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TMI Blog1962 (8) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the amount is capital receipt, the second question would not arise. As in our opinion the answer to the first question is that the amount of ₹ 6,000 is capital receipt, the second question does not arise and we do not, therefore, propose to answer that question. So far as the first question is concerned the material facts are that the assessee which is a Hindu undivided family was, inter alia, the owner of certain zamindari properties and lands. During the year Kartik Samvat 2007-2008, which is the relevant accounting period for the assessment year 1952-53, the assessee leased out to one Madan Lal 6 bighas 13 biswas of land for a period of five years for a lump sum payment of ₹ 6,000 on the terms and condi- tions set out in the agreement which is a part of the statement of the case and is annexed as annexure A thereto. The reason for the giving of the land on lease is contained in the recital and is as follows: The land does not yield good crops on account of poor soil. The lessee is in need of earth for preparation of bricks for setting up a kiln and he expressed a wish to the lessor for the land. The lessor has accordingly decided to give the lessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t depending upon the particular facts and circumstances. Naturally, the facts and circumstances have to be gathered from the terms of the lease or the licence. It is well settled, however, that it is not the form of the document or the form in which the transaction is couched that is determina- tive of the matter. It is the real nature of the transaction upon which the answer to the question depends. It is also well settled that it is also not conclusive whether the receipt in a particular case is a lump sum receipt or is spread over the terms of years or is partly paid by an initial lump sum pay- ment and partly by subsequent annual payments. A lump sum payment may in some cases represent the value of the rights or the property transferred or may merely be a capitalised annual rent for the use of the property during the term of the lease paid in the beginning of the lease. The principle on the basis of which the question has to be decided is whether the document or the transaction embodied in the document is a transfer of any rights and the amount paid is the price of those rights or the transaction is merely the right or the liberty to use the property for a term of years any the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion is not merely a licence but is in fact and reality a lease. Once this is accepted it necessarily follows that there is a transfer of property involv- ed and not merely the use of property as in a licence. The term is five years which is much longer than the term in the Supreme Court case. The rights conferred are both the right to enter upon the land, to remain there, to dig earth, to mould bricks, to set up a brick kiln and to bake the bricks and sell them. The right is also there to dig and appropriate earth and use it for moulding bricks and after they have been baked in the kiln on the land to sell them there, that is to say, to remove them or to carry away the earth dug in the form of bricks. The payment in either case is a lump sum pay- ment. No portion of that payment is referable to any single one of the various rights conferred upon the lessee. In the circumstances, it seems to me, that if anything, the present case, on facts, is on a higher footing than the case before the Supreme Court. It follows that the case is fully governed by the principle laid down in that case and it must, therefore, be held that the amount of ₹ 6,000 was received by the assessee as ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to income-tax. It appears to me that the case was decided by the Patna High Court on the analogy of the nature of receipts from the grant of coal mining rights in England and the case in Secretary of State v. Sir Andrew Scoble [1903] A.C. 299; 4 Tax Cas. 618 was men- tioned in this connection. Counsel for the assessee before the Patna High Court had sought to argue that the analogy of mining cases in England could not be applied to cases arising in India as in England special provision had been made in the income tax statutes for treating the receipts arising from the grant of such rights as income and for the levy of income-tax thereon, but the argument was negatived on the ground that for treating the royal- ties arising from the grant of coal mining rights as income there was nothing peculiar in the English Income Tax Act but that Act only included the royalties in a schedule of income. It appears to me, however, with the utmost respect, that even from the passage from the English case referred to in that decision, this conclusion is not borne out. Lord Halsbury, from whose speech a quotation is made in the report, observed as follows: My Lords,...Where you are dealin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case and from the view taken of those facts, it appears that the assessee in the Patna case A.I.R. 1931 Pat. 264 was carrying on the trade of utilising his capital asset, namely, the land, by allowing earth to be cut away from it in consideration for a periodical payment. The assessee's trade was to utilise the land as a profit-making apparatus. On the view of the Chief Justice the capital asset remained intact possibly unaffected or even increased in value . Clearly, this amounted to exploitation of an asset of an enduring nature for producing regular income or taxable profit. These very facts will, however, show how very different the facts in the case before us are. After the clear pronouncement of the Supreme Court in the case mentioned above, I should not have felt called upon to deal at any length with this Patna decision but I have done so merely out of consideration for the insistence of Sri Gopal Behari that this case also was a case of grant of certain rights in land which were of the same nature as the rights granted in the Patna case*. I have, however, pointed out how different the facts there were. I have also pointed out that I find it difficult to understan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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