9911796707
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Issues:
1. Interpretation of lease terms regarding payment of road cess, mine cess, and income tax on royalties. 2. Determination of whether the lessee is liable to pay all taxes, rates, assessments, and impositions under the lease. 3. Analysis of whether income tax falls within the scope of the covenant in the lease. The judgment involves two appeals arising from a suit for recovery of road cess, mine cess, and income tax charged on royalty for a colliery under a lease agreement. The trial court decreed the suit, which was affirmed by the lower appellate court for road cess and mine cess but dismissed for income tax. The main issue is the interpretation of the lease terms regarding the liability to pay road cess, mine cess, and income tax on royalties. The lease clause requires the lessee to pay royalties and discharge all taxes, rates, and impositions imposed on the mines by the government. The lessee argues that the covenant does not intend to burden them with the lessor's assessments but only their share under statute laws. The court must determine whether the lessee is obligated to pay all charges imposed on the mines or in respect of them. Regarding road cess and mine cess, the court held that the lessee is liable for charges imposed on the lessor or lessee under the statutes, extending to recurring charges regardless of how they are described in the statute. The covenant obligates the tenant to pay all charges imposed by statutes, whether on the mines or the lessor/lessee in respect of them. The court dismissed the lessee's argument that the charges must be specifically on the mines themselves. However, concerning income tax, the court found that the claim failed due to lack of evidence showing the specific amount imposed on the mines alone under the Income Tax Act. The court emphasized that income tax is assessed on total income, not separately on specific sources like mines, making it distinct from taxes like road cess and mine cess. In the analysis of income tax liability under the lease, the court concluded that income tax is a personal tax and cannot be considered a tax on the mines themselves. The court highlighted that income tax is assessed on total income, including profits and gains from all sources, making it impossible to separate the tax payable on mines from the total tax liability. The court found that income tax could not have been within the contemplation of the parties when the lease was executed, leading to the dismissal of the appeals. The judgment emphasizes the distinction between taxes like road cess and mine cess, which are directly linked to the ownership of mines, and income tax, which is a personal tax assessed on total income.
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