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

1. In all these appeals the question for decision is the character and purport of the payment termed Salami and whether it fails within the meaning of "agricultural income" as defined in the Assam Agricultural Income Tax Act (Act IX of 1939) hereinafter called the "Act".2. C.A. No. 162 of 1955 is directed against the judgement of the Calcutta High Court datedC.A. Nos. 38 to 44 of 1956 have been brought against the judgment of Assam High Court datedThe matters were all heard together in the Assam High Court and were disposed of by one judgment.C.A. No. 162 of 1955 relates to the assessment year 1941-The assessee in that case was a-/8/9 annas co-sharer in a zamindari estate known as "Parbatjoar estate" in Assam. The original assessee was Jyotindra Narayan Chowdhury who died on 25-1-1953 and on his death his widow, Shrimati Sindhurani Chowdhurani and others were substituted. The gross agricultural income of the assessee was Rs. 89,633 and income from salami was Rs. 9, 331-9-4 which was received from settlement of 414 different holdings out of which 278 were holding of virgin lands and 136 were those of what are described as auction- purchaseof the gross income from salami 15 percent has been allowed as collection charges and the amount in dispute in this appeal therefore is Rs. 7, 934. The agricultural Income Tax Officer held this sum to be agricultural income by his order dated 10-11-1941, which was affirmed on appeal to the Assistant Commissioner of Agricultural Income-Tax. The revision taken to the Commissioner under S. 27 of the Act was dismissed but as the instance of the assessee the following two questions were referred for the opinion of the High Court.(1) Whether the single non-recurring premia or salamis paid to the landlord assessee once only as consideration for the settlement of agricultural land at the time of granting a lease can be held to be income within the meaning of the Act?(2) Whether single non-recurring premia or salamis paid to the landlord assessee as consideration for the settlement of agricultural land once only at the time of granting lease when such premia or salamis are not dependent on the rate of rent charged, can be held to be income within the meaning of the Act?4. The Calcutta High Court by its Judgment dated 12-4-1945, held these receipts to be "agricultural income". Against this judgment an appeal was taken to the Privy Council but on the abolition of the jurisdiction of the Privy Council the appeal was transferred to the Federal Court and was heard by that Court as C. A. No. 30 ofThat Court set aside the judgment of the High Court and remitted the case to the High Court "to be dealt with again after ascertaining and considering the following additional factors likely to show the true nature of the receipts described as salami in the present case.The number of settlement of waste lands and abandoned holdings during the amounting year and the maximum and the minimum meets settled and salami received.Does the salami vary with the quality of the land, the facilities for irrigation and such other favourableHow many tenants ejected under S. 68 during the accounting year and how long they had been in occupation before such eviction?4. Is Salami received when lands are re-let after eviction?5. Is salami that is paid in the zamindary of the assessee in the nature of a present given by the tenant to the landlord for the permission to occupy the land or whether it is in substance a premium payable by lessee at the inception of the tenancy.After the remand the case was again stated by the Member of Assam Board of Agricultural Income Tax. Dr. Goswami, and answers to these questionsTotal number of settlements were 414, maximum extent being 59 bighas 2 cottahs and 10 Dhurs, and salami Rs.161-8-6 1/4 and minimum extent was 15 Cottahs and salami received therefrom Rs. 2-11-9.Rate of salami varies with the quality of the lands, two fixed rates being Rs. 7 per bigha for jungle lands and Rs. 10 per bigha for non-jungle lands.There was no eviction of tenants under S. 69 of the Goalpara Tenancy Act, but action was taken in a large number of cases under S. 68 of that Act.4. Salami is realized when lands are re-let-after eviction.5. Salami is not in the nature of a present. It is a compulsory payment by the tenant to the landlord at the inception of thethe Statement of the Case the Board said that the zamindars business or vocation was letting out holdings against payment. The area of land held by him was a large one "which" he lets out piecemeal to various tenants on conditions among others that the would-be-tenant will first pay a fee which he prefers to call salami and that he will pay an annualheld that this payment was not "a windfall" that the "salami" arose from the Landlords, business of letting out his lands, and ..... is an income", that because of the "regularity or periodicity" attached to the receipt of salami, "it satisfies the test of income and therefore the amounts received as salami were "agricultural income" within S. 2 (a) (1) of the Act.On a consideration of the facts found by the Board in this case and after reference to the reported judgments of the various courts, the Calcutta High Court held that the amounts received by the assessee as salami were not "agricultural income" and the Board has brought this appeal (C.A. No. 162 of 1955) against that judgment.

Reasoning: 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.