Jenmikaram treated as taxable income, not capital compensation, under the tenancy scheme.

Jenmikaram under the Kanom Tenancy Act, 1955 was held to be income, not a capital receipt. The Kerala HC reasoned that the statutory scheme extinguished the jenmi's proprietary rights, vested ownership in the kanom-tenant, and substituted the old recurring liabilities with a consolidated annual payment in lieu of all claims of the jenmi. Because jenmikaram was not linked to any quantified capital value of the former interest and was not repayment of capital in instalments, it retained the character of taxable income under the Income-tax Act, 1961. The reference was answered in favour of the Revenue.

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Issues: Whether jenmikaram payable under the Kanom Tenancy Act, 1955 was a capital receipt by way of compensation for extinguishment of the jenmi's rights, or income assessable to tax under the Income-tax Act, 1961.

Analysis: The statutory scheme showed that the jenmi's proprietary rights were extinguished and the kanom-tenant became the owner subject only to payment of jenmikaram. The definition of jenmikaram treated it as the amount payable every year in lieu of all claims of the jenmi and as a substitution for michavaram, renewal fees and puravaka dues. The court held that the payment had no relation to any quantified capital value of the jenmi's former interest and was not a return of capital in instalments. Instead, it was a consolidated statutory substitute for the earlier recurring liability of the kudiyan and therefore retained the character of income rather than compensation for capital deprivation.

Conclusion: Jenmikaram was not a capital receipt; it was assessable to tax as income. The reference was answered against the assessee and in favour of the Revenue.

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