CHHATRASINHJI KESARISINHJI THAKORE Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) On December 11, 1947, the appellant granted to the Shivrajpur Syndicate Ltd. rights for mining manganese ore from lands in two villages Shivrajpur and Bhat. The following are the material terms of the indenture of lease :

(2.) The appellant received from the Syndicate, beside rents and royalty, Rs. 16,309 in the year ending July 31, 1951 and Rs. 39,515 in the year ending July 31, 1952, being 3/16th of the amount of rent and royalty payable to the appellant in accordance with the terms of Part V of the lease. The Syndicate described this payment as "Local Fund Cess." The Income-tax Officer. Ward "B', Panch Mahals, brought these two amounts to tax in the assessment year 1952-53 and 1953-54. In appeal to the Appellant Assistant Commissioner of Income-tax, Baroda Range, it was maintained by the appellant that the two sums were not taxable, because they represented Local Fund Cess collected by him on behalf of the Government of Bombay or the Local Board, Panch Mahals, and in any event because they were receipts "of a casual and non-recurring nature." The Appellant Assistant Commissioner upheld those contentions of the appellant and directed that the said sums be excluded from the total income of the appellant.

(3.) In the view of the Income-tax Appellant Tribunal, the appellant received the two sums from the Syndicate under Cl. 1 of Part VII of the lease agreement and not as Local Fund Cess on behalf of the Government of Bombay or of the Local Board, Panch Mahals, and the amounts were not receipts "of a casual and non-recurring nature". The Tribunal submitted a consolidate statement of the case under S. 66(2) of the Income-tax Act in respect of the two years of assessment and submitted the following questions for the opinion of the High Court of Bombay :