Salami received by the assessee was a revenue receipt and assessable to tax.

G.N.Prasad, J.

1. Under Sec. 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:

"Whether on the facts and circumstances of this case, the Tribunal was right in holding that the sum of Rs. 2,20.000 was the income of the assessee assessable to tax under the provisions of the I.-T Act?"

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:

(i)Salami (inclusive of Mohar-karai and Dewani Negi amounting to Rs.5,000)...Rs. 2,25,000.

(ii)Rent... 8/- per acre.

(iii)Royalty... 6/- per ton.

(iv)Minimum royalty...Rs. 22/- per acre.

3. Previous to this, on the 20th March 1941, the assessee had granted a prospecting lease of 311 acres of land to the said Company for a period of one year at a premium or Salami of Rs. 100 per acre and royalty of -/8/- annas per ton. The question relates to the assessment year 1944-45.

4. The Income-tax Officer took the view that as the assessee had chosen to take a very large sum by way of premium and a lower rate in respect of royalty, the premium or salami represented advance payment of royalty which was a revenue receipt and assessable to income-tax as such.

5. On appeal, the Appellate Assistant Commissioner held that the sum of Rs. 2,20,000 which represented the salami was a capital receipt and was therefore, not taxable. Against that order, the Department preferred an appeal to the Appellate Tribunal which by its order dated the 7th August 1952 remanded the case to the Appellate Assistant Commissioner for a finding whether there were circumstances to indicate that the salami was really in the nature of an income receipt. In pursuance of this order, the Appellate Assistant Commissioner admitted certain additional evidence on the record and submitted his finding to the Tribunal agreeing with the view of the Income-tax Officer that a major part of the premium of Rs. 2,25,000 was taken in exchange of the royalty that would accrue to the assessee in further years and, therefore, it was a taxable revenue receipt. On receipt of this finding, the Appellate Tribunal recorded its final decision in favour of the Department, holding that the sum of Rs. 2,20.000 received by the assessee by way of salami or premium was in sub-stance, an advance payment of royalty. Accordingly, the Tribunal set aside the order of the Appellate Assistant Commissioner and restored the order of the Income-tax Officer. At the instance of the assessee the present reference has been made by the Appellate Tribunal.

6. Mr. K.B.N Singh appearing on behalf of the assessee has contended before us that the Appellate Tribunal was in error in holding that the sum of Rs. 2,20,000 was a revenue receipt representing an advance payment of royally. It was urged that it was a payment for the mining rights which the assessee had granted to the lessee for a period of thirty years, and as such. It was a payment on capital account which is not taxable. In support of his contention, learned counsel relied upon the following decisions:

Province of Bihar V/s. Pratap Udai Nath Sahi Deo. (1941) 9 ITR 313: (AIR 1941 Pat 289 SB); Kamakshya Narain Singh V/s. Commr. of Income-tax, Bihar and Orissa, (1943) 11 ITR 513: (AIR 1943 PC 153); Member for the Board of Agriculture Income-tax. Assam V/s. Sindhurani Chaudhurani, (1957) 32 ITR 169: ( (S) AIR 1957 SC 729): Chintamani Saran Nath Sah Deo V/s. Commr of Income-tax. Bihar and Orissa, (AIR 1961 SC 732) and Commr. of Income-tax, Assam, Tripura and Manipur V/s. The Panbari Tea Co. Ltd., AIR 1965 SC 1871.

7. The principle of law laid down by a Special Bench of this Court in Maharaja