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TMI Blog1940 (9) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... alties were not assessable, but in the grounds of appeal to the Assistant Commissioner he took the point that coal royalty was not income and therefore not assessable. The Assistant Commissioner of Income-tax allowed the assessee to take this contention and he rejected it on the merits. When the matter came before the Commissioner he was requested to state a case for the opinion of this Court on two points: (1) Whether royalty on mines being capital revenue should not have been excluded in computing the total income determined for income-tax? (2) What should be the principle on which the cost of management in collection of royalties is to be determined when there is a combined management covering both the zamindari collection of agricultural income and royalties from the mines? The Commissioner of Income-tax has made a reference to this Court and has expressed his opinion that the sums received by way of royalty were rightly held by the Assistant Commissioner to be annual income and not capital instalments of purchase price. As to the second question, the Commissioner points out that it is a pure question of fact and that no legal question whatsoever is involved in it. He theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slack coal, eight annas per ton on hard coke, and six annas per ton on soft coke. There is a further provision as to payment of a sum by way of minimum royalty in the event of the royalty calculated on the coal raised and coke manufactured not amounting to that sum. All the leases further contain provisions giving the lessor a right to re-enter in case of failure to pay the rent or royalties reserved. This case first came before a Bench, and when it was opened it was apparent that counsel for the assessee desired to challenge the correctness of a number of Bench decisions of this Court. That being so, it was thought desirable that the case should be heard by a larger Bench, and this Special Bench of three Judges has been constituted in consequence. It will be convenient to deal firstly with the first question which is: "Whether royalty on mines being capital revenue should not have been excluded in computing the total income determined for income-tax?" This is framed rather too widely, because the question which has to be determined is whether the royalty payable to this assessee under the various leases granted by him or his predecessors is assessable to income-tax, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid by Lord Cairns in Gowan's case (supra), that a lease of mines 'is not in reality a lease at all in the sense in which we speak of an agricultural lease. There is no fruit; that is to say, there is no sowing and reaping in the ordinary sense of the terms, and there are no periodical harvests. What we call a mineral lease is really, when properly considered, a sale out and out of a portion of the land.' I think this is a perfectly accurate statement. But the argument that no income-tax should be imposed on what is, perhaps not quite accurately, called rent reserved on a mineral lease, because it is a payment by instalments of the price of minerals forming part of the land, any more than on the price paid down in one sum for the out and out purchase of the minerals forming part of the land, is I think, untenable. " Here again Lord Blackburn points out that a mineral lease is not a lease in the sense in which that term is used in connexion with agricultural property and that the rent reserved is really a payment by instalments of the price of minerals leased. He, however, states that the argument that no income-tax should be imposed on these payments is untenable. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not in the nature of things and by reason of the user disappear, In order to cause the latter speciality to arise, minerals must be expressly denominated, so as thus to permit of the idea of partial consumption of the subject leased. " It has been urged that this case establishes that minerals cannot be the subject matter of a lease because the essential characteristic of a lease is that the subject is one which is occupied and enjoyed and the corpus of which does not in the nature of things and by reason of the user disappear. Lord Shaw however points out that minerals may be made part of the subject-matter of a lease, and in such a case the lease would permit the idea of the partial consumption of the subject-matter leased. This decision of their Lordships of the Privy Council can in no way assist the assessee in this case, and it appears to me that the case is against the present contention, because it is expressly stated that minerals may form part of the subject-matter of a lease if it is so stated in the lease itself. Counsel for the assessee also relied on a latter case of their Lordships of the Privy Council, Bejoy Singh v. Surendra Narayan [1928] 56 Cal 1. In that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lish cases to which reference has already been made. In my judgment, Mookerjee, J., did not hold that royalty was income within the meaning of the Indian Income-tax Act then in force because royalty formed the basis of taxation in England. He came to the conclusion that royalty from its nature, though in one sense repayment of capital, was received by the lessor or owner of the minerals as income. There was an appeal in this case to His majesty in Council but not on the question whether royalty was income. In In re Jyoti Prasad Singh Deo [1921] 6 Pat L.J 62; 1 ITC 103 , the question whether royalty was income was discussed by the learned Judges, who formed the Special Bench which heard that case, and it was held that income derived from rents and royalties of collieries does not fall within income derived from business under Section 5 (iv), Income-tax Act, 1918, but within income from other sources under cl. (vi) of that section. Mr. Das has contended and rightly that this case, though decided by three Judges, is not binding on the present Bench, because the question to be decided in this case was really not in issue in the previous case. In that case it appears to have been conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r view was expressed by this Court in Mohadeo Ashram Prasad v. Commissioner of Income-tax [1927] 6 Pat 29; 2 ITC 281 ., in which it was held that income derived from nimak sair (i.e., income from the settlement of the right to collect a particular kind of earth in a particular area during a particular season for the purpose of extracting saltpetre) is indistinguishable from the rents or royalties arising from the letting of coal or other minerals in the earth, and, therefore, is income from "other sources" within the meaning of Section 12, Income-tax Act. The same view was taken in a more recent case of this Court, Janki Kaur v. Commissioner of Income-tax [1931] 10 Pat 275; 5 ITC 42, in which it was held that sums received on account of royalties for preparing bricks are assessable to income-tax just as royalties on quarries or royalties on coal. Dealing with the observation of Lord Halsbury in Scoble's case (supra), Courtney-Terrell, C.J., at page 277 observed: "That part of the passage which relates to the taxation of rent derived from coal together with the contention that coal is as far as income is concerned the subject of special legislation in England is what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of coal raised and the amount of coke manufactured subject always to minimum annual sum fixed in the respective leases. In one sense a part of this annual sum may be regarded as the price of the coal actually removed; but what is paid to the lessor is paid not only for the coal and the right to remove it but also for the other rights granted to him by the lease. No attempt is made in the lease as regards annual payments to differentiate between what is paid merely for the coal or what is paid for the other rights such as the rights to erect buildings, make railways, erect coke ovens and manufacture coke. What is paid is paid for the whole of the rights granted and that is salami and an annual sum payable year after year until the lease comes to an end by effluxion of time or by any other means. It would be very difficult to argue that the minimum royalty payable under these leases is the price of coal, because such would be payable even if no coal was gotten and would be payable even if the royalty calculated on the amount of coal gotten did not amount to the sum fixed as the minimum royalty. Counsel for the assessee conceded that where no coal was raised the minimum royalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale or transfer of the coal to the so-called lessees that does not conclude the matter. A sale may be made for a price which could properly be regarded as a capital receipt and therefore not assessable to income-tax. Such a transaction would amount to the exchange of one form of capital for another. The consideration for such a sale however, need not be in the form of capital. A vendor might secure by the terms of the sale an income for himself, and such would undoubtedly be assessable to income-tax. Such was the case in Gopal Saran Narain Singh v. Commissioner of Income-tax [1935] 14 Pat 552; 3 ITR 237. In that case the assessee transferred an estate in consideration of (a) the payment of a lump sum, (b) the discharge of certain debts and (c) the payment to him for life of an annuity of ₹ 2,40,000. By a separate deed the payment of the annuity was made a charge on the lands transferred. The taxing authorities held that this annuity was income and assessable to income-tax. It was held by their Lordships of the Privy Council that this annuity was not a capital sum payable in instalments, but income in the hands of the vendor. In that case it had been strenuously argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1931] 59 Cal 699, the facts of which are as follows: By a contract in writing, the appellants were to take a lease for 999 years of the underground coal rights in two mauzas within the respondent's zamindari, and if within two months they failed to do so, "except for the reason of the want of the lessor's title to the said mauzas," a salami of ₹ 34,440 which they had paid, was to be forfeited. After the contract, it appeared that, at some unknown date, an ancestor of the respondent had made Brahmottar grants of the mauzas. The appellants called for production of copies of the grants in order that they might be satisfied that they did not include the minerals. The respondent being unable to produce copies, the appellants refused to take the lease, and sued to recover the salami. There was no evidence that the Brahmottardars had ever claimed subsoil rights. It was held that, under the contract, the appellants could recover the salami, upon proof that the title to the subject of the lease was not free from reasonable doubt, the text being the same as under Section 25(b), Specific Relief Act, 1877, upon a suit by a lessor for specific performance, and [that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so treated, it is quite impossible to regard the annual payments as other than rent or income payable under the various leases. For the reasons which I have given, I am satisfied that the royalties received by the assessee in this case constitute income and were rightly assessed to income-tax by the taxing authorities. I would, therefore, answer the first question accordingly. The second question raises no point of law as pointed out by the Commissioner, and should be answered accordingly. I may point out that no argument of any kind was addressed to us upon this question. The assessee must pay the costs of this reference which I would assess at 20 gold mohurs. The Commissioner will also retain the sum of ₹ 100 deposited in this case. Fazl Ali, J.-This is a reference made by the Commissioner of Income-tax, Bihar, under Section 66(2), Income-tax Act, and the question of law which he has formulated for our decision is as follows:- "Whether royalty on mines being capital revenue should not have been excluded in computing the total income determined for income tax?" The question has arisen with reference to a sum of ₹ 5,32,368-2-10 said to have been received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential characteristic of a lease is that the subject is one which is occupied and enjoyed and the corpus of which does not, in the nature of things and by reason of the user, disappear. The first question to be considered is whether a mineral lease is not in fact a lease but a sale and whether royalty merely represents the price of the coal taken out by the lessee. In my opinion, even though the distinction drawn by Lord Cairns between agricultural and mineral leases is by no means to be overlooked, it will be going too far to say that a mineral lease does not at all partake of the character of a lease as that term is ordinarily understood and that there is no difference between a mining lease and a sale of minerals. One of the essential points of distinction between a mining lease and a sale of coal land is that while in a mining lease the lessor has the right of reversion, there is no such right of reversion in a sale. The leases which have been printed in the paper-book of this case also contain certain clauses such as the forfeiture clause and the clause as to the surrender of the land, which are not found in a deed of conveyance. Another point of distinction is that while in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not operate as a lease. On the other hand, it implies that a mukarrari lease may carry with it a right to subjacent mineral if adequate words are used therein to cause the mineral rights to be included within it. In Munro v. Dulcolt [1931] 59 Cal 699 Lord Atkinson, while recognizing that Lord Cairns had described the true nature of a mining lease, proceeded to hold that a document which purported to be a mining lease "was a lease within the meaning of the Natal Statute XIX of 1884." In discussing the question whether the document required registration in the Deeds Registry he observed as follows: "The objects of all registration are, among other things, to afford to the public the means of knowing to whom the ownership of the land of a country belongs, what are the interests carved out of it, and what are the charges upon and incumbrances affecting it, so that these owners may discharge the liabilities ownership entails, that those who deal with them may be protected, and in many cases that the transfer to others of their proprietary interests may be easily and inexpensively effected. All these considerations apply as directly and as forcibly to mining leases as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respects. The question which still remains to be considered is whether royalty is not essentially the price of the coal taken out, because S. 105, Transfer of Property Act, states that the consideration for a lease also may be price as well as "rent." It appears that as long ago as in Queen v. Westbrook 116 ER 69 Lord Denman expressed the view that royalty "was a sum which, after all such expenses were paid, the occupier could afford to render to the landlord." His observations on this point were these: "When the case is thus laid bare, there is no distinction between it and that of the lessee of coal mines, of clay pits, of slate quarries: in all these the occupation is only valuable by the removal of portions of the soil: and whether the occupation is paid for in money or kind, is fixed beforehand by the contract, or measured afterwards by the actual produce, it is equally in substance a rent: it is the compensation which the occupier pays the landlord for that species of occupation which the contract between them allows." It appears to me that, whatever may be the true nature of royalty, what has been observed in this passage represents the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id, it is "rent"; but he says that if the mine is worked and coal is not extracted beyond the limit fixed in the lease for the payment of the minimum royalty, the minimum royalty becomes partly rent and partly price of the coal taken out. The royalty other than minimum royalty, however, is according to him always price for the coal taken out. In my opinion it is difficult to accept this view, because the leases before us nowhere state that where the coal is extracted within the limits for which only the minimum royalty is payable, the minimum royalty shall include the price of the coal, nor does it state at what rate the so-called price is to be charged in such cases. In my opinion the more logical view seems to be that the royalty which is payable over and above the minimum royalty is to all intents and purposes a payment of the same nature and category as the minimum royalty. I am also of the opinion that it is difficult for anyone to find how much of "royalty" represents "price " in the true sense of the term and how much is "money rendered to the landlord" in consideration of the lessee's occupation of the land and exercising the mani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Income, their Lordships think, in this Act connotes a periodical monetary return "coming in" with some sort of regularity, or expected regularity from definite sources. 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 any. thing in the nature of a 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." But capital, though possibly the source in the case of income from securities, is in most cases hardly more than an element in the process of production. " In my opinion royalty is income, because it is a periodical monetary return coming in with some sort of regularity from a definite source. The mere fact that if the transaction is minutely dissected by a student of political economy, he may say that royalty is merely a form of capital, will not conclude the matter. In fact the distinction made in Section 105, Transfer of Property Act, between premium (otherwise called the price) and rent is also a some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Section 4 of the Act itself, and as has been observed, the Income-tax Acts are not cast upon absolutely logical lines". Again in Mahadeo Ashram Prasad v. Commissioner of Income-tax [1927] 6 Pat 29 the same learned Chief Justice dealt with the question as follows: "It was further argued with regard to this part of the case that the income derived from the source is really not income at all, but in the nature of a sale of a part of the earth appertaining to assessee's zamindari, in other words, that it was a transfer of one kind of capital into another, namely, the transfer of this particular sort of earth into money. It if, however, of a recurring nature and it is not casual and in such cases it seems to me it is quite impossible to distinguish the rents or royalties, whatever they may be called, arising from the source, from the rents or royalties arising from the letting of coal or other minerals in the earth, or income which arises from the produce of the earth whether it be that on the surface or whether it be that beneath the surface, provided that it is not non-recurring or casual, and provided that it is not in the nature of a sale ". I respectfully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese cases the point was not raised strictly in the form in which it has been raised here, but the learned Judges who decided them did express the view that royalty is assessable to income-tax and have given good reasons in support of their view. I would therefore answer the question formulated by the Commissioner of Income-tax as follows: Royalty on mines upon the terms of the leases relied on by the assessee must be regarded as income and is as such liable to be taxed. In India "royalty on mines" must be regarded as "income from other sources" within the meaning of that expression as used in Section 6 of the Act, because though properly speaking it is income received in relation to property, yet Section 9 of the Act suggests that the tax levied under the head "property" must be confined to property "consisting of any buildings or lands appurtenant thereto". In this respect there is a distinction between the English and the Indian Income-tax Acts, but as I have already indicated, under both the Acts royalty is income. I thus find myself in complete agreement with my Lord the Chief Justice and I also agree to the proposed order as to costs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ril 1919. In that lease (so far as is relevant to the present controversy) it is stated that in consideration of the salami or premium rupees thirty-seven thousand and forty (being at the rate of rupees forty per standard bigha on nine hundred and twenty-six bighas) in respect of the premises the assessee granted to the lessee the under-ground coal mine rights under the lands specified therein in order that the lessee may "search for, work, make merchantable and carry away the coal there found" on paying therefor by monthly payments in each year a royalty on all coal and coke raised and despatched at the rate of four annas per ton with the provisions for the payment of a minimum royalty at the rate of ₹ 5 per annum per standard bigha of land whether coal shall be raised or not. The argument advanced before this Court was that what is called a lease of coal land is in reality the sale of coal belonging to the assessee and therefore the royalty thus received by the assessee under the terms of these leases is merely the purchase price of his coal and not income which can be assessed to income-tax. It was admitted that the authorities in the Calcutta High Court and thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n English law, and drafted in the first instance by eminent lawyers in England, it has only applied the English law in so far as it was considered applicable to India. It is not surprising to find that the rule, arising out of the special conditions of land tenure in England, that a conveyance to operate as a lease must reserve a reversion to the lessor finds no place in the Act." And then his Lordship proceeded to refer to Ss. 105 and 108, Transfer of Property Act, and applied the provisions stated in those sections to decide the question in controversy before their Lordships, I therefore propose to answer the question without any reference to the English and the Scotch decisions but by reference to the Indian Statutes only. It cannot be denied that the object of the Indian Act is to tax income, a term which it does not define. It would be useful to bear in mind the observations made by Sir George Lowndes in Commissioner of Income-tax, Bengal v. Shaw Wallaced Co [1932] 59 Cal 1343; 6 ITC 211., that "an income in this Act connotes a periodical monetary return 'coming in' with some sort of regularity, or expected regularity, from definite sources. The source is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer of Property Act, which regulates fully the rights and liabilities of lessors and lessees in this country. That this is so appears to be supported by the observation of their Lordships of the Judicial Committee in a number of cages. In Nageshwar Bux v. Bengal Coal Co. [1931] 58 IA 29, a dispute arose between the zamindar and a coal company who held a mukarrari lease of a certain village and believed that they were entitled to the subjacent minerals in which they openly carried mining operations for 12 years. The zamindar on the other hand contested this claim on the ground that the lessor of the coal company had no right to grant a lease authorising the company to work coal. Lord Macmillan who delivered the judgment of their Lordships made this observation at page 35 which is very germane to the present discussion: "In considering the character and effect of acts of possession in. the case of a mineral field, it is necessary to bear in mind the nature of the subject and the possession of which it is susceptible. Owing to the inaccessibility of minerals in the earth, it is not possible to take actual physical possession at once of a whole mineral field: it can be occupied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd liabilities of a buyer and seller as defined in Section 55, particularly in the matter of the requirements as to title which the sellor must satisfy. The appellant company has not shown that the respondent has failed, or is not in a position to perform any of the duties incumbent on a lessor under Section 108 ". In my opinion, this decision is a clear answer to the argument which Mr. Das was painfully evolving by relying upon the English and Scotch decisions and the dictum of several other eminent Judges in England based upon the view that what is called a coal-mining lease in England is really in the nature of an out and out sale. However attractive this description of the coal-mining lease may be in England and in Scotland or in the language of economists, I am content to rely upon the decisions of their Lordships of the Judicial Committee where they have authoritatively held that a coal-mining lease in India is governed by Ss. 105 and 108, Transfer of Property Act, IV of 1882. In Abhiram Goswami v. Shyama Charan Nandi [1909] 36 IA 148, the question which arose inter alia for decision was whether the suit which was instituted to eject the defendants from the possession o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining an injunction to restrain such user. The question still remains, what was the subject of the lease? " Mr. Das relies upon the passage towards the end of this page where his Lordship in referring to the case in Thakur Giridhari Smgh v. Megh Lal Pandey [1917] 44 IA 246 , stated that: "In that case attention was drawn to the point that the essential characteristic of a lease is that the subject is one which is occupied and enjoyed and the corpus of which does not in the nature of things and by reason of the user disappear ". But the fallacy of this argument of Mr. Das becomes apparent if the succeeding lines are perused where it was stated that the intention of the parties as to what was the subject and extent of the lease must depend upon the true construction of the terms of the grant and that it did not contain any reference to minerals or to the subsoil or to the right to excavate for making bricks and there was nothing to suggest in the lease that the land included therein was to be put to any use other than that to which the zamindari lands were subject at the time of the lease. Upon a consideration of all the terms of the lease his Lordship came to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter in the present case was that the assessee was receiving money as the purchase price of the coal, the right to extract which he had parted with temporarily in favour of the lessee. Pollock, M.R., thus expressed himself as to this rule in Westleigh Estates Go. Ltd. [1928] 12 Tax Cas at p 690: "It is a well-recognized principle that, in revenue cases regard must be had to the substance of the transactions relied on to bring the subject within the charge to a duty, and that the form may be disregarded." Similarly, Lord Hanworth, M.R., in Perrin v. Dickson [1930] 14 Tax Cas 608, at page 619 observed: "For the purposes of the revenue the substance of the matter must be regarded. It matters not whether in the contract it is, or is not, called an annuity. If in truth and in fact it is an annuity no dressing of the transaction can alter its character. Stripped of its form, the transaction is a method of saving up money for future use." But it is impossible for a Court to ignore altogether the form in which the parties have chosen to express their contract. In Helby v. Mathews [1895] AC 471, at page 475 Lord Herschell, L.C, stated: "My Lords, it is said th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding is dispelled and the supposed doctrine given its quietus the better it will be for all concerned, for the doctrine seems to involve substituting "the uncertain and crooked cord of discretion" for "the golden and straight mete wand of the law " (4 Inst. 41). "Every man is entitled if he can to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow tax-payers may be of his ingenuity, he cannot be compelled to pay an increased tax. This so called doctrine of "the substance" seems to me to be nothing more than an attempt to make a man pay notwithstanding that he has so ordered his affairs that the amount of tax sought from him is not legally claimable." "The principal passages relied upon are from opinions of Lord Herschell and Lord Halsbury in your Lordships" House. Lord Herschell, L.C., in Helby v. Mathews [1895] AC 471 observed at page 475: "It is said that the substance of the transaction evidenced by the agreement must be looked a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the plea of looking at the substance of the matter, rewrite the contract between the parties " The Courts have not hesitated to tear down deeds if they are cloaked to shield a wholly different arrangement but only where the deeds are not genuine and are attempted to hide different transactions. The quotations from the judgment of the Master of the Rolls in Inland Revenue Commissioners v. Duke of Westminister [1935] 19 Tax Cas 490, given by Singleton, J., at page 466 are instructive: "Certain definite considerations arise and must be stated upon these deeds. It is not suggested that, they are all part of a device or stratagem improperly entered into for the purpose of defeating a proper charge under the Income-tax Acts. Their genuine nature is not impugned. And a little later he observed: "It appears to me that the only way in which you can reach the conclusion adopted by the Commissioners is by throwing aside the deeds, and I see great difficulty in throwing them aside temporarily during the time when services are rendered to the appellant, and recognizing them as valid and subsisting during all other times, whether present or future. It seems to me that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed for all times at 4 annas a ton. He also argued that where the royalty received exceeds the minimum royalty, the Income-tax Officer should be directed to find out the value of the coal extracted and deduct it from the royalty received in the year. It seems difficult to accept this argument and as Sir Manmatha Nath Mukerjee who appeared for the Commissioner of Income-tax, argued, if once it is conceded that a minimum royalty was taxable the whole argument of Mr. Das seems to disappear. How could the character of the amount paid by the lessee for the use of the mines change so violently the moment the minimum limit is exceeded? I now briefly refer to the Indian cases upon this topic. The earliest case is the case in Manindra Chandra Nandi v. Secretary of State [1907] 34 Cal 257, which has been considered up to now to be the leading case on the taxability of royalties on coal mines; so far as it decided the liability of the proprietor for cesses (the view has been affirmed by the Judicial Committee on an appeal from the decision). Mr. Das argued that this decision was erroneous because Mookerjee, J., failed to notice that in England royalty is made taxable expressly by statute o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period and it is in no sense a capital sale of the land itself. So here. The lessee of the coal mine has a right to go upon the land to search for and extract coals from there and in respect of that licence he pays rent or royalty which is to be calculated at a specific rate which bears relation to the extent of the user of the licence and it may be that during the course of the licence all the coals may be exhausted. But this is what the parties have actually contemplated. Lastly, reference should be made to the well-known Tikari case of this Court which was affirmed by their Lordships of the Judicial Committee in Gopal Satan Narain Singh v Commissioner of Income-tax [1935] 62 IA 207; 14 Pat 552; 3 ITR 237., In that case the assessee had transferred his zamindari to Rani Bhubaneshwari Kuar in consideration of the payment of a lump sum, the discharge of certain debts, and the payment to him for life of an annuity of ₹ 2,40,000, the annuity being made a charge on the lands transferred. It was contended on behalf of the assessee that the substance of the transaction and not the mere form in which it was dressed should be looked at, and that the assessee had expressly sold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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