Salami on agricultural land settlement is capital receipt, not agricultural income, unless it represents rent in advance.

A non-recurring salami received on settlement of agricultural land is not agricultural income unless it represents rent or rent paid in advance. Where the premium is paid as consideration for acquiring the right to enjoy the land and has no direct relation to rent, it is a capital receipt. On the facts noted, the lump-sum salami was treated as payment for settlement of the land rather than periodical income, so it was not taxable as agricultural income under the Orissa Agricultural Income-tax Act.

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Issues: Whether salami received on settlement of agricultural lands constitutes agricultural income taxable under the Orissa Agricultural Income-tax Act, or is a capital receipt not liable to tax.

Analysis: Agricultural income denotes income derived from land used for agricultural purposes, and income ordinarily imports a periodical monetary return from a definite source. A single non-recurring payment by way of salami is not income unless the facts show that it represents rent or a portion of rent paid in advance. Where the premium has no relation to rent and is paid as consideration for the acquisition of the right to enjoy the land, it is in the nature of a capital payment. On the facts found, the rent fixed was fair rent and there was a presumption of merger of rent in the salami, but the receipt itself was treated as a single lump sum for settlement of the land.

Conclusion: The salami of Rs. 20,768 received on settlement of the agricultural lands does not constitute agricultural income and is a capital receipt not taxable under the Act.

Ratio Decidendi: A non-recurring salami received for settlement of agricultural land is not agricultural income unless it is shown to be rent or part of rent paid in advance; otherwise it is a capital receipt.

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