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TMI Blog1956 (2) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... he widow, as his legal representative. The assessee leased out his graphite mines in Singanapalle forest and Nagavaram Mutha forest to the Indian Plumbago Company, Bombay, under two indentures dated 23rd December, 1946. The Singanapalle mine was leased for 25 years for a lump sum royalty of ₹ 12,000 and the Nagavaram mine for 30 years for a lump sum royalty of ₹ 12,000. In the return of income for the relevant year, the assessee included the proportionate lease amount for one year in respect of the two mines. Before the Income-tax Officer, the assessee contended that only the proportionate lease amounts for one year were taxable. But the Officer rejected that plea and held that the entire lease amount was liable to tax. On appeal, for the first time before the Appellate Assistant Commissioner, it was argued that the amounts represented the premium received by the lessor and, therefore, they were capital in nature. The Appellate Assistant Commissioner rejected the contention and held that the amounts were revenue receipts. The assessee died in 1949, but, on 4th July, 1951, long after his death, an appeal was filed to the Tribunal purporting to be by the assessee himse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal representative and therefore liable to pay the tax assessed on her husband, is an assessee within the meaning of the definition. If so, she would be entitled to file an appeal under section 33 of the Act in her own right. Meenakshamma could have filed the appeal as the legal representative of her husband through her power of attorney agent. Presumably because it was thought that the cause title should be in the name of the original assessee, it was so drafted but, in fact, it was presented by the power of attorney agent of Meenakshamma. It is on record that the power of attorney executed by her was filed before the Tribunal and, indeed, a few days thereafter, an application was filed in the name of Meenakshamma for stay of execution of the order of the Appellate Assistant Commissioner. The said facts leave no doubt in our mind that the memorandum of appellate grounds in substance was presented by the legal representative of the original assessee and was, therefore, in order. The description was only due to a mistake and the memorandum could be treated as having been filed by the legal representative herself. In this view, the memorandum of appeal was duly presented to the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot a revenue one. The Income-tax authorities had taken the view that the payment of salami or nazarana was in the nature of payment of rent in advance. But the learned Judges held that the question cannot be decided as a question of law but could only be decided after a full investigation of all facts and, therefore, referred the case back to the Commissioner under section 66(4) of the Income-tax Act. At page 558, the learned Judges observed: In some cases it might be payment of rent in advance and in other cases it might well be a lump sum payment for the transfer of the leasehold interest. Rajah Bahadur Kamakshya Narain Singh of Ramgarh v. Commissioner of Income-tax, Bihar and Orissa [1943] 11 I.T.R. 513, was a decision of the Judicial Committee. There, the assessee received large payments by way of royalty under various mining leases granted for 999 years. Further, the lessee had to pay an annual sum as royalty computed at a certain rate per ton on the amount of coal raised and coke manufactured. Their Lordships held that the salami was paid for the acquisition of the right of the lessees to enjoy the benefits granted to them by the lease and that right being a capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the salami income.....On the contrary the indentures which are on record indicate that the salami was not in payment of advance rent. A Division Bench of the Calcutta High Court in Jyotirindra Narain Sinha v. Commissioner for the Board of Agricultural Income-tax, Assam [1953] 24 I.T.R. 158, also expressed the view that the question whether a particular receipt like salami can be regarded as income or as capital receipt cannot be answered in the abstract and that each case has to be decided on its special facts. The decision in Cossimbazar Raj Wards Estate v. Commissioner of Income-tax, Bengal [1946] 14 I.T.R. 377, on which the learned advocate for the Commissioner placed reliance, is a case where a provision was made that, in case the lessee surrendered the lease before the term had run out, he should pay the total amount of rent payable for the unexpired portion of the lease. The learned Judges held that that amount was rent for the obvious reason that it represented the balance of rent for the said unexpired portion. Under section 105 of the Transfer of Property Act, a lease of immovable property is a transfer of a right to enjoy such property made for a certain time, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the 19th day of November, 1946. The second document was the mining lease in regard to Nagavaram forest. Under clause 3, a sum of ₹ 23,000 in lump sum had been fixed as royalty for the whole period of 25 years and this amount had been paid to the lessor on 19th November, 1946. The first lease was only a renewal of an earlier lease with the same lessees in the year 1941. The lessor and the lessees were persons conversant with the terms under which the leases of the mines were given. With that knowledge, when they used royalty , which term has the recognised meaning of rent for the occupation of working out of the mines, prima facie, it must be held that the word was used in the accepted sense of the term. Further, the words lump sum royalty used in the preamble and the words used in clause 3 namely Rs. 12,000 in a lump sum has been fixed as royalty indicate that it is a consolidated advance payment of the amounts which would otherwise be periodically paid for the occupation of the mines. The words royalty for the whole period of the lease in clause 3 dispel any ambiguity, for those words indicate that what was payable for parts of the term of the lease was consolidated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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