Capital receipt versus agricultural income: lump sum salami for a lease grant was held not taxable as rent or revenue derived from land.

Non-recurring salami paid by prospective tenants at the inception of agricultural leases was held to be a capital receipt, not agricultural income. The lump sum was consideration for the landlord parting with rights in agricultural holdings and did not have the recurring character of rent or revenue derived from land. Because it was paid before the landlord-tenant relationship fully arose and was not periodic income, it fell outside the statutory definition in section 2(a)(i) of the Assam Agricultural Income-tax Act, 1939. The assessees therefore succeeded, and the disputed salami receipts remained outside tax as agricultural income.

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Issues: Whether non-recurring salami paid by tenants at the inception of agricultural leases constituted "agricultural income" as rent or revenue within section 2(a)(i) of the Assam Agricultural Income-tax Act, 1939.

Analysis: The salami receipts were lump sum, non-recurring payments made before the landlord-tenant relationship came into existence. They were paid as consideration for the landlord parting with rights in agricultural holdings and were not periodic receipts, nor rent, nor capitalised rent. The payments did not arise with the regularity or recurring character required of income and were not revenue derived from land. Their true character was that of a premium or capital payment for the grant of a lease or settlement.

Conclusion: Salami was not agricultural income and did not fall within the statutory definition of rent or revenue derived from land.

Final Conclusion: The State's appeal failed and the assessees' appeals succeeded because the disputed salami receipts were held to be capital in nature rather than taxable agricultural income.

Ratio Decidendi: A lump sum non-recurring payment made by a prospective tenant at the inception of a lease, as consideration for the landlord's parting with an interest in agricultural land, is a capital receipt and not rent or revenue derived from land.

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