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TMI Blog1924 (7) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and the matter has now come before us for decision upon a case slated by the Commissioner of Income-tax upon the 15th November last. 3. Some difficulty arises at the outset as the facts have not been very fully or clearly stated by the Commissioner. We are not told in the case stated anything about the nature of the leases under which the salami is payable except that they are leases of coal mining rights for a term of years. The number of the leases the amount of the salami in each case making up the total sum of ₹ 3,37,632 and the duration of the term are not stated nor are any other provisions of the leases referred to Again with regard to the annuities no very definite findings of fact are arrived at by the Commissioner. He refers to the Will of the late Raja but does not state the terms of the Will under which the annuities are granted. He assumes that the estate is impartible and passed by succession according to the law of primogeniture but in a later passage he treats the case as one in which the devolution is governed not by inheritance but by survivorship and he questions the right of the late Raja to dispose of the estate by Will in so far as it has granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or the exercise of a profession, vocation or occupation but it is urged on behalf of the Crown that they may recur for the leases may fall in by forfeiture and in any event they are for a definite term. The case of Birendra Kishore Manikya v. Secretary of State for India 61 Ind. Cas. 112 : 48 C. 766 : 32 C.L.J. 433 : 25 C.W.N. 80 has been relied on. There the question was whether certain receipts including, inter alia, (a) salami paid by transferees of occupancy holdings for obtaining the landlord's consent to the transfer, and, (b) patta salami, a fee generally of one rupee, paid by the tenant on settlement of waste lands or abandoned holdings were assessable to income-tax. The real question for determination in that case was whether the sums so paid were agricultural income which is exempt from income-tax under the Act. It does not appear to have been argued that they were not income at all. The Court held that the first of the above classes of salami was not agricultural income within the meaning of Sections 2 and 4 of the Income Tax Act, 1918 but that the second class was exempt, from tax as it might reasonably be regarded as rent or revenue derived from land. It by no me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1921) Pat. 81 (F.B.). They are nonetheless income merely because they are paid for rights the exercise of which involves a waste of the capital. As was pointed out by Lord Halsbury, L.C., in The Secretary of State for India v. Sir Andrew Scoble (1903) A.C. 299 : 72 L.J.K.B. 617 : 51; W.R. 675 : 89 L.T. 1 : 19 T.L.R. 550 where you are dealing with income-tax upon a rent derived from coal (and the same would apply to royalties) you are in truth taxing that which is capital in this sense that it is a purchase of the coal and not a mere rent, but he adds The income-tax is not and cannot be, I suppose from the nature of things, cast upon absolutely logical lines. At the same time there is a vast difference between a sum paid once for all for the lease of mineral rights and a rent or royalty paid annually to the lessor. The lessor in this case who holds an unfettered right of disposal would appear; in granting these leases to have had two objects in view which are distinguishable. In so far as rent and royalty are reserved, he is founding an annual increment to the income of the Raj for himself and his successors but with regard to salami it is the price he demands for parting with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trict of Manbhum and elsewhere. These he leaves to whoever may be his heir at his death. Of his cash and moveable properties including diamonds and precious stones a 6-annas share is to appertain to his zemindari and to go to his heir. The remaining 10 annas share he leaves to his wives who shall survive him in equal shares for their absolute use. The Will then provides as follows: Each of my wives shall get a maintenance of ₹ 3,600 per annum and he who will inherit and be in possession of the zemindari at any time shall be bound to pay to each of my wives maintenance at the above rate, i.e., at the rate of ₹ 3,600 per annum and he shall pay the said amount of maintenance in 12 equal instalments, i.e., ₹ 300 every month. If the amount be not paid according to the instalments, then he shall pay interest at the rate of Re. 1 per cent. per mensem, and the zemindari left by me shall remain charged for the amount of maintenance and interest for default, i.e., my wives shall be competent to sue, individually or jointly, for the amount of maintenance with interest which will be due to them respectively and realize the same by selling the property left by me. 9. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bligation of the assessee arises not by reason of the Hindu Law but because the income of the zemindari to the extent of the maintenance granted belongs to the widows and not to the assessee and the whole zemindari is subject to a charge for its enforcement. As already stated, however, there is no evidence before the Court to enable it to determine to what extent the maintenance is charge upon the taxable income of the assessee and we do not think the decision of the Commissioner in its result can be disturbed. 11. The result is that I find that the salami received in this case is not chargeable to income-tax, that the royalties received are taxable income and that in the particular circumstances and on the facts disclosed no case has been made out for deducting the maintenance annuities from the taxable income of the assessee. The petitioner has succeeded roughly as to half the deductions which he claims and has failed as to the other half. We consider that in the circumstances he is entitled to be paid half the costs of this reference. The hearing fee we assess at ₹ 80. 12. In Case No. 73 of 1923 the petitioner is Raja Jeoti Prashad Singh Deo of Panchkote. His income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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