Pagdi and salami from tenants treated as capital receipt, not taxable income, absent proof of revenue character.

Pagdi or salami received from tenants for grant of monthly tenancies was treated as a capital receipt because it was a non-recurring payment made for acceptance as tenants, not advance rent. The taxing authority failed to show any factual basis for treating the premium as revenue in character. Receipt of similar payments from multiple tenants did not, by itself, make the sums business income, because there was no evidence that the building activity formed part of the assessee's business. The attempt to assess the amount as income from other sources also failed on the facts found.

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Issues: Whether the sum of Rs. 54,000 received by the assessee from tenants as pagdi or salami for grant of monthly tenancies was a capital receipt or income liable to tax.

Analysis: The receipt was found to be a non-recurring payment made by tenants for being accepted as tenants and not an advance rent. The nature of salami or premium is ordinarily capital, and the taxing authority had not established any facts showing that, in the present case, the amount was revenue in character. The fact that the payments were received from multiple tenants did not, by itself, convert the receipts into business income in the absence of evidence that the building activity formed part of the assessee's business. The attempt to assess it as income from other sources also failed on the facts found.

Conclusion: The amount of Rs. 54,000 was held to be a capital receipt and not taxable income.

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