- (1.) On December 11, 1947, the appellant granted to the Shivrajpur Syndicate Ltd. rights for mining manganese ore from lands in two villages Shivrajpur and Bhat. The following are the material terms of the indenture of lease : "X X X in consideration of the rents and royalties covenants and agreements by and in these presents and in the Schedule hereunder written, reserved and contained and on the part of the Lessee to be paid, observed and performed, the Lessor hereby grants and demises unto the Lessee All Those the mines, beds, veins, and seams of Manganese Ore X X situate lying and being in and under the land X X. X X X to Hold the premises X X granted and demised unto the Lessee for the term of twelve years which shall be deemed to have commenced from the first day of December One thousand nine hundred and forty-five. X X X. yielding and paying therefore unto the Lessor the several rents and royalties mentioned in Part V of the Schedule at the respective times herein specified subject to the provisions contained in Part VI of the said Schedule." In Parts II, III and IV of the Schedule liberties, powers, privileges, restrictions and conditions enjoyed by the lessee were set out. By Part V the Syndicate agreed to pay annually Rs. 2,629/8/8 as rent and royalty at the rate of 8 per cent of the sale value of all manganese ore. By Cl. 1 of Part VII it was agreed that : "The lessee shall pay the rents and royalty reserved by this lease at the time and in the manner provided in Parts V and VI and shall also pay and discharge all taxes, rates, assessments and impositions whatsoever being in the nature of public demands which shall from time to time be charged, assessed or imposed upon or in respect of the mines or works of the lessee or any part thereof by authority of the Government of India or the Government of Bombay or otherwise except demands for land revenue X X X"
(2.) The appellant received from the Syndicate, beside rents and royalty, Rs. 16,309 in the year ending July 31, 1951 and Rs. 39,515 in the year ending July 31, 1952, being 3/16th of the amount of rent and royalty payable to the appellant in accordance with the terms of Part V of the lease. The Syndicate described this payment as "Local Fund Cess." The Income-tax Officer. Ward "B', Panch Mahals, brought these two amounts to tax in the assessment year 1952-53 and 1953-54. In appeal to the Appellant Assistant Commissioner of Income-tax, Baroda Range, it was maintained by the appellant that the two sums were not taxable, because they represented Local Fund Cess collected by him on behalf of the Government of Bombay or the Local Board, Panch Mahals, and in any event because they were receipts "of a casual and non-recurring nature." The Appellant Assistant Commissioner upheld those contentions of the appellant and directed that the said sums be excluded from the total income of the appellant.
(3.) In the view of the Income-tax Appellant Tribunal, the appellant received the two sums from the Syndicate under Cl. 1 of Part VII of the lease agreement and not as Local Fund Cess on behalf of the Government of Bombay or of the Local Board, Panch Mahals, and the amounts were not receipts "of a casual and non-recurring nature". The Tribunal submitted a consolidate statement of the case under S. 66(2) of the Income-tax Act in respect of the two years of assessment and submitted the following questions for the opinion of the High Court of Bombay : "(i) Whether the sum of Rs. 16,309/ Rs. 39,515 received by the assessee from the Syndicate is 'income' for the purpose of the Indian Income-tax Act, 1922 ? (ii) If the answer to the above question is in the affirmative, whether the income-receipt is exempt under S. 4 (3)(vii) of the Act by reason of its being of a casual and non-recurring nature ?" In compliance with an order of the High Court, the Tribunal submitted a supplementary statement of the case observing that the lands in question which were "alienated villages" between August 1, 1950 and August 15 1950, had ceased to be alienated villages in consequence of the application of the Bombay Taluqdari Abolition Act 62 of 1949, that the total amount of assessment payable in respect of these villages was Rs. 1,222,92 and the local fund cess due in respect of the lands was Rs.270.45 nP. that the total Jama payable to the appellant was Rs. 504.45 nP., and that the appellant had under the Bombay Local Boards Act, 1923, to pay the cess as a percentage of land revenue and not of the Jama. The High Court, in the light of the supplementary statement of the case, recorded its answer on the first question in the affirmative, subject to the reservation that "the amount of cess which the appellant was legally liable to pay under the Bombay Local Boards Act was not subject to income-tax" and answered the second question in the negative. With certificate granted by the High Court, these appeals have been preferred.;