Mining lease tender money is capital consideration, not first-year dead rent, where the lease excludes dead rent and provides royalty separately.

A lump-sum tender payment made to obtain a mica mining lease was treated as consideration for acquiring mining rights, not as dead rent for the first year. The lease terms and Rule 41(1)(iii) of the Mineral Concession Rules, 1949 showed that for the first year no dead rent was payable, while royalty was separately chargeable and dead rent and royalty were alternatives, not cumulative. The amount therefore could not be split up and attributed in part to first-year dead rent. The issue was answered in the negative, against the assessee and in favour of the Revenue.

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Issues: Whether any part of the sum of Rs. 1,55,000 paid as tender money for the mica mining lease could be treated as dead rent payable for the first year and thus as revenue expenditure.

Analysis: The payment was made as a bid price for acquiring mining rights and was distinct from the recurring payments under the lease. Under the notice and the acceptance letter, no dead rent was payable for the first year, but royalty was payable. Rule 41(1)(iii) of the Mineral Concession Rules, 1949 showed that for each year the lessee was liable to pay either dead rent or royalty, whichever was higher, but not both, and that the first year was exempt from dead rent. The amount of Rs. 1,55,000 therefore could not be dissected so as to attribute any part of it to first-year dead rent, since the amount had nothing to do with rent or royalty and was instead consideration for acquiring the lease itself.

Conclusion: No portion of the sum of Rs. 1,55,000 could be regarded as dead rent payable for the first year. The answer to the referred question was in the negative, against the assessee and in favour of the Revenue.

Ratio Decidendi: A lump-sum bid amount paid to acquire mining rights, being capital in nature, cannot be apportioned as first-year dead rent where the lease structure separately provides for royalty and excludes dead rent for that year.

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