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Issues Involved:
1. Taxability of Rs. 5,25,000 received as salami. 2. Taxability of Rs. 1,76,306 received on account of cess. Detailed Analysis: 1. Taxability of Rs. 5,25,000 Received as Salami: The primary issue was whether the amount of Rs. 5,25,000 received as salami by the assessee is taxable. The Income-tax Officer included this amount in the assessable income, considering it an advance payment of income. However, the Appellate Assistant Commissioner concluded that the salami was a capital receipt and not taxable. The Appellate Tribunal upheld this decision. The facts reveal that the salami was received as part of a settlement where the assessee agreed to validate certain prospecting licenses and leases, which were previously considered ultra vires by the Court of Wards. The settlement included an extension of the prospecting license and a lump sum payment for validating the leases and licenses. The argument from the Income-tax Department that the salami was an advance royalty was rejected. The judgment references several precedents, including the case of Raja Bahadur Visweshwar Singh, where it was established that salami could either be a capital receipt or an advance rent, depending on the case's facts. The court concluded that in this case, the salami was not an advance payment of rent but a lump sum for the settlement of claims regarding the invalidity of the licenses and leases. The court emphasized that the nature of salami as a capital receipt or income must be determined based on the specific facts of each case. Here, the salami was received for settling the claim that the licenses and leases were invalid, not for any rent due. Thus, the amount of Rs. 5,25,000 was correctly treated as not being assessable to tax. 2. Taxability of Rs. 1,76,306 Received on Account of Cess: The second issue was whether the amount of Rs. 1,76,306 received on account of cess by the assessee is taxable. The Income-tax Officer included this amount in the assessable income, but the Appellate Assistant Commissioner and the Appellate Tribunal concluded otherwise. The facts show that this amount was paid to the assessee as reimbursement for cess paid by the Court of Wards to the Government, which was actually the liability of the coal company. The court reasoned that the reimbursement for an out-of-pocket expense by the assessee could not be treated as income. The judgment states that the facts clearly demonstrate that the amount was a reimbursement and not an income. Therefore, the Appellate Tribunal correctly concluded that the amount of Rs. 1,76,306 was not taxable. Conclusion: 1. Question No. 1: The amount of Rs. 5,25,000 received as salami by the assessee is not assessable to taxation. 2. Question No. 2: The amount of Rs. 1,76,306 received on account of cess by the assessee is not taxable. The court awarded costs to the assessee, assessing the hearing fee at Rs. 500.
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