LexMAHARAJA CHINTAMANI SARAN NATH SAR DEO versus THE COMMISSIONER OF INCOME-TAX, BIHAR & ORISSA
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November 30. 790 SUPREME COURT REPORTS [1961] MAHARAJA CHINTAMANI SARAN NATH SAR DEO v. THE COMMISSIONER OF INCOME-TAX, BIHAR & ORISSA (J. L. KAPUR, M. HIDAYATULLAH and J. C. SHAH, JJ.) Income Tax-Capital or Revenue receipt-Prospecting licence for bauxite-Licensee's right to appropriate samples in reasonable quantities-Grant of right to a portion of capital-Payments lo licensor- Liability to tax. In 1945 the appellant who was a Zamindar granted licences to different parties to prospect bauxite. Under the licence the licensee had the right to enter upon the land fo prospect, dig and prove all bauxite lying in or within the land and to take away and appropriate samples of bauxite in reasonable quanti- ties not exceeding 100 tons in the aggregate. In consideration of the premium paid, the licensees could, at their option, after giving necessary notice and on payment of a further sum, get a mining lease for a term of thirty yea<s. The income-tax autho- rities were of the view that the licensees were not granted any interest in land and that the amounts receivtd by the appellant from the licensees were revenue receipts and, therefore, assess- able to income-tax. Held, that on its true construction the transaction of 1945 did not amount merely to a grant of the use of the capital of the licensor but was really a grant of a rii:ht to a portion of the capital. Accordingly, the amounts received by the appellant were capital receipts and, therefore, not liable to income-tax. Raja Bahadur Kamakshya Narain Singh of Ramgarh v. Com- missioner of focome-tax, Bihar and Orissa, ( r943) L.R. 70 I.A. r8o, The Member for the Board of Agricultural Income-tax, Assam v. Smt. Sindurani Chaudlturani, [1957] S C.R. ro19 and Commissio- ner of Income-tax, Bihar and Orissa v. Raja Bahadur Kamakshya Narain Singh, [r946] r4 T.T.R. 738, considered. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 424of1957. Appeal by special leave from the judgment and order dated January 25, 1955, of the Patna High Court in Misc. Judicial Case No. 621 of 1953. N. 0. Chatterjee and R. 0. Prasad, for the appel- lant. K. N. Rajagopal Sastri and D. Gupta, for the res- pondent. " ( I i I -4 2 S.C.R. SUPREME COURT REPORTS 791 1960. November 30. The Judgment of the Court was delivered by 1960 Maharaja KAPUR, J.-This is an appeal by special leave Chintamani Saran against the judgment and order of the High Court at Nath Sah Dco Patna answering the question referred to it by the The c0 ,,:;,.issioner Income-tax Appellate Tribunal against the assessee of Income-ta:r, who is the appellant before, us. The appeal relates Bihar & Orissa to three assessments made on the appellant for the respective assessment years 1945-46, 1946-4 7 and ' 1947-48. The appellant is a Zamindar and owns considerable properties. In the accounting years he granted licen- ces to different parties to prospect for Bauxite. The particulars of the licences are: Received from I. Aluminium Corpora lion of India Ltd. 2. Indian Alu- minium Co. Ltd. 3. Dayanand Modi. 4. Indian Alu- minium Co. Date of the Licence 20-1-1945 26-5-1945 7-5-1945 Period of Assess- Amount Licence ment year Received. Rs. 6 months 1945/46 15,290/-. l year 1946/47 l,24,789/-. 6 months 1947/48 l,500/-. Ltd. 14-8-1945 l year 1947/48 70,146/-. The Income-tax Officer held that these amounts were received as revenue payments and were therefore tax- able. On appeal to the Appellate Assistant Commis- sioner the amounts were held to be capital receipts but this order was set aside by the Income-tax Appel- late Tribunal which held the amounts to be revenue receipts and taxable as such. At the instance of the appellant the case was referred to the High Court under s. 66(1) of the Income-tax Act and the following question was stated for the opinion of the Court :- "Whether in the facts and circumstances of these cases the sums of Rs. 15,209, Rs. 1,24,789, Rs. 1,500 and Rs. 70,146 received by the assessee are income assessable to tax under the Indian Income-tax Act?" Kapur J. 792 SUPREME COURT REPORTS [1961] '960 The question was answered in the affirmative and the 'M h . High Court held that there was material to support Chinta::;:1;.,.. the flnding of the Tribunal, and it was a finding of Nath Sah Deo fact; that the amounts received by the appellant were v. revenue receipts and not capital receipts. Against The Commission" this
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