TaxTMI 
TaxTMI 
1953 (2) TMI 56
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....tioner Shri S. M. Bose, Proprietor of Rutton Estate, Tuisipur. Cuttack towards settlement of agricultural lands constitutes agricultural income or capital gains". The question arises under the following facts; The petitioner realised the above sum of Rs. 20,768/- as salami by settling tenants in respect of certain Nijchas, Nijjote, Anabadi and Nilam-Kharid lands of the Rutton Estate, Tuisipur, Cuttack. The petitioner's case is that settlements are oral and the tenants have obtained occupancy right by virtue of the settlements. The rents have been fixed by a....
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....cultural income". It runs as follows : "(1) any rent or income derived from land which is used for agricultural purposes, and is either assessed to land revenue in the Province of Orissa or subject to a local cess or rate assessed and collected by officers of the Crown as such;" He emphasises upon the words "income derived from land which is used tor agricultural purposes". The word "income", it is true, is a word very difficult and perhaps not possible to define in any precise and general formula. Its definition has, however, been approached in many decisions of their Lordships in Privy Council. I cannot put in better language than that of Sir George Lowndes in the case -- 'Commr. of Income-tax. Bengal v. Shaw Wallace & ....
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....regularity, or expected regularity, from definite sources. From this point of view, a single nonrecurring payment by way of salami cannot ordinarily be taken to be an income. 2. Whether salami is income within the meaning of the Income-tax Act or Agricultural Income-tax Act has come for determination in several cases before their Lordships of the Patna High Court and it is the consistent view taken by Patna High Court in many decisions that salami paid to the landlord at the time of settlement of agricultural land cannot be regarded as income as a matter of law. Where salami can be regarded as payment of rent in advance it can lightly be regarded as income. Where, however, salami could not be regarded as a payment of rent in advance, it ....
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....pt. The reference is disposed of accordingly. Hearing fee is assessed at Rs. 100/-. Panigrahi, J. 3. I agree with the order proposed by my learned brother and would like to add a few words. 4. The petitioner settled by auction the occupancy right in certain Nij-chas, Nij-jote, Anabadi and Nilam-Kharid lands in his estate. The purchase money fetched at the auction was entered in his accounts as salami, and an annual rent was fixed for the different plots of land at varying rates. The salami does not represent the market-value of the land in the area and the finding of fact is that it is in fact much lower than the value of similar lands in the neighbourhood. The Assistant Collector of Agricultural Income-tax inferred from this fact ....
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.... which is fixed on different considerations, and is comparable to the prevailing rate. It is conceded by the opposite party, that it does not represent the market value of the land either. The contention for the opposite party is that the process through which the money is obtained can be repeated any number of times, such as on failure of payment of rent, and the receipt is therefore in the nature of a periodical return. 6. The contention of the petitioner is supported by an array of cases but the point for decision turns upon the exact connotation of the word 'income'. The Agricultural Income-Tax Act does not define the word 'income'; nor does it define the word 'salami'. The Assessing Officer referred to the no....
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....ources. "The source is not necessarily one which is expected to be continuously productive, but it must be one whose object is the production of a definite return, excluding anything in the nature of a merp windfall. Thus, income has been likened pictorially to the fruit of a tree, or the crop of a field. It is essentially the produce of something which is often loosely spoken of as 'capital' ". In the later case of the Judicial Committee -- 'AIR 1935 P. C. 143 (B), the appellant conveyed the greater portion of his estate to Rani Bhubaneswari in consideration of the Rani covenanting to pay him an annuity during his lifetime which was a charge upon the property transferred. Their Lordships held: "This annual payment i....