Case: The Member For The Board Of Agricultural Income Tax, Assam Vs. Smt. Sindhurani Chaudhurani.(With Connected Appeals)

income". Moreover the dictum the smaller the salami the higher the rent and vice versa did not receive acceptance by the Federal Court when the present matter was heard in that Court before remand (C.A. No. 30 of 1949),20. In Mehar Bano Khanum v. Secretary of State, I L R 53 Cal 34 : (A I R 1925 Cal 929 ) (FB) (I), "salami" was defined to be an amount received by the landlord for the recognition of the transfer of a non-transferable holding which was paid to the landlord because of his ownership of the land. It was held to be "agricultural income" as it was "rent or revenue" within the meaning of that expression. The Standing Counsel who appeared for the Secretary of State in that case conceded that it was not revenue but his argument was that it was not revenue derived from land but that it was an incident of the transfer and not of tenancy and therefore did not flow from the land. In neither of these cases was it argued whether salami was a revenue receipt or capital receipt.21. In a Full Bench of the Patna High Court in Rajendra Narayan v. Commissioner of Income tax, I L R 9 Pat 1: (A I R 1929 Pat 449) (J), mutation fees were held to be agricultural income but that was a case of payment after the relationship of landlord and tenant bed come into existence. Similarly in the Commissioner of Income-tax v. K.C. Manavikraman Rajah, I L R 1945 Mad 837: (A I R 1945 Mad 207) (K), monies paid for the renewal of leases were held to be agricultural income within the meaning of S. 2(1) (a), Income- tax Act. Here again the monies were paid not for the constitution of the relationship of landlord and tenant but after that relationship had come into existence and for its continuance.22. In Bikram Kishore Manikya Bahadur v. Province of Assam, 53 C W N 164 (L), a case under the Act, Harries, C.J., referred to 70 Ind App 180 at p.190: (A I R 1943 P C 153 at p.156) (C), and held that it had to be decided on the facts of each case whether salami was agricultural income or not because it was not known in respect of what transaction the amount was received.23. The Orissa High Court in S.M. Bose v. Secretary Board of Revenue, A I R 1953 Orissa 288 (M), has held that salami is not a payment of rent in advance nor is it income but is a payment by way of capital receipt. It has contended before us that the Privy Council in 70 Ind App 180 at p. 190: (A I R 1943 P C 153 at p. 156) (C), based its decision on the wasting nature of the assets under the lease. But the definition given by Lord Wright is in general terms and just describes what the characteristics of a payment by way of salami are without any reference as to the nature of assets under a lease.24. In all these appeals before us the assessee derived considerably large amounts of income from agricultural holdings. It is not shown as to what the number of the holdings were but they must have been considerably large. On the other hand the number of settlements was comparatively small - a few hundreds and consisted of settlements of virgin lands as well as of auction purchase lands and were not derived from the same holdings at regular intervals. This and the findings of fact given above negative the finding as to "regularity and periodicity" of payment of salami and also that it "arose out of business of letting out his land." The payments by way of salami were made by the prospective lessees anterior to the constitution of the relationship of landlord and tenant as the price for the lessor agreeing to the parting of his rights in an agricultural holding in favour of the proposed lessee.25. In Principles of Mohamadan Law by Macnaughton salami is defined as;"a free gift by way of compliment or in return of a favour,"In Wilsons Glossary the meaning given to it is:"a complimentary present a douceur ......... a present to a superior upon being introduced to him; a gratuity or offering on receiving a lease ..........."In the Arabic-English Dictionary by Johnson it means:"......... a present on being introduced to a superior; earnest money; a free gift from a farmer to Government of talking lands ........."In vol. I of Baden-Powells "Land Systems of British India" it is stated at page 543;"."........ the Zamindar, to raise money, had sold so many taluqs or under farms for salami or fees paid down ..........."Thus all these definitions show that salami is a payment by the tenant as a present or as price for parting by the landlord with his rights under the lease of a holding. It is a lump sum payment as consideration for what the landlord transfers to the tenant.26. The manner in which the leases were dealt with and the fact that in no case was a non-occupancy tenant evicted and his tenure was allowed to mature into an occupancy holding shows that the leases were in practice not so precarious as was suggested by the Board, but had an element of stability and permanency attached to them. Therefore, when a tenant paid salami he did so in order to get in return an estate in the land owned by the zamindar. Salami is thus not rent and both parties have proceeded on that basis and it could not be called revenue within the meaning of the word used in the definition of agricultural income under S. 2(1) (a) of the Act because it was a payment to the landlord by the tenant as a consideration for the transfer of a right in zamindari lands owned by the landlord. It has, therefore, all the characteristics of a capital payment and is not revenue.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]24. In all these appeals before us the assessee derived considerably large amounts of income from agricultural holdings. It is not shown as to what the number of the holdings were but they must have been considerably large. On the other hand the number of settlements was comparatively small - a few hundreds and consisted of settlements of virgin lands as well as of auction purchase lands and were not derived from the same holdings at regularand the findings of fact given above negative the finding as to "regularity and periodicity" of payment of salami and also that it "arose out of business of letting out his land." The payments by way of salami were made by the prospective lessees anterior to the constitution of the relationship of landlord and tenant as the price for the lessor agreeing to the parting of his rights in an agricultural holding in favour of the proposed lessee.The manner in which the leases were dealt with and the fact that in no case was a non-occupancy tenant evicted and his tenure was allowed to mature into an occupancy holding shows that the leases were in practice not so precarious as was suggested by the Board, but had an element of stability and permanency attached to them. Therefore, when a tenant paid salami he did so in order to get in return an estate in the land owned by theis thus not rent and both parties have proceeded on that basis and it could not be called revenue within the meaning of the word used in the definition of agricultural income under S. 2(1) (a) of the Act because it was a payment to the landlord by the tenant as a consideration for the transfer of a right in zamindari lands owned by the landlord. It has, therefore, all the characteristics of a capital payment and is not revenue.