The original assessee was Maharaja Partap Udainath Sah Deo the holder of an importable estate On January 22, 1944 the assessee granted a lease of certain mining rights to Aluminium Production Company Ltd. in respect of 171 03 acres of land for a period of 30 years The main terms were as follows Salami inclusive of Moharkari and Dewani Negi amounting to Rs.
2,25,000 as Dewani Negi and Moharkari and the balance of Rs.
100/ per acre and royalty at the rate of /8/ annas per ton.
2,25,000/ Rent /8/ per acre iii Royalty /6/ per ton.
2,00,000 was revenue receipt and was taxable as such.
2,20,000 had been taken in exchange of royalty that would have accrued during the period of lease.
iv Minimum royalty Rs.
The Tribunal by an order dated July 26, 1956 allowed the appeal of the Revenue and restored the order of the Income tax Officer.
5,000/ Rs.
2,20, 000 the amount which companyld be regarded to be salami and treated as a capital receipt companyld reasonably be estimated at a sum of Rs.
While making the assessment for the year 1944 45 the Income tax Officer took the view that the assessee had chosen to take large sum by way of salami while granting the lease in the year 1944 and had accepted lesser rate of royalty, the salami represented an advance payment of royalty.
He treated Rs.
He gave a finding that the assessee had intentionally accepted lower royalty and taken higher salami and therefore the major portion of the sum of Rs.
On appeal by the Revenue the Appellate Tribunal by an order dated August 7, 1952 remanded the case to the Appellate Assistant Commissioner for finding whether there were circumstances to indicate that the salami was really receipt of income.
Previously the assessee had granted a prospecting lease of 311 acres of land to the same Company on March 20, 1941 for a period of one year.
2,20,000 was treated by him as income of the assessee and the assessment was made accordingly.
The area companyered by that lease though larger included substantially the area leased out subsequently.
5,000 out of the sum of Rs.
20,000 which was number assessable to tax but the remaining amount of Rs.
The Appellate Assistant Commissioner made a report dated April 12, 1956.
On appeal the Appellate Assistant Commissioner held that the amount of Rs.
2,20,000 was paid by the Company to the assessee as salami and as such it was a capital receipt and number taxable.
22/ per acre.
The terms of the 1941 lease were that salami was payable at the rate of Rs.
2,20,000/ was the income of the assessee assessable to tax under the provisions of the Income tax Act ?
N. Grover, J. This is an appeal from a judgment of the Patna High Court in a reference made to it under Section 66 1 of the Income tax Act, 1922, by the Appellate Tribunal by which the following question of law was referred for determination by the High Court Whether on the facts and circumstances of this case, the Tribunal was right in holding that the sum of Rs.
