Mine-derived receipts from pumped-out water are taxable as annual net profits, even when realised through a later sale.

Sale proceeds from water necessarily pumped out of a mine were treated as income derived from the mine and therefore included in annual net profits liable to cess under the Bengal Cess Act, 1880. The reasoning focused on the source of the receipt: the water arose in the course of working the colliery, had to be removed for safe and proper mining operations, and when sold the receipt remained attributable to the mine itself. The distinction between casual and regular income was held irrelevant because the statute imposed no such limitation. A prior mine-profit decision was treated as consistent with charging receipts arising from the mining activity.

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Issues: Whether the sale proceeds of water pumped out from a mine form part of the annual net profits from the mine and are therefore liable to cess under sections 6 and 72 of the Bengal Cess Act, 1880.

Analysis: Section 6 authorises cess on annual net profits from mines, and section 72 requires return of the net annual profits of such property. The decisive question was whether income earned by selling water necessarily pumped out of the mine could be treated as profit from the mine. The Court held that the source of the income was the mine itself: the water arose in the course of working the colliery, had to be pumped out for safe and proper working, and when sold for a price the resulting receipt remained income derived from the mine. The Court further held that the distinction between casual and regular income was irrelevant because the statute makes no such distinction. The reasoning in the earlier mine-profit case was treated as supporting the view that profits attributable to the initial mining activity remain chargeable even when realised through a subsequent commercial step.

Conclusion: The sale price of pumped-out water constitutes profit derived from the mine and is includible in annual net profits for cess assessment; the assessee's challenge fails.

Ratio Decidendi: Where a statute charges cess on annual net profits from a mine, receipts earned by selling a product or by-product necessarily arising from the working of the mine are profits from the mine and are taxable as such, regardless of whether the receipt is regular or casual.

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