Ram Labhaya, J.
1. These nine references (Nos. 1 to 9 of 1949) are from the Assam Board
of Agricultural Income-tax which shall hereinafter be referred to as the Board. Originally four questions were referred to us by all these references excepting No. 1. The first 2 questions which were common to all the references were answered by the order of this Court dated 9th May, 1950. The third question related to Salami receipts. This question was not included in Reference No. 1. The material made available to us by the Board was not enough for determining the nature of Salami receipts. The cases were sent back to the Board for furnishing us with a fuller statement of facts bearing on the nature of Salami receipts after further enquiry into facts on the lines indicated in our order. The order also directed the Board to include this question in Reference No. 1 and it has been done so. It now is common to all the references and is as follows:
'Whether the amount received by the Assessee as Salami for settlement of agricultural holdings is agricultural income within the meaning of Section 2 (a) (1) of the Assam Agricultural Income-tax Act.'
'The consideration of the 4th question which was connected with the above question was also
deferred. This question (No. 4) is as follows: 'Whether the assessee is entitled to a deduction of 15 per cent, on the amount of Salami as collection charges.'
These two questions will be disposed of by this
2. The facts brought out in the ampler statement now submitted to us may be briefly stated. These references relate to 5 big Zemindary estates, viz., Parbatjoar, Mechpara, Bijni Raj, Gauripur and Chapor Trust. The assessees are either co-sharers in one or two estates or are exclusive owners except in the case of the Trust estate which is in the charge of a trustee. All these estates have vast expanses of land which include culturable and forest land. Parbatjoar and Mechpara Estates have co-sharers. The co-sharers of these estates do not maintain separate accounts. They keep joint accounts for each estate. Annexure I to this order is a statement which embodies particulars about receipts of different assessees from their estates. In column No. 6 of the statement Salami receipts of each assessee under different heads are shown. Columns 8 to 11 give the maximum and minimum extent of the areas settled and the Salamis realised for these areas.
3. Salami is received at the time of settlement of waste or virgin lands not settled before, estate purchased land and abandoned holdings. These settlements are invariably oral and they are never for a fixed term. The accounts of the Bijni Raj and the Chapor Trust Estates alone show settlement of abandoned holdings during the years of assessment. In other cases no settlements of abandoned holdings have been shown separately in the accounts. The Board has stated that
'it appears that receipts from Salami do not include only receipts on account of settlement of waste lands which are virgin and have not been settled with anyone before but also Salamis received for settlement of abandoned holdings and estate purchased lands.'
The accounts according to the Board do not show the categories of the land settled. All
settlements are shown under the general head
'settlement of waste lands'. At the time of the hearing of the references a statement showing Salami receipts of each assessee in the relevant years has been put in by the learned Advocate-General. The learned counsel for the assessee agrees to its correctness and has requested for its being made a part of the records. The statement has been treated as part of the record in each case and the information it embodies has been incorporated in 'Annexure I' to the order. In the case of 7 assessees no settlements of abandoned holdings are shown during the years of assessment in the statement. This, however, does not mean that there have been no abandoned holdings in their estates or that no abandoned holdings are settled. The note at the bottom of the statement is that it is not clear from the registers whether these settlements include only settlement of virgin lands not settled with anyone before or any other type of land. The Dewan of Bijni Raj Estate admitted (vide 'Annexure A' to the supplementary statement of the case from the Board in reference No. 7) that the settlement of abandoned holdings had been treated as settlement of waste lands. The Executor of Gauripur Estate also admitted (vide 'Annexure A' to the supplementary statement in Reference No. 8) that if there were any resettlements of abandoned holdings, the Salami if any received therefrom had been credited to the Salami account under the heading 'settlement of waste lands'. The officer of the Chapor Estate similarly stated that the settlement of abandoned holdings was treated as settlement of waste lands.
4. In regard to abandoned holdings the procedure prescribed in Section 82 of the Goalpara Tenancy Act has not been followed even in these 3 estates. This section requires the landlord to file a notice in the prescribed form in the Deputy Commissioner's office stating that he has treated the holding as abandoned & that he is about to enter. The Deputy Commissioner has then to publish a notice thereupon. The requirement is a safeguard for the tenant. Its persistent non-compliance appears to be the reason for not showing settlements of abandoned holdings separately.
5. The rate of Salami varies with the quality of land. Parbatjoar Estate has two standard rates--Rs. 7/- per Bigha is charged for lands under the forest and Rs. 10/- per Bigha for all other lands. In Mechpara Estate the rates are as follows: (i) In hilly tracts Re. 1 to Rs. 2 for good Sail lands and Re. 1/- to Rs. 6/- for other classes, (ii) In plains Rs. 2/- to RS. 3/-for good Sali lands and Re. 1/- to Rs. 6/- for other lands and As. -/8/- to Re. 1/- for newly formed Char areas. In Bijni Raj Estates the rent varies from Rs. 1/8/- to Rs. 2/- per Bigha. The minimum Salami is Re. 1/- whatever the area of the land may be. In Gauripur Estate holdings are settled by auction and it is the demand that determines the amount of the Salami. The quality of land and the facilities for irrigation are factors which influence demand. In Chapor Trust Estate as soon as a Char is created, parties make their offer and the highest bidder gets it.
6. It is abundantly clear from the above statement of facts that the rates of Salami
vary with the quality of land in each estate. They have no relation to rent which is admittedly fixed and invariable.
7. Lands are settled generally in small plots. The highest figure received as Salami in a single transaction in the years with which we are concerned was in Parbatjoar. A sum of Rs. 621/-was received on a settlement of an area measuring 88 B. 14 K. 15 D. In Mechpara an area measuring 165 B. 16 K, 12 D. was settled for Rs. 318/-. The minimum extent of area settled in one transaction was also in Mechpara. Land measuring only 2 K. was settled. Salami received was Rs. 3/5/-. Between these two extremes the extent of areas settled varies.
8. There have been no ejectments of tenants in any of the estates except Mechpara. In this estate there were three cases of ejectment in 1946-47 and three in 1948-49. Action is generally taken in all estates under Section 68 of the G. T. Act. Under this section though occupancy tenants are not liable to ejectment for arrears of rent, the tenancies are liable to be sold in execution of decrees for arrears of rent. A non-occupancy tenant is liable to ejectment on the ground that he has failed to pay up arrears of rent. It appears that even non-occupancy tenants are not generally ejected under Section 69. The procedure provided by Section 68 suits the landlord better. He can realize arrears of rent and evict the tenant as well. The tenancy may be purchased by the landlord in execution of the rent decree in the absence of a third party wanting to purchase it. In that case the tenant if he has not left already is dispossessed in execution. If the third party purchases the tenancy there is a substitution of the tenant. The result is a continuance of the tenancy which is to the interest of the landlord. When the landlord purchases the tenancy himself he resettles it. Salamis received on settlement of estate purchased lands are shown in column 6, vide Annexure I to this order. (Omitted from this report.--Ed.)
9. When the landlord purchases a holding, he does so generally for the decretal amount. The amount then is credited by the landlord in the rent account and is debited to the acquisition account. On resettlement Salami is realised and the landlord is compensated for loss due to failure in the payment of rent by the last tenant.
10. Salami is received in a lump sum at the time of settlement or resettlement as the case may be. Sometimes when the tenant taking settlement is unable to pay the Salami in lump he is allowed to pay it by instalments. It is not ordinarily a periodically recurring payment like rent. It may recur only in cases where lands are abandoned or where the estate has purchased the holding in execution of a decree for arrears of rent. Abandoned holdings without any arrears of rent are abandoned very rarely from the very nature of things. A tenant leaving the land would generally leave arrears as well.
11. The Board regards Salami as a compulsory payment from which there is no escape for a tenant desirous of having a settlement of land.
12. With the exception of the fact that rates of Salami vary from estate to estate, the other features of the Salami receipts are common to all the cases. Even as regards the rate
of Salami, it is clear that it varies with the quality of land in each estate. One argument was, therefore, addressed in all these references and this order will cover all the cases.
13. In the back-ground of facts reproduced above from the statements relating to different cases we have to determine whether the amounts received by the assessees as Salami constitute agricultural income within the meaning of Section 2 (a) (1) of the Assam Agricultural Income-tax Act, 1939. The definition of the expression 'agricultural income' is in two parts. The first part with which we are mainly concerned provides that agricultural income means any rent or revenue derived from land which is used for agricultural purposes and is either assessed to land revenue in Assam or is subject to the local rate assessed and collected by officers of the Crown as such. The lands which have formed the subject-matter of settlements were used for agricultural purposes and are assessed to land revenue. All that we have to see is whether Salami can be regarded as rent or revenue derived from land in these cases.
14. The question whether receipts described as Salami constitute capital receipts or income came up for consideration before their Lordships of the Federal Court in--'Civil Appeal No. 30 of 1948'. One of the assessees of these references Jyotirindra Narayan Sinha Choudhury (Reference No. 1) was the assessee in that case also. The assessment related to one of the five estates (Parbatjoar) with which we are now concerned. The appeal was from a decision of the Calcutta High Court given on a reference from the Assam Board of Agricultural Income-tax. Their Lordships held that the nature of the receipt had to be ascertained in each case and that it was the duty of the Income-tax Officer to determine if the receipt amounted to income within the recognised principles of law. The learned C.J. observed in that case as follows:
'I do not think because the word 'Salami' is used in respect of a receipt, it is necessarily a receipt of a capital nature or is income liable to tax. As the authorities referred to in the above-mentioned three decisions show, the nature of a receipt described as 'Salami' in each has to be determined as a fact.'
It is clear from the above observation that whether Salami represents capital receipt or is income cannot be determined as a matter of law and the nature of the receipt has to be discovered from the facts of each case.
15. In view of the above authoritative pronouncement from their Lordships of the Federal Court we have first to see whether the Salami received in the case of each assessee for settlement of agricultural holdings could be treated as capital receipt and therefore outside the ambit of agricultural income as defined in the Act. Both rent and revenue are covered by the expression agricultural income. Receipts by way of rent are admittedly income. The nature of the tenancy is immaterial. Whether the tenant is a tenant at will or an occupancy tenant does not affect the question. If he pays
any rent to the landlord the rent is assessable to tax as his income provided the land is settled for agricultural purposes. The situation
would be the same even if the tenant acquires
permanent rights after some years of occupation.
16. The system under which Salami is charged by the proprietors of the estates is an old one. Before 1943 a tenant on whom land was settled could be ejected under Section 69 of the Goalpara Tenancy Act so long as he had not acquired occupancy rights, on the ground that his tenancy had been terminated by the landlord by six months' notice expiring with the end of the agricultural year. The landlord has now no right to terminate the tenancy by such a notice. The tenant thus is not at the mercy of the landlord and if he is not holding for a fixed term under a written lease (which is never the case in these estates) he can hold on against the will of his landlord provided that he does not fail to pay the rent or render the land unfit for the purposes of tenancy or commit a breach of any condition of the tenancy, which involves liability to ejectment, is consistent with the provisions of the Act and relates to the use and occupation of the land. The non-occupancy tenant in these circumstances acquires by his settlement by reason of the provisions contained in the G. T. Act certain stability of tenure and can acquire the status of an occupancy tenant by avoiding default in the payment of rent and observing valid conditions of the lease after 12 years' continuous occupation. The landlord thus parts with his right of immediate occupation in every settlement, and cannot take back possession at his pleasure.
17. The change in the law has produced no change in the system by which lands are settled on tenants on payment of Salami in addition to the annual rent that is reserved. There has been no variation in the rates of Salami or rent. They continue to be the same as they were before 1943.
18. From 'Annexure I' (Omitted from this report.--Ed.) it would appear that the settlements are a normal and a regular feature of the Zamindary occupation of all the assessees. The number of settlements of waste lands and estate purchased lands in every year of assessment is large. Lands are settled generally in small plots. It is to the advantage of the landlord to settle as much land as he can. This brings him recurring income. If he settles land on rent alone without charging any Salami or premium, the tenant gets exactly the same privileges as he would even if he pays Salami in addition. The Goalpara Tenancy Act makes no distinction between a tenant who has paid Salami and who has not paid Salami. The landlord does not bargain for any extra stability of tenure in cases where he charges Salami. Whatever stability attaches to the tenure is by operation of law. Even if therefore the landlord were to give away land on rent alone, he would have to part with just as much right to immediate occupation as he would if he charged Salami also. His occupation is to settle land on tenants on rent. He gets Salami without parting with any extra right in land. Rent is a technical term. It is the legal name or description of any payment made in money or in kind by one person to another in respect of the grant of a right to use land. If the proprietor makes it his occupation to settle lands on tenants on fixed annual rental, he cannot help parting with the right of occupation in the land. The conditions of the tenancy
being governed by the Goalpara Tenancy Act, the tenant gets certain rights by the fact of settlement alone and it is not in the power of the landlord to part with less. If he does not part with more than the law compels him to do, it could not be said that there has been any parting with rights in land in consideration of Salami received. In law Salami would correspond to premium and may not justifiably be classed as rent. Looked at that way it would be revenue derived from land. Both form part of the consideration for the creation of the tenancy. Both rent and Salami are derived from land. Without the land the landlord could neither receive rent nor Salami. If therefore the expression rent is not applied to Salami receipts, these receipts could not be taken out of the ambit of the expression 'revenue' as used in the definition of agricultural income is the Assam Agricultural Income-tax Act, for it may not be said that rent is income and Salami is capital receipt though both form part of the consideration for the transfer of the right of occupation. It is not possible to make any distinction between the two receipts except that one is recurring and other is not. Even a recurring receipt can be a capital receipt if capital asset can be said to have been parted with.
19. On general principles Salami receipts may not be regarded as capital receipts. One test by which a capital receipt may be distinguished from revenue receipt is that in consideration of the capital receipt capital asset is parted with in some measure. The tenant or the lessee gets a perpetual or a long term lease on payment of Salami or the premium that he pays. He may get rights to extract minerals as in mining leases and may consume and exhaust the capital by his mining operations. In the case of a lease in perpetuity or for a very long term as for 999 years or even of an indefinite duration on terms which indicate a permanent tenure, the Salami or the premium paid may easily be regarded as payment for the transfer of a capital asset. But where no transfer of the capital asset is involved, Salami or premium even as a nonrecurring payment may be income or revenue. Can it be said in these cases that every settlement involves a transfer of any capital asset? The agricultural Income-tax Act aims at taxing agricultural income. Landlords make their agricultural income generally by letting out lands for cultivation. Tenants in all provinces get a measure of legislative protection from the possible vagaries, greed and oppression of the powerful landlords. The district of Goalpara where the estates with which we are concerned are situated has got a separate act for regulating the relationship of landlord and tenants and notwithstanding the protection that it affords to the tenant, it appears from the large number of resettlements of estate purchased lands that tenants fall into arrear and are forced to leave in a large number of cases. The Salami payable is not excessive, the rent is low and they are not evictable at the pleasure of the landlord. They can easily acquire the status of occupancy tenants. The period of 12 years for the acquisition of this status is not long, yet in a large number of cases each year and in every estate tenants fall into arrear and are consequently forced to leave. The tenure they get at the time of the
settlement is at best precarious. Legislative protection does not avail against the pressure of circumstances. Besides Salami alone is not the consideration for the acquisition of the tenure. It is difficult to say in these circumstances that each settlement involves a transfer of capital asset in lieu of Salami and therefore Salami is a capital receipt. In the absence of any statutory definition of the word income authorities are our only guide in the task of placing receipts, the nature of which is disputed under one head or the other. These may now be considered.
20. The learned counsel for the assessees has relied on a string of cases from the Patna High Court in support of his contention. These cases are not helpful. In--'Shiva Prasad Singh v. Emperor' AIR 1924 Pat 679 there were mining leases for a term of 999 years. The Salami or premium received was Rs. 3,37,632. It was held (p. 681) that the Salami was the price that the assessee received for parting with the direct enjoyment of property by himself and his successors. In the words of Dawson Miller, C.J. 'the leases were really out and out sales of the property.' In--'Commr. of Income-tax v. Visheshwar Singh' : 7ITR536(Patna) a sum of Rs. 1800 was received as Salami for a settlement of land measuring 4 1/2 bighas. The lease was for building a gola house and a platform for a rice mill. The lessee could transfer his rights with the permission of the landlord. It was found that the lessor permanently parted with the direct enjoyment of the property by himself and his successors and the lessee though not a purchaser out and out of the entire interest in the land was undoubtedly a purchaser of a large interest therein. In--Commr. of Income-tax v. Kamakshya Narain Singh' AIR 1947 Pat 252 a sum of Rs. 5,25,000 was paid as Salami to the assessee. He had questioned the validity of certain prospecting licenses, and their extensions and the leases which had been granted under the terms of those prospecting licenses and extensions. As a result of a settlement between the assessee and the coal company concerned, the assessee agreed to accept the various prospecting licenses and their extensions and the leases which had been granted under the terms of those prospecting licenses and extensions in consideration of the sum paid to him by way of Salami. The prospecting license was also extended for a term of seven years from a certain date. In--'Kali Pd. Singh v. Commr. of Income-tax, B. & O.' : AIR1951Pat151 an area measuring 3,071 acres of land was leased for the purpose of enabling the lessee to extract mica therefrom. The lease was for a term of nine years at an annual rental of Rs. 155. A Salami of Rs. 4000 was paid at the time the lease was obtained. It was held that Salami was not income prima facie and it was for the Income-tax authorities to show that there were circumstances which indicated that it was so. They had failed to bring out any such circumstances. On the contrary the document on the record disclosed that Salami was not in payment of advance rent. In--'Kamakshya Narain Singh v. Commr. of Income-tax, Bihar and Orissa their lordships of the Privy Council observed as follows:
'The Salami has been rightly in their Lordships' opinion treated as a capital receipt. It is a single payment made for the acquisition
of the right of the lessees to enjoy the benefit granted to them by the lease. That general right may properly be regarded as a capital asset and the money paid to purchase it may properly be held to be a payment on capital account.'
In this case also it was a mining lease and its duration was for 999 years. A minimum royalty and royalties per ton were also payable.
21. In all these cases excepting--'Commr. of Income-tax v. Visheshwar Singh' : 7ITR536(Patna) there were mining leases. These mining leases have nothing in common with the settlement of lands made by the assessees of these references. There has not been any such parting of interest in land as that which occurred in the Patna cases relating to mining leases. The circumstances in the cases before us are very different. The assessees of these cases when they parted with their right of occupation did not part with any such substantial interest as the lessors of the mining leases did. These mining leases were isolated transactions. They were not a normal or a regular feature of any profession, vocation or occupation. These cases are all easily distinguishable on facts. On the strength of these cases it is not possible to hold in the cases before us that in every settlement the assessee concerned was parting with capital asset in land or was selling property out and out as held in--'Shiva Prasad Singh v. Emperor', AIR 1924 Pat 679 or a large interest as in : 7ITR536(Patna) '. The facts of--'Commr. of Income-tax v. Kamakshya Natain' AIR 1947 Pat 252 do not bear even a remote resemblance to the facts of the present case. The facts in--'Kali Pd. Singh v. Commr. of Income-tax, B. & O.' : AIR1951Pat151 and--'Kamakshya Narain Singh v. Commr. of Income-tax, Bihar and Orissa' are similar to those of AIR 1924 Pat 679'. These cases therefore have no application to facts on which the nature of Salami receipts in these references has to be determined.
22. In--'Bhuneshwari Kuar v. Commr. of Income-tax, Bihar & Orissa' AIR 1941 Pat 39 it was held that whether payment of Salami is capital receipt or income depends on the facts of each case. There is no dispute about this proposition. On facts, no decision as to the nature of receipts was given. As the facts disclosed in the reference were not adequate, the case was referred back to the Commissioner of Income-tax for further enquiry. In--'Province of Bihar v. Pratap Udai Nath Shahi Deo' AIR 1941 Pat 289 the question was whether single non-recurring premia and Salamis paid to the assessee once only as consideration for a settlement of agricultural land at the time of granting of the lease can be held to be income within the meaning of the Act. The question had to be decided with reference to the provision of the Bihar Agricultural Income-tax Act which defined agricultural income as meaning rent or income derived from land which was used for agricultural purposes. The learned Chief Justice observed that Salami or premium could not be regarded as income as a matter of law. 'It may in certain cases be regarded as payment of rent in advance and in such cases the Salami could rightly be regarded as income'. But as facts bearing on the nature of the payments received as Salami were not given, he declined to hold that the
Salami receipts represented income. The principle enunciated in the decision is not in controversy. On facts the decision is not helpful. Salami was not treated as income as facts bearing on the nature of the receipt were not placed by the taxing authorities before the court. The learned C.J. also held that there was no real difference between the word 'income' in Section 2 (a) and the word 'revenue' in Section 2 Income-tax Act which includes payment in the nature of income other than rent derived from the land. The word 'revenue' occurs in the definition of the Assam Agricultural Income-tax Act with 'rent'. It will have the same meaning as in the Income-tax Act. It is meant to cover all agricultural income which may not be covered by the expression rent.
23. The examination of all the authorities relied on by the learned Advocate for the assessees reveals that there is no precedent covering the cases before us which may justify the view that Salami in these cases even though treated as a single non-recurring item of receipt, must necessarily be treated as capital receipt. Summed up briefly the position is that the assessees in the cases before us are making settlements of small plots of lands. Generally Salami received at the time of the settlement is a small sum. A large number of settlements are being made every year. These settlements cover lands of all the three categories though in a particular year there may be no settlement of abandoned lands as noticed above. Abandonment of lands without arrears appears to be a rare phenomena from the very nature of things. Salami in itself is not received as a consideration for parting with any substantial interest in land. The right to immediate occupation of the land no doubt is parted with. But the landlord cannot help parting with it if he wants to settle the land for purposes of cultivation. He will have to part with the right of occupation even if no Salami is received. For charging Salami he allows no definite period or extra rights as in mining leases. It is not received as consideration for a sale out and out or even of a large interest in land. It is in the interest of the landlord that the tenants should continue to cultivate. The Salami serves as a safeguard against frequent abandonments which are detrimental to his interest . By Salami the tenant gets a stake in the tenancy. The rate of rent is deliberately kept low. It is invariable. The usual rate of rent as stated before us by the learned counsel for the parties is As. -/11/-per bigha. Salami varies from estate to estate. But the variations in all cases are according to the quality of land. It does not go higher than Rs. 10 or lower than Re. 1 except in very rare cases. It serves as a guarantee of good faith and security against abandonments if the tenant finds conditions not quite congenial. But the landlord gives nothing extra for the Salami that he receives.
In these circumstances we find it difficult to hold on the strength of authorities cited that Salami receipts are capital receipts merely because they do not satisfy the requirements of the import of the expression 'income' as given in--'Commr. of Income-tax Bengal v. Shaw Wallace & Co.' which requires income to be a periodically monetary return coming in with some sort of regularity or expected regularity from definite sources.
The source according to this case may not necessarily be one which is expected to be continuously productive. But it must be one whose object is the production of a definite return excluding anything in the nature of a mere windfall. This view of the expression 'income' has been modified by subsequent decisions. Income now may not necessarily be a recurrent return from a definite source though it is generally of that character vide--'Kamakshya Narain Singh v. Commr. of Income-tax, Bihar & Orissa' . It may not recur at all and the source may never yield a periodical return. An isolated adventure may constitute business. Even a casual and a nonrecurring receipt may be income though it may be exempt from taxation under certain circumstances. Section 4 (3) (vii) of the Income-tax Act provides that casual and non-recurring receipts are exempted from tax, provided they do not arise from business or exercise of a profession, vocation or occupation. Thus even a casual and a non-recurring receipt if received in the exercise of a profession, vocation or occupation would be income. As held in--'Amrit Kunwar v. Commr of Income-tax, C.P. and U.P., Lucknow' : 14ITR561(All) anything which can properly be described as income is taxable unless the Act expressly exempts it. The mere fact that the element of recurrence is wanting, would not necessarily make it a capital receipt. It is obvious that settlements which yield Salami form a regular and normal source of income from the Zamindary occupation of the assessees. They are having large and substantial sums of money as Salami each year. Even if these receipts are treated as non-recurring, they cannot be brought under the general exemption by being treated as capital receipts.
24. The element of recurrence also is not
wholly wanting. Tenants are being evicted
every year in each estate. The evictions take
place in execution of rent decrees. Resettlements follow as a matter of course. There are
abandonments also though they may be few
and there may not be any settlements of
abandoned holdings in certain years. Income
by way of Salami can possibly recur in respect
of the same plot. There is not merely an ex
pectation of recurrence. It does recur obviously
in a very large number of cases, for every
ejectment in execution of a rent decree gives
rise to an occasion for a resettlement and
resettlements of estate purchased lands are as
numerous and frequent as settlements of waste
25. Receipts by way of Salami even if isolated and non-recurring are covered by the expression revenue in the sense in which the expression is used in the definition of 'agricultural income' in the Assam Agricultural Income-tax Act. The dictionary meaning of the word 'revenue' is the return, yield or profit of any land, property or other important source of income. Profit arising from any land would be its revenue. Premium which is realised by way of Salami even if non-recurring is undoubtedly profit arising from the land. It is derived from land. All agricultural income which is meant to be assessed is not covered by the expression rent. All other heads of agricultural income would be covered by the expression 'revenue'. Salami, therefore, regarded as non-recurring income when seen in
relation to a particular plot of land would be covered by the expression 'revenue'. The dictionary meaning of the word does not require recurrence as its essential characteristic. It was held in--'Birendra Kishor v. Secretary of State' AIR 1921 Cal 262 that there could be little doubt that when a lease was granted, the amount fixed for periodical payment was not independent of the amount paid in lump sum as premium. Receipts by way of Salami were found exempt from tax (under the Income-tax Act) on the ground that they might reasonably be regarded as rent or revenue derived from land. The learned Judges referred to--'Dinonath Mookerjee v. Debnath Mullick' 13 W R 307 (Cal) in which it was held that money payable by a lessee in consideration of a lease granted, whether called Nazar or Salami, cannot be looked upon as rent and held that it was not necessary to hold that salami was rent within the meaning of the definition given in the Bengal Tenancy Act or the Transfer of Property Act. Rent in our view is a periodical payment. It may be payable periodically or on specified occasions. It is generally reserved on a periodical basis viz. annually, quarterly, or monthly. It connotes a periodically recurring payment according to its definition given in Section 105 T. P. Act. This feature of rent is necessarily implied in its definition given in the Goalpara Tenancy Act. Salami therefore is not rent. It may also be observed that it is nobody's case that it is rent. The assessees call it Salami or premium though they contend that it is not income. The Board also does not regard it as rent. If therefore Salami is found to be assessable as income as we do it would be covered by the expression Revenue and not rent. In the case of--'Jyotindra Narayan Sinha In the matter of 49 Cal W N 472 Salami was found to be revenue. We think facts revealed by further enquiry justify the conclusion arrived at in that case.
26. Dawson Miller, C. J. when considering the decision in--'Shiva Prasad Singh v. Emperor' AIR 1924 Pat 679 observed at p. 680 as follows:
'The Court held that the first of the above glasses of salami was not agricultural income within the meaning of Sections 2 and 4 of the Income Tax Act, 1918, but that the second class was exempt from tax as it might reasonably be regarded as rent or revenue derived from land. It by no means follows, however, that because a particular class of payment included under the term Salami is regarded as the income of the recipient, every payment which may be popularly described as Salami must be income. Small payments recurring from time to time in connection with the same holding may perhaps be legitimately regarded as income in most cases, although I am not prepared to subscribe to the proposition which might be deduced from the case cited that the capitalised value of the rent paid in a lump sum is in all cases to be regarded as income.'
The learned Chief Justice was not prepared to dissent from the view taken in--'Birendra Kishor v. Secy. of State', AIR 1921 Cal 262 so far as Salami receipts on the occasion of settlements were concerned if they were small payments recurring from time to time in connection with small holdings as was the case in the Calcutta decision.
27. The observations of Harries, C.J. in--'Bir Bikram Kishore Manikya v. Province of Assam' 53 Cal W N 164 are also noteworthy. When considering whether Salami or premium realised in respect of settlement of land is agricultural income within the meaning of the definition given in the Assam Agricultural Income-tax Act, he observed referring to--'Birendra Kishore v. Secy. of State' AIR 1921 Cal 262 as follows:
'We are of course bound by the decisions of this Court. But it is difficult to answer the question submitted because it is not stated how the payments of Salami arose. If they arose from the settlement of waste lands such would in the view of this court be agricultural income. But it would not be income if the payments were made in respect of transfers.'
28. In--'Mehar Bano Khanum v. Secy. of State' : AIR1925Cal929 a Full Bench decision--it was held by majority that Salami paid by a tenant to a landlord for the recognition of a transfer of a non-transferable holding is rent or revenue within the meaning of the expression as it occurs in Section 2 (1) (a) of the Income-tax Act.--'Birendra Kishore v. Secy. of State' AIR 1921 Cal 262 was overruled on this point. The ratio decidendi was that the expression revenue included the term yield or profit of any land. The Nazar or Salami realised when granting recognition for transfers could not in their lordships' view be regarded as anything else but profit derived from the land used for agricultural purposes. They thought there was no escape from the conclusion that a payment of this kind was profit derived from the ownership of land.
The same view prevailed in--'Commr. of Income-tax v. K.C. Manavikraman' AIR 1945 Mad 207 wherein it was held that not merely the Avakasam and the additional Avakasam is agricultural income but even the further exactions by the landlord though reprehensible were agricultural income. The assessee in this case was a Zamindar. He held agricultural land which he leased to tenants. Under the Malabar Tenancy Act 1930, a tenant is entitled to renewal of his lease which is usually for twelve years. It is the custom in that part of India for the tenants to pay a renewal fee, which is known as Avakasam, and additional Avakasam, which is a percentage of the Avakasam. The assessee in that case was in the habit of requiring his tenants to pay more than the Avakasam and additional Avakasam before granting them renewals. It was held that all income received by him when granting renewals was agricultural income. A Full Bench decision of the Patna High Court reported in--'Rajendra Narayan v. Commr. of Income-tax' AIR 1929 Pat 449, also expressed the view that mutation fees paid by assessee's tenants upon succession to holdings by inheritance was agricultural income. The fact that these exactions were illegal was regarded as immaterial. In view of these decisions we -think there is no escape from the conclusion that Salami is revenue derived from land and is thus agricultural income for the purpose of the Assam Agricultural Income-tax Act.
28A. The receipts of the assessees from this source cannot be regarded as windfall. Salami is a regular source of income from land. It is certain to accrue each year and in large
sums. It is part of the receipts of the regular business or occupation of the Zamindary. Nor can it be seriously urged that Salamis represent merely presents to the landlord. They are obviously compulsory payments. Rates are fixed according to the quality of the land. Every tenant has to pay if he desires settlement of the land for cultivation. The payment bears no resemblance whatsoever to what may be regarded as a present or gift. It is part of the system on which lands are settled to tenants and is not at all different from rent except that rent is paid annually and Salami is paid at the time of settlement; for the rest both are compulsory in nature and therefore unavoidable. They proceed from a compulsion of the circumstances. For reasons given above we find that Salami is revenue derived from land and is therefore income within the meaning of the expression as denned in the Agricultural Income-tax Act. Our answer to the question therefore is in the affirmative. We hold that Salami receipts in the case of all the assessees are assessable to tax under the Assam Agricultural Income-tax Act.
29. The next question is whether the assessees are entitled to deduction of 15 per cent. on account of Salami as collection charges. The deduction of 15 per cent. as collection charges is permissible only on collections of rent under Section 7 (c). This is not in dispute. The case of the assessees has been that Salami was neither rent nor revenue. It was in their view a capital receipt and not income. The position taken on behalf of the Board was that it was revenue as distinguished from rent. We have come to the conclusion that not being a periodically recurring payment it cannot be justifiably described as rent. We have, therefore, found it to be revenue derived from land. The assessees on their own showing and also in view of our finding are not entitled to claim 15 per cent. by way of collection charges on the amounts received by way of Salami. If, however, any expenditure (not being in the nature of capital expenditure or personal expense of the assessee) has been laid out or expended wholly and exclusively for the purpose of deriving this income (Salami), it would be open to the taxing authorities to allow such expenditure as a legitimate deduction under Rule 2 (viii) of the Assam Agricultural Income-tax Rules, 1939. We answer this question in the negative.
30. I agree.