TMI Blog1960 (11) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the assessee who is the appellant before us. The appeal relates to three assessments made on the appellant for the respective assessment years 1945-46, 1946-47 and 1947-48. The appellant is a zamindar and owns considerable properties. In the accounting years he granted licences to different parties to prospect for Bauxite. The particulars of the licences are : Received from Date of the Period of Assessment Amount licence licence year received Rs. 1. Aluminium Corporation of India Ltd. 20-1-1945 6 months 1945-46 15,290 2. Indian Aluminium Co. Ltd. 26-5-1945 1 year 1946-47 1,24,789 3. Dayanand Modi 7-5-1945 6 months 1947-48 1,500 4. Indian Aluminium Co. Ltd. 14-8-1945 1 year 1947-48 70,146 The Income-tax Officer held that these amounts were received as revenue payments and were, therefore, taxable. On appeal to the Appellate Assistant Commissioner, the amounts were held to be capital receipts but this order was set aside by the Income-tax Appellate Tribunal which held the amounts to be revenue receipts and taxable as such. At the instance of the appellant the case was referred to the High Court under section 66(1) of the Income-tax Act and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and over the adjoining lands and properties and in consideration of the premium paid, the licensees could, at their option, after giving necessary notice and on payment of a further sum, get a mining lease for a term of thirty years on the terms and conditions set out in the indenture attached as schedule 2 to the licence. The Income-tax Appellate Tribunal found that the licensees were not granted any interest in land and the amounts received were revenue receipts and, therefore, assessable to income-tax. A reference to some of the cases would assist in determining the nature of the transaction which was evidenced by the documents placed on the record. In Raja Bahadur Kamakshya Narain Singh v. Commissioner of Income-tax the payments by way of premium were held to be capital receipts. In that case large payments by way of royalty for granting various mining leases were received by the assessee. The leases were for a period of 999 years for mining coal with liberty to search for, work, make merchantable and carry away the coal there found and with power to dig and sink pits. In consideration of these rights the lessees paid a sum by way of salami (premium) and an annual sum as r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was received by way of settlement and not by way of salami but S. K. Das, J. (as he then was), held that salami was a lump sum payment for rights which were being given to the licensee, namely, the right to prospect for a certain number of years and also the right to get mining leases and, therefore, salami in question was undoubtedly a capital receipt. In Province of Bihar v. Maharaja Pratap Udai Nath Sahi Deo it was contended that payments in the nature of premium or salami were not part of the income of the assessee and were, therefore, not taxable and it was held that salami may, in certain cases, be regarded as a payment of rent in advance and it would in those cases be regarded as income but where it could not be so regarded it would not be income and, therefore, not taxable. It was also held that prima facie salami is not income. In Member for the Board of Agricultural Income-tax, Assam v. Sindhurani Chaudhurani this court defined salami as follows : " The indicia of salami are (1) its single non-recurring character and (2) payment prior to the creation of the tenancy. It is the consideration paid by the tenant for being let into possession and can be neither rent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut it was really a grant of a right to a portion of the capital in the shape of a general right to the capital asset. In support of this distinction between the use of capital and the taking away of capital, counsel relied upon the following observation of Lawrence, J., in Greyhound's case : " The question as to what receipts are revenue and what are capital has given rise to much difference of opinion ; but it is clear, in my opinion, that, if the sum in question is received for what is in truth the user of capital assets and not for their realisation, it is a revenue receipt, not capital. " That may be so but the question has to be decided on the nature of the grant. The terms of the covenant in the present case which have been quoted above show that the transaction was not one merely of the user of capital assets but of their realisation. By this test, therefore, the receipts were on capital account and not revenue. Counsel then referred to a judgment of the Patna High Court in H. P. Bannerji V. Commissioner of Income-tax where it was held that compensation received by the assessee for use by the military of his lands for a short period was a revenue receipt. In that ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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