9911796707
TMI Blog1959 (6) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... into a public limited company on 17th March, 1952, R.B. Bansilal Abirchand Mining Syndicate, hereinafter referred to as the Mining Syndicate, were lessees from the Government of Madhya Pradesh of certain mining rights under leases executed before and after the year 1949. Under the mining leases the Mining Syndicate were entitled to enter upon the lands described in the leases and to search for the win manganese ore and to raise and carry away and dispose of the same. The rights of the Mining Syndicate under the leases were sold by the court receiver appointed in a suit for dissolution of partnership and rendition of accounts of that syndicate and were purchased on 13th December, 1951, by the assessee company for a lump sum of ₹ 17,00,000. Out of the sum of ₹ 17,00,000, ₹ 15,27i,000 were allocate to the price of the rights in the mines, ₹ 21,320 for buildings and other immovable properties, ₹ 14,900 for machinery furniture and other moveable properties and ₹ 1,36,780k for stock of raw and ready manganese ore. The Income-tax Officer held that the amount of ₹ 15,27,000 paid by the assessee company for the interest is purchased from the Mining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... royalties, covenants and agreement s by the in the present s and the Schedule thereunder the State Government granted and demand to the lessee all the mines, bed/veins and seems situate, lying and being in or under the land referred to in Part I of the Schedule together with the liabilities, powers and privileges to be exercised or enjoyed in connection therewith set out in Part II of the Schedule subject to the restrictions and connections as to the exercise and enjoyment of such liberties, powers and privileges set out in Part III of the Schedule except and reserving out of he demise unto the State Government the liberties, powers and privileges set out in Part IV of the Schedule. This lease also included a Schedule the first four parts of which set out respectively the area of the lease, the liberties, powers and privileges to be exercised and enjoyed by the lessees, the restrictions and conditions as to such exercise or enjoyment and the liabilities, powers and privileges reserved to the State Government. Though different phraseology has been used in these two sets of leases, it is evident that in substance by the leases the Government of the Central Provinces and Berar gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat case, the assessee had received large payments by way of royalty under various mining leases. By the leases the lessees were granted and demised for a period of 999 years the underground coal mining rights specified in the schedule to the leases and all the estate, right, title and interest of the lessor into and upon the same and every part thereof with full liberty and power to the lessees to search for, work, make merchantable an carry away the coal there found and with power to dig and sink pits, to erect engines, machinery, buildings, workshops, cottages and to make such railways, tramways and roads as were required. In consideration of there rights the lessees were to pay a sum by way of salami or premium and an annual sum as royalty computed at a certain rate per ton on the amount of coal raised and coke manufactured, subject to a minimum annual sum. It was contended before the taxing authorities by the lessees that the sums received as salami and royalty did not constitute income but was a capital receipt representing the price of the minerals removed, and their Lordships of the Privy Council held that the salami was paid for the acquisition of the right of the lessees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in calculating his trading profits. In Stow Bardolph Gravel Co. Ltd. v. Poole (Inspector of Taxes) [1955] 27 I.T.R. 146, a company of sand and gravel merchants, in consideration of a payment of 2,000, acquired the benefit of a contract to take a deposit of sand and gravel. They later exercised an option contained in the contract under which they acquired for 2,250 a right to take a further deposit. It was held that the amounts paid were not expended on the purchase of stock-in-trade and were not, therefore, admissible as deductions in the computation of the company's profits under the relevant income-tax provisions--the reason for that conclusion being that by the contract and option the company did not acquire any proprietary right in the deposits in situ but merely had the right to work them and to take away what was won, and the company had not, on the facts, purchased stock-in-trade readily identifiable as such from the moment of purchases but merely a means of getting gravel and sand which when excavated and taken into possession would be part of their stock-in-trade. The same reasoning will, in our judgment, apply to the facts of the present case for holding that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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