorities from determining the quantum of the amount which is payable by the appellant as local fund cess, when that question properly arises before them in the course of proceedings for assessment. The Income-tax Officer is, within the lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are "to pass through the Tharavband." By the instructions it is not sought to be conveyed that local fund cess in respect of non-agricultural incomes subject to local fund such as rent and royalties is to be levied at a rate different from the rate prescribed by the statute. The Bombay Local Boards Act, 1923, expressly provides that local fund cess is to be levied on land revenue whether the land is used for purposes agricultural or non-agricultural at the prescribed rate and by executive instructions the Act cannot be modified and has not been modified. It was said that the syndicate may seek to recover from the appellant the excess amounts paid by it towards local fund cess. We were told at the Bar that after the proceeding for assessment in these appeals reached the High Court, the syndicate has filed a suit in the civil court against the appellant to recover the amounts paid by it. We are not in this case concerned with the merits of that claim. The appellant has received certain amount under a contract with the syndicate, and if that amount was income, the fact that the person who paid it may claim refund will not deprive it of its character of income in the year in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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