P.B.Mukharji, J. - (1.) This Income-tax Reference raises the following question for an answer: "Whether on the facts and in the circumstances of the case the sum of Rs. 5 lacs was a capital receipt or a revenue receipt in the hands of the assessee?"
(2.) The facts are simple and short. The assessee was the lessee of mica mining rights over a certain area of Mahal Mahassi. It had also a lease of 16 annas surface rights in the said Mahal. There were two leases. One was in respect of the mining rights, the other was in respect of surface rights. They were both obtained on the 25th April, 1942. On 12th December, 1942, the mining rights in the said Mahal were requisitioned by the Government of India. Thereafter, on the 4th December 1943, the Government acquired 4722 acres thereof. The requisition in respect of the mining rights over area other than the said area of 4722 acres was withdrawn on the 30th October, 1945. 3 parties were interested in the claims for compensation for the acquisition. They were (1) Bhoticas, (2) the assessee and (3) Mr. E. C. Knuckey. The Bhoticas were the proprietors of the entire Mahal and were the owners of 8 annas share in the mining rights therein. Mr. Knuckey was the Muk-aridar of the 16 annas of the said property and was the owner of 8 annas in the mining rights in the said property. The assessee was the lessee. The assessee was M/s. Christian Mining Company Ltd. now in liquidation and represented by the Official Liquidator.
(3.) During the pendency of the compensation proceedings Chrestian Mica Industries Ltd. acquired the shares of the Bhoticas and of Mr. Knuckey. An award was made by the arbitrator appointed for the purpose. There was an appeal to the High Court at Patna from the award of the arbitrators. This appeal was ultimately compromised. One term of the compromise was that mica mining lease was to be granted to the appellant namely the assessee and Chrestian Mica Industries Ltd. in respect of the acquired portion for a period of 20 years. On the 28th May, 1953, the assessee agreed to the grant of lease solely in favour of Chres-tian Mica Industries Ltd. and executed an agreement to that effect, for a consideration of Rs. 3,85,000 in addition to the sum receivable by the assessee as its share under the award of arbitrator and a further sum equivalent to 50 per cent of the net profits earned by the lessee Chrestian Mica Industries Ltd. from an area of mica mining operation to be carried on by them in the acquired portion. This was by way of royalty. 3A. The assessee company thereafter went into voluntary liquidation in the month of May, 1955. On the 29th June, 1955, the assessee company along with this liquidator assigned its right to receive the said royalty and also all other benefits available to it under the lease agreement dated the 28th May, 1953 to M/s. Associated Industries Limited for a consideration of Rs. 5 lakhs. The cheque for Rs. 5 lakhs being the consideration for the assignment was received by the liquidator. It is this sum of Rs. 5 lakhs which is in issue in this case. The question here is whether that was a capital receipt or a revenue receipt.;