Recurring salami on agricultural lettings treated as revenue, not capital, and included in agricultural income.

Recurring salami or premium received in the ordinary course of letting agricultural land was treated as revenue derived from land, not as a capital receipt, because it formed part of the normal yield of the estate and was not compensation for wasting capital. The analysis distinguished long-term mining leases and similar transactions involving diminution of capital value, and stressed that the receipts here arose from relatively small holdings let for cultivation and capable of being re-let after abandonment. On that basis, the receipts fell within agricultural income under the Assam Agricultural Income-tax Act, 1939.

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Issues: Whether salami or premium received for the grant of lettings of waste lands or the re-letting of abandoned holdings constituted agricultural income within the meaning of the Assam Agricultural Income-tax Act, 1939.

Analysis: The receipt had to be tested under the statutory definition of agricultural income as rent or revenue derived from land used for agricultural purposes. The Court distinguished authorities where salami paid under long-term mining leases was treated as capital, noting that those transactions involved a very different character of letting and a potential diminution of capital value. Here the receipts arose from relatively small agricultural holdings let for cultivation, the holdings being capable of being let again when abandoned, and the salami was charged according to demand rather than as compensation for damage to the land. The evidence also showed that such receipts were a normal and regular feature of the zemindar's agricultural estate.

Conclusion: The salami was revenue from agricultural land and therefore formed part of agricultural income under the Act.

Final Conclusion: The reference was answered in favour of treating the disputed receipt as taxable agricultural income, and the assessee's contention that it was a capital receipt failed.

Ratio Decidendi: A recurring or regular salami received in the ordinary course of letting agricultural land, where it is charged as part of the yield of the estate and not as compensation for wasting capital, is revenue derived from land and falls within agricultural income.

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