COMMISSIONER OF INCOME TAX Vs. BAGCHI AND BROS R N

JUDGEMENT

(1.) THESE are references under Section 256(1) of the Income-tax Act, 1961. THESE references relate to the assessment years 1970-71 and 1971-72. The moot question involved in these references is whether the fixed minimum guaranteed income received by the assessee constituted income from business or whether it was income from "other sources". The question referred to us for our opinion is as follows :

(2.) THE assessee is a company. It owned a colliery known as Dobery Colliery. In June, 1969, the assessee entered into an agreement with M/s. Sinha Coal Syndicate. In terms of the agreement, the assessee was to receive a fixed minimum guaranteed sum as royalty. THE agreement has been described by the Revenue as an agreement of lease. It was contended that that was not a lease but was an agreement of managing contract entitling M/s. Sinha Coal Syndicate to run the colliery as managing contractor for 10 years with an option of renewal for a further period of 10 years. Clause 18 of the agreement read as follows :

(3.) FOLLOWING the law laid down by the Full Bench, we hold that the Tribunal was not justified in holding that the income of the assessee which was received from the managing contractors, M/s. Sinha Coal Syndicate, on the basis of the agreement dated June 8, 1969, was assessable under the head "Business" and not under "Other sources". The question is thus answered in the negative, in favour of the Revenue and against the assessee.