MAHARAJA CHINTAMANI SARAN NATH SAH DEO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) UNDER Section 60(1) of the Income-tax Act. 1922, the Appellate Tribunal, Patna Bench, has drawn up a statement of the case and formulated the following question of lay for determination by the High Court:

(2.) THE original assessee was Maharaja Pratap Udai Nath Shah Deo, the holder of an impartible estate. By an indenture of lease dated the 22nd January 1944, the assessee granted a lease of certain mining rights to Messrs Aluminium Production Company, Ltd., in respect of 171,08 acres of land for a period of thirty years on inter alia, the following terms: <FRM>JUDGEMENT_167_ITR62_1966Html1.htm</FRM>

(3.) THE principle of law laid down by a Special Bench of this Court in Maharaja Pratap Udai Nath Sahi Deo's case, (1941) 9 ITR 313: (AIR 1941 Pat 289 SB) was that Salami cannot be regarded as income as a matter of law. Salami may in certain cases be regarded as advance payment of rent, and in such cases the Salami can rightly be regarded as income But where Salami cannot be regarded as payment of rent in advance, it cannot be regarded as income and would, therefore, not be taxable. It was further held by the Special Bench that the onus lies upon the Income-tax Authorities to show that their do exist facts which would make the salami income. But upon the facts of that particular case, it had not been shown that the salami received by the assessees constituted part of their income.