1951 (3) TMI 50 - HC - Income Tax

High Court rules sums for lease and land not taxable as revenue.

Raja Kali Prasad Singh Versus Commissioner of Income Tax, Bihar and Orissa.

The High Court of Patna ruled in favor of the assessee in a taxability case involving two sums received. The court held that a sum of Rs. 4,000 received ... - Issues:1. Taxability of a sum of Rs. 4,000 received as salami for obtaining a lease.2. Taxability of a sum of Rs. 351 received for settlement of fireclay land.Analysis:The High Court of Patna addressed the issue of taxability concerning two sums received by the assessee. Firstly, a sum of Rs. 4,000 was paid by Dwarka Prasad Agarwal as salami for obtaining a lease of 3071 acres of land to extract mica. The assessee argued that this amount was a capital receipt related to the transfer of mineral rights. However, revenue authorities treated it as a revenue receipt. The court relied on precedents, including Commissioner of Income Tax, Bihar and Orissa v. Kamakshya Narain Singh, to determine that salami could not be considered income unless specific circumstances indicated otherwise. As no such circumstances were shown by the revenue authorities, the court concluded that the Rs. 4,000 salami was not taxable as revenue and should be excluded from assessment.Secondly, a sum of Rs. 351 was received by the assessee from Amin Ahmed Khan for settling fireclay land measuring 51.6 acres. The court considered whether this amount was a revenue receipt taxable under the Income Tax Act. Following the same reasoning as the first issue, the court concluded that unless specific circumstances indicated that the sum was income, it could not be taxed as revenue. As no such circumstances were presented, the court held that the Rs. 351 received for the fireclay land settlement was not assessable as revenue and should be excluded from the assessment.In both cases, the court emphasized that salami amounts could only be considered income if circumstances supported such a classification. The court's decision was based on legal principles and precedents that established the criteria for determining the taxability of salami payments. Consequently, the court ruled in favor of the assessee, excluding both the Rs. 4,000 and Rs. 351 salami amounts from the assessment. The court awarded costs to the assessee and set the hearing fee at Rs. 100. Vaidynathier Ramaswami, J., concurred with the judgment, and the reference was answered accordingly.