JUDGEMENT Appeal (No. 21 of 1942) from a judgment of the High Court (September 6, 1940) on a reference under s. 66 of the Indian Income-tax Act (XL of 1922) (as amended by Acts XXI. and XXII. of 1930 and Act XVIII. of 1933), by which the High Court answered in the negative a question of law, submitted by the Commissioner of Income-tax of Bihar and Orissa in respect of an assessment to income-tax of the appellant assessee for the year 1937- 1938. The following facts are taken from the judgment of the Judicial Committee The two questions submitted to the Commissioner by the assessee to be referred to the High Court were " (1.) Whether "royalty on mines being capital revenue should not have been "excluded in computing the total income determined for "income-tax? (2.) What should be the principle on which "cost of management in collection of royalties is to be deter-" mined when there is a combined management covering both "the Zamindari collection of agricultural income and royalties "of mines?” The Commissioner of Income-tax was of the opinion that the second question raised no question of law and should not be answered by the High Court. In fact, no argument was addressed by the assessee to the High Court thereon, and the High Court concurred in the opinion of the Commissioner of Income-tax. No further reference to that question need therefore be made. The assessee, Kumar Kamakshya Narain Singh Bahadur, was at all material times the proprietor of a revenue paying estate known as the Ramgarh Raj, bearing Tauzi No. 28, in the Collectorate of Hazaribagh, being impartible and governed by the rule of primogeniture. At the time of the assessment which was the subject-matter of this appeal, the estate was under the management of the Court of Wards, the assessee being a minor. On August 10, 1937, the assessee attained his majority and the estate was released from the management of the Court of Wards. At the time of the assessment which was the subject-matter of this appeal, the estate was under the management of the Court of Wards, the assessee being a minor. On August 10, 1937, the assessee attained his majority and the estate was released from the management of the Court of Wards. For the income-tax year 1937- 1938 the manager of the estate, on behalf of the assessee, made a return of the income of the assessee to the Income-tax Officer, District Hazaribagh, including a sum of Rs.5,32,368-2-10 being royalties realized from lessees of coal mines under seven leases, each of them for a term of nine hundred and ninety-nine years, in the form of and on similar conditions and covenants as those contained in three leases, that was to say (1.) A lease dated April 5, 1919, between Alexander McNeil Walter, the manager of the Ramgarh Estate under the Court of Wards Act (Act IX. Bengal Code 1879) of the one part and Bokaro and Ramgurh, Ld., of the other part; (2.) a lease dated March 25, 1925, between the said Alexander McNeil Walter and Bokaro and Ramgurh Ld., of the other part; (3.) a lease dated April 12, 1927, between the said Alexander McNeil Walter of the one part and the Karanpura Development Co., Ld., of the other part. Under the terms of the leases the lessees covenanted to pay to the lessor royalties on all steam coal, rubble Law. Rep. 70 Ind. App. 180 ( 1942- 1943) Raja Bahadur Kamakshya v. C ommissioner of Income-Tax 85 coal, dust, hard and soft coke gotten manufactured and dispatched, the lessees also covenanting that after certain dates, as provided by the said leases, minimum royalty should be paid on the terms and at the rates provided therein, in the event of the royalties reserved and payable under the said leases not amounting to the figure of the minimum royalty. It was here only necessary to refer in detail to the material terms and covenants of one of the leases, namely, that dated April 3, 1919. It was here only necessary to refer in detail to the material terms and covenants of one of the leases, namely, that dated April 3, 1919. The most material clause was as follows " This "indenture witnesseth that in pursuance of the said agreement "and in consideration of the salami or premium rupees thirty-" seven thousand and forty (being at the rate of rupees forty "per standard bighas on nine hundred and twenty-six bighas) "in respect of the premises at or before the execution of these "presents by the lessees paid to the lessor (the receipt whereof "the lessor doth hereby admit and acknowledge) the lessor "doth hereby grant and demise unto the lessees all and singular "the underground coal mining rights of and in all those the "lands and premises specified in schedule hereto and which "are hereinafter referred to as the premises and all the estate "right title interest claim and demand of the lessor into and "upon the same and every part thereof with full liberty and "power to the lessees to search for work make merchantable "and carry away the coal there found and also liberty and "power for the purposes aforesaid and all other purposes "connected therewith to dig sink drive make repair and use all "such pit shafts drifts levels water gates planes adits water-"ways and always and to form and erect engines machinery "dressing floors buildings workshops store houses cottages "godowns coke ovens furnaces brick-kilns lime-kilns erections "and things and to form all such railways and tramways and "other roads and communications spoil-heaps and other "conveniences in over and under the said lands as may be "necessary in the premises. To hold the said premises hereby "demised unto the lessees from the first day of November "one thousand nine hundred and fifteen for the term of nine "hundred and ninety-nine years subject to the right of determination hereinafter contained yielding and paying therefor "unto the lessor by monthly payments in each year (the first "such payments to be made on the twenty-first day of "December one thousand nine hundred and fifteen) the royalty "on all coal and coke raised gotten manufactured and "despatched from the said lands hereby demised at the rates "following that is to say Four annas per ton on all steam "coal three annas per ton on all rubble coal and two annas "per ton on all dust coal raised and despatched and eight "annas per ton on all hard coke and six annas per ton on all " soft coke manufactured and despatched." The lease provided for payment of a minimum royalty at the end of any year in which royalties on coal raised and dispatched should, be less than a certain amount. It also contained usual covenants, and in particular that the lessees undertook to deliver up the mines in good order and condition at the end or sooner determination of the term. It included a covenant by the lessor for quiet enjoyment, and the lessees were granted liberty to determine the lease on certain terms. The lessor was further entitled to enter on the demised premises and to determine the lease on specified conditions if the royalties were not duly paid. For all purposes material to this appeal the other leases were in terms similar to the lease just referred to. The Income-tax Officer of Hazaribagh assessed the assessee to income-tax on the income of the assessee, including the coal mine royalties, in the sum of Rs,76,286-9-o, and to supertax, in a sum of Rs.1,95,610-4-0. For all purposes material to this appeal the other leases were in terms similar to the lease just referred to. The Income-tax Officer of Hazaribagh assessed the assessee to income-tax on the income of the assessee, including the coal mine royalties, in the sum of Rs,76,286-9-o, and to supertax, in a sum of Rs.1,95,610-4-0. By a petition of appeal, dated Sepember 15, 1937, the assessee appealed to the Assistant Commissioner of Income-tax on the following, amongst other grounds " That according to law, rent and "royalty on mines being capital revenue, that is value of the "corpus, should be exempted in assessing income-tax; that "rent and royalty are in the nature of the price of coal and "instalments of purchase money and hence not assessable to "income-tax." By his order of February 14, 1938, the Assistant Commissioner expressed the opinion that royalties should be included in assessing the income of the assessee, and stated that " in order to constitute a sale a fixed price is "always essential. Law. Rep. 70 Ind. App. 180 ( 1942- 1943) Raja Bahadur Kamakshya v. C ommissioner of Income-Tax 86 But while the lessees are to pay royalties "at a certain fixed rate per ton of coal extracted, the aggregate "of such payments must not be less than a minimum sum in "any year. This minimum has to be paid even if no coal is "extracted. From this it follows that royalty is not the price "of coal taken as the assessee contends." The assessment was confirmed. By a petition under s. 33 of the Act to the Commissioner of Income-tax the assessee prayed that the Commissioner should send for the record and that the order of the Assistant Commissioner be set aside and a fresh assessment be made, which petition was rejected. By an application under s. 66, sub-s. 2, of the Act the assessee required the Commissioner of Income-tax to refer the two questions set out above for decision of the High Court. By an application under s. 66, sub-s. 2, of the Act the assessee required the Commissioner of Income-tax to refer the two questions set out above for decision of the High Court. On December 23, 1938, the Commissioner of Income-tax drew up a statement of the case, exhibiting a specimen of the mining leases concerned, referring those questions to the High Court, and expressed his own opinion upon them, which was, as regards the first question—" (a) Receipts under leases in the terms of the "exhibit were rightly held by the Appellate Officer to be annual "income and not capital instalments of a purchase price." The High Court referred the case to a Full Bench (Harries C.J., Fazl Ali and Manohar Lall JJ.) who were of the opinion that royalties received by the assessee were " income from other "sources " within the meaning of ss. 6 (vi.) and 12, sub-s. 1, of the Act, and were rightly assessed to income-tax by the taxing authorities. 1943. Apr. 5, 6, 7. Sir Walter Monckton K.C., Cyril King K.C. and R. K. Handoo for the appellant. This is the first time this point—whether sums received by way of royalty under mining leases are income, profits or gains derived from " other sources " within the meaning of those words in ss. 6 and 12 of the Indian Income-tax Act, 1922—has reached this Board, though in India it has been decided that they do attract tax. It is submitted that, looking at the instruments here in question in the light of all the circumstances, the royalties are not income but capital receipts. This was in substance a sale of coal at a price which the parties have chosen to call royalty; it is a payment for the coal as and when it is obtained, and not a rent for enjoyment of the lease. The main function of the leases is to provide for the getting of the coal. To be exigible to tax this must be income from " other "sources." It is not some of the fruit of the tree that is being taxed, but some of the tree itself Gowan v. Christie (( 1873) L. R. 2 Sc. & D. 273, 283.). Campbell v. Wardlaw (( 1883) 8 App. Cas. 641, 644, 649, 655.) applies or gives effect to the doctrine of Lord Cairns in obiter in Gowan v. Christie (1). & D. 273, 283.). Campbell v. Wardlaw (( 1883) 8 App. Cas. 641, 644, 649, 655.) applies or gives effect to the doctrine of Lord Cairns in obiter in Gowan v. Christie (1). In In re Aidants Settled Estate ([ 1902] 2 Ch. 46, 63.), it was said that the term " rent "in the case of a mining lease is somewhat misleading. It is "really purchase-money for coal worked," and also, in regard to minimum royalty, that a minimum rent " is really a payment in advance of the purchase-money" (Ibid. 64.). The mere presence of a covenant for a minimum royalty does not alter or detract from the quality of the payment of the ordinary per ton royalty as a payment of price for the coal which is actually got. In Secretary of State for India v. Scoble ([ 1903] A. C. 299.), it was said that " where you are dealing with income-tax "upon a rent derived from coal, you are in truth taxing that "which is capital in this sense, that it is a purchase of the coal "and not a mere rent " (Ibid. 303.). In the light of that principle in the authorities the substance of the transaction in this case is a sale per ton of the coal. The judgments below are founded on the decision in Manindra Chandra Nandi v. Secretary of State for India (( 1907) I. L. R. 34 C. 257.), which turned on the position in England, but in the English Act there are special words which provide for the taxation of royalties. If, looking at the problem, what is income ?, one is not compelled to depart from the logical reasoning in the English authorities to comply with any such statutory provision as exists in England—and there is no provision taxing royalties in India—one is at liberty to do justice to what is the substance of the matter. The following cases are founded on Manindra Chandra Nandis case (( 1921) 6 Fat. L. J. 62.) In re Raja Joyti Prasad Singh Deo (8) ; Sri Raja Shiva Prasad Singh v. The Crown (( 1924) I. L. R. 4 Pat. 73, 83.) ; Maharaja Guru Mahadeo Ashram Prasad Sahi Bahadur v. Commissioner of Income-tax, Bihar and Orissa (( 1926) I. L. R. 6 Pat. L. J. 62.) In re Raja Joyti Prasad Singh Deo (8) ; Sri Raja Shiva Prasad Singh v. The Crown (( 1924) I. L. R. 4 Pat. 73, 83.) ; Maharaja Guru Mahadeo Ashram Prasad Sahi Bahadur v. Commissioner of Income-tax, Bihar and Orissa (( 1926) I. L. R. 6 Pat. 29, 37-38.), in which last case it was held that income from the settlement of a right to collect a particular kind of earth in a particular area during a particular season for the purpose of extracting saltpetre cannot be distinguished from royalties on coal, and therefore is Law. Rep. 70 Ind. App. 180 ( 1942- 1943) Raja Bahadur Kamakshya v. C ommissioner of Income-Tax 87 to be treated as income from other sources. In the last of the Indian cases, Maharani Janki Kuer v. Commissioner of Income-tax, Bihar and Orissa (( 1930) I. L. R. 10 Pat. 275.), sums received on account of royalties for preparing bricks were assessable like royalties on coal. Rex v. Attwood (( 1827) 6 B. & C. 277, 281.) and Reg. v. Westbrook (( 1847) 10 Q. B. 178.), were relied on in Manindra Chandra Nandis case (I. L.R.34 C. 257.). [Observations of Lord Blackburn in Coltness Iron Co. v. Black (( 1881) 6 App. Cas. 315, 335- 336.) were also referred to.] In the case of a coal mine something is being got out of the corpus of the earth, as distinct from the recurring fruit of a tree. One must look further than whether the receipt is a regular expectation, or has been received over a long period Income-tax Commissioner v. Shaw, Wallace & Co. (( 1932) L.R. 591. A. 206, 212.).; Gopal Saran Narain Singh v. Income-tax Commissioner (y). In the court below the judges, while seeking to say that they put on one £ide the decisions under the English income-tax system, have in fact given effect to them in a field where they ought not to have done so. Cyril King K.C., following. Before any element of income, profit or gain emerges the equivalent of the deterioration in the capital asset must first be made good from the gross receipts. To be income, it must be a return on use of capital, and that return corresponds to the fruit or the crop Income-tax Commissioner v. Shaw, Wallace & Co. Cyril King K.C., following. Before any element of income, profit or gain emerges the equivalent of the deterioration in the capital asset must first be made good from the gross receipts. To be income, it must be a return on use of capital, and that return corresponds to the fruit or the crop Income-tax Commissioner v. Shaw, Wallace & Co. (6); Gopal Saran Narain Singh v. Income-tax Commissioner (( 1935) L. R. 62 I. A. 207,213.). This case, on its particular facts, is wall on the wrong side of the line, for it is the most complete case of the abstraction of the thing itself and its dissipation. [Reference was made to Shop Investments, Ld. v. Sweet (( 1940) 23 Tax Cas. 38.), which was approved in Croft v. Sywell Aerodrome, Ld. ([ 1942] 1 K. B. 317.).] If the Board think that there is not sufficient authority to justify the whole of these royalties being charged to tax, then it would be a case for analysis with the view to the extraction from the gross royalties of the income element. That should not be an impossible task Secretary of State for India v. Scoble ([ 1903] 1 K. B. 494 ; [ 1903] A. C. 299.); Foley v. Fletcher (( 1858) 3 H. & N. 769.); Perrin v. Dickson ([ 1930] 1 K. B. 107.); and Sothern-Smith v. Clancy ([ 1940] 2 K. B. 276; [ 1941] r. K. B. 276.). The capital element should not be lost sight of here. Tucker K.C. and Sir Alfred Wort for the respondent. If the appellant is right no mine owner can ever have an income, whether he sells the coal himself or gives the right to somebody else for a payment. The matter is really based on the dictum, which was obiter, of Lord Cairns in Gowan v. Christie (L. R. 2 Sc. & D. 273.), where he said that " what we call a mineral lease is really, "when properly considered, a sale out and out of a portion of "land" (Ibid. 283-284.). That was agreed with by Lord Blackburn in Coltness Iron Co. v. Black (6 App. Cas. 315, 335.), but he added that the argument that no income tax is payable is not tenable. That was also obiter. 283-284.). That was agreed with by Lord Blackburn in Coltness Iron Co. v. Black (6 App. Cas. 315, 335.), but he added that the argument that no income tax is payable is not tenable. That was also obiter. So far as the tenant for life cases are concerned, where land is left containing coal, which is not land, it has been held that in such cases, unless a contrary intention is shown, the tenant for life is not entitled to the full amount of any produce taken from the land because the presumed intention of the testator is that the last person shall get the land unimpaired; it is analogous to the doctrine which makes the tenant for life liable for waste. The corpus of the estate must not be destroyed by the tenant for life, but that does not touch the question from an income-tax point of view, when it is income that is being taxed. Campbell v. Wardlaw (8 App. Cas. 641.) and In re Aldams Settled Estate ([ 1902] 2 Ch. 46, 63.), are of no assistance on the meaning of " income" in the Indian Income-tax Act or, indeed, in the English Act. The only question is whether the royalties are " income." That there is a source cannot be doubted, it is the mining leases or, alternatively, the land itself. There is no definition of " income " in the Act, and that in Income-tax Commissioner v. Shaw, Wallace & Co. (L. R. 59 I. A. 206, 212.) is not exhaustive. [On the meaning of * income " reference was also made to Pool v. The Guardian Investment Trust Co. ([ 1922] 1 K. B. 347.), and Eisner v. Macomber (( 1920) 252 U. S. 189.).] The decision thirty-six years ago in Manindra Chandra Nandis case (I. L. R. 34 C. 257.), and in particular Law. Rep. 70 Ind. App. 180 ( 1942- 1943) Raja Bahadur Kamakshya v. C ommissioner of Income-Tax 88 the judgment of Mookerjee J., answers the question in issue correctly. It is plain from the decision that the judge was riot founding himself on English cases, or on any provision of English income tax ; he was facing the problem, is royalty "income " within the meaning of the Indian Act ? and that case determines the point now before this Board. It is plain from the decision that the judge was riot founding himself on English cases, or on any provision of English income tax ; he was facing the problem, is royalty "income " within the meaning of the Indian Act ? and that case determines the point now before this Board. The court will hesitate long before overruling a decision of long standing Ricketts v. Colquhoun (plain[ 1926] A. C. 1, 5.). This is nothing more than rent, measured by a particular set of circumstances, paid for the interest in the land which is conferred on the lessees. Sir Walter Monckton K.C. in reply. Mere regularity of payments is not enough, the quality of the payments must be considered Commissioners of Inland Revenue v. Ramsay (( 1935) 20 Tax Cas. 79.). The true nature of loyalty is in substance a sale of part of the corpus, namely, the coal, as and when it is extracted. Stare decisis is not in any sense a conclusive argument. May 13. The judgment of their Lordships was delivered by LORD WRIGHT, who stated the facts, and continued The appellants main contention has been that on the true construction of the Income-tax Act, 1922, mineral royalties depending on the tonnage of minerals raised and dispatched are not properly chargeable to tax because they are in their nature and quality capital, and are not " income " or income derived from " other sources " within the meaning of ss. 6 and 12 of the Act. The Indian Income-tax Act of 1922, which was a consolidating Act, is both in its general framework and its particular provisions different from the English income tax Acts, so that decisions on the English Acts are in general of no assistance in construing the Indian Act. But on some fundamental concepts reference may be to some extent usefully made to English decisions, in particular as to the meaning of the word " income." Under s. 4 of the Indian Act it is pro vided that the Act shall apply to all " income, profits or gains " described or comprised in s. 6, and arising in British India. Sect. 6 specifies six heads of income, profits and gains which are to be chargeable. Sect. 6 specifies six heads of income, profits and gains which are to be chargeable. Of these it is not disputed that the moneys on which the disputed charge has been assessed (if taxable as income under s. 6), fall under the head "other "sources." As to this head, s. 12 enacts (1.) that the tax payable by an assessee thereunder is to be " in respect of "income, profits and gains of every kind and from every "source to which the Act applies (if not included under any of "the preceding heads)." (2.) Sub-sect. 2 provides that "such income, profits and gains shall be computed after making "allowance for any expenditure (not being in the nature of "capital expenditure) incurred solely for the purpose of "making or earning such income, profits or gains, provided "that no allowance shall be made on account of any personal "expenses of the assessee.” Under the English Acts income which consisted of mining royalties was taxed under sch. A, but according to the relevant rules of sch. D. Under the Indian Act the provisions of s. 9 with reference to " property " (which is head iii. in s. 6) are regarded as excluding royalties from being held to come under that head. Royalties cannot be regarded as " profits "or gains " of a business. The sources of the royalties may properly be deemed to be the lessees covenants to pay them, and hence royalties fall under " other sources/ The appellants substantial argument is that the coal on his land is capital, and that the sums which he receives from time to time for each ton raised and dispatched is a capital receipt, being the price given in exchange for the capital asset, as and when the property in each ton vests in the lessee. He supports this contention also on what he terms are the realities and equities of the position. These, as he urges, arise from the circumstance that the coal is a wasting property and is being gradually exhausted as each ton is raised and disposed of. He has also submitted, though not perhaps very strenuously, that whereas under the English Acts mines and income from them are expressly dealt with and are clearly therefore subjected to the tax, the position under the Indian Act is different in the respect that mining royalties are not expressly specified as taxable. He has also submitted, though not perhaps very strenuously, that whereas under the English Acts mines and income from them are expressly dealt with and are clearly therefore subjected to the tax, the position under the Indian Act is different in the respect that mining royalties are not expressly specified as taxable. He has also contended that their peculiar characteristics make the general words “income, profits and " Law. Rep. 70 Ind. App. 180 ( 1942- 1943) Raja Bahadur Kamakshya v. C ommissioner of Income-Tax 89 gains " inapplicable to them, at least in the absence of their being expressly mentioned. The issue depends on the true interpretation of the word “income” as used in the Act. Income is not only the most general word in s. 6 of the Act, but is obviously a more appro priate term to be applied to mining royalties than " profit or "gains." To ascertain whether the word "income" applies to mining royalties, it is necessary to advert to the nature of a mining lease and the meaning of rent or royalties as used in a mining lease. A question has been raised whether the mining leases are leases within ss. 105 to 108 of the Transfer of Property Act, 1882, or within the ordinary legal acceptance of that word in Indian law. In their Lordships opinion, the leases are properly described as leases according to ordinary parlance, and are within the terms of the sections referred to of the Act of 1882. At the same time, their Lordships do not regard this question as relevant to determine in the present case. The payments which under the leases are exigible by the lessor may be classed under three categories (i.) the salami or premium; (2.) the minimum royalty; (3.) the royalties per ton. 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 benefits 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. But the royalties are on a different footing. 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. But the royalties are on a different footing. The minimum royalty is only payable if in any year the royalties on coal raised and dispatched are less than the sum fixed as the minimum royalty. This amounts to a species of annual guarantee ; it does not correspond to any coal in fact extracted and taken away; it is simply " income " flowing from the covenants in the lease, contingently on the lessees failure to take the minimum quantity of coal. It would be payable if in any year the lessees took no coal at all, or if the coal in the mine was completely exhausted before the termination of the lease. The minimum royalty is, therefore, in their Lordships judgment, " income," and in no sense a payment on capital account. But the minimum royalty throws, at least by analogy or contrast, some light on the character of the royalties payable on each ton of coal. These, in their Lordships judgment, for reasons which will now be explained, constitute income, as the High Court at Patna has held in upholding the assessment. The appellants case was primarily based on certain observations made by Lord Cairns in Gowan v. Christie (( 1873) L. R. 2 Sc. & D. 273,283-284.), where he said "for although we speak of a mineral lease, or "a lease of mines, the contract is not, in reality, a lease at all "in the sense in which we speak of an agricultural lease. "There is no fruit; that is to say, there is no increase, there is "no sowing or reaping in the ordinary sense of the term; "and there are no periodical harvests. What we call a mineral "lease is really, when properly considered, a sale out and out "of a portion of land. It is liberty given to a particular "individual, for a specific length of time, to go into and under "the land, and to get certain things there if he can find them, "and to take them away, just as if he had bought so much of " the soil." Lord Cairns was there not considering the question whether royalties under such a lease were capital or income for purposes of taxation. The question was whether the lessee was entitled to be relieved from his contract because he could not work the minerals at a profit. The House of Lords held against the lessee. Before discussing that dictum of Lord Cairns, certain other authorities may be cited. In Coltness Iron Co. v. Black (( 1881) 6 App. Cas. 315.), there was a further discussion of the nature of a mining lease. The main question was whether the lessees could deduct from their gross annual receipts, which included profits from their coal mines, the cost incurred in sinking new pits. The House held that they could not, because these costs were not part of the working expenses but were capital expenditure. They further rejected the contention that some allowance should be made against the profits because the coal was being gradually exhausted in the course of earning these profits. This, so far as it goes, is a decision against the appellants argument. It is based on the English taxing Acts under which mines are specifically assessed. Lord Blackburn, after quoting what Lord Cairns had said in Gowan v. Christie (( 1873) L. R. 2 Sc. & D. 273, 283- 284.), Law. Rep. 70 Ind. App. 180 ( 1942- 1943) Raja Bahadur Kamakshya v. C ommissioner of Income-Tax 90 went on to say (6 App. Cas. 335.) " But "the argument that no income tax should be imposed on what "is, perhaps not quite accurately, called rent reserved on a "mineral lease, because it is a payment by instalments of the "price of minerals forming part of the land, any more than on "the price paid down in one sum for the out and out purchase "of the minerals forming part of the land, is, I think, "untenable." He further added, in reference to the fact that the coal was being exhausted, the following observa tions (Ibid. 336.) " It has also been sometimes argued that it is very "unjust to tax at the same rate a terminable interest, such "as that in a mine, which must at some time be worked out, "and a fee simple interest, which will endure so long as this "world continues in its present state. I will not inquire "whether this is just or not. I will not inquire "whether this is just or not. There is much force in the "argument on the other side, that if the interest is terminable, "so is the tax, and will cease when the interest ceases. But "whether just or not, there can be no doubt that the same "annual charge is imposed upon a terminable annuity and on "one in perpetuity; and, what seems harder, that the same "annual charge is imposed upon a professional income, earned "by hard labour, often extending over many years before "any return isgot, and, when earned, precarious, as depending "on the health of the earner." Now it is true that Lord Blackburn was dealing with the English statutes, which were clearly different from the Indian Act. Under that latter Act the tax is on " income." Mines are not specially mentioned as they are in the English Act. But if income is in fact derived from mines, it is to be taxed as much as " income " from any other source. The general term covers the specific instances. The grounds on which the appellant contends that the royalties are not " income " are that they are capital receipts from a wasting property. In principle, in their Lordships opinion, both these points are disposed of by Lord Blackburns words, which depend on general principles, not on rules peculiar to the English Acts. Income, it is true, is a word difficult and, perhaps, impossible, to define in any precise general formula. It is a word of the broadest connotation. Its definition has, however, been approached in recent decisions of this Board. The first to which their Lordships think it is desirable to refer is Income-tax Commissioner v. Shaw, Wallace & Co. (( 1932) L. R. 59 I. A. 206.). Sir George Lowndes, in delivering the judgment of the Board, once more wisely emphasized the danger of using decisions on English income tax Acts in order to construe the Indian Act. He went on to give a definition of " income " as it is used in the Indian Income-tax Act. His definition was (Ibid. 212.) "Income, their Lordships think, in this Act connotes* a "periodical monetary return coming in with some sort of "regularity, or expected regularity, from definite sources. He went on to give a definition of " income " as it is used in the Indian Income-tax Act. His definition was (Ibid. 212.) "Income, their Lordships think, in this Act connotes* a "periodical monetary return coming in with some sort of "regularity, or expected regularity, from definite sources. "The source is not necessarily 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. Thus income has been likened "pictorially to the fruit of a tree, or the crop of a field. It is "essentially the produce of something which is often loosely "spoken of as capital. But capital, though possibly the "source in the case of income from securities, is in most cases "hardly more than an element in the process of production." That definition was followed, and in substance repeated, in a decision of the Board delivered by Lord Russell of Killowen in Gopal Saran Naraian Singh v. Income-tax Commissioner (( 1935) L. R. 62 I. A. 207.). In that case the appellant, the assessee, had transferred an estate in consideration of a lump sum and of the discharge of certain debts and of the payment to himself for life of an annuity of Rs.2,40,000. It was held that the annuity constituted " income M to the assessee during each year in which it was paid. Lord Russell, adopting generally the definition already quoted, added the following important amplification (( 1935) L. R. 62 I. A. 213.) " The word " income is not limited by the words profits and gains. Anything which can properly be described as income, is taxable under the Act unless expressly exempted." It is not, in their Lordships1 opinion, correct to regard as an essential element in any of these or like definitions a reference to the analogy of fruit, or increase, or sowing, or reaping or periodical harvests. Law. Rep. 70 Ind. App. 180 ( 1942- 1943) Raja Bahadur Kamakshya v. C ommissioner of Income-Tax 91 Lord Cairns used these expressions because he was distinguishing mineral leases from agricultural leases. Sir George Lowndes speaks of "income " being likened pictorially to the fruit of a tree or the crop of a field. Law. Rep. 70 Ind. App. 180 ( 1942- 1943) Raja Bahadur Kamakshya v. C ommissioner of Income-Tax 91 Lord Cairns used these expressions because he was distinguishing mineral leases from agricultural leases. Sir George Lowndes speaks of "income " being likened pictorially to the fruit of a tree or the crop of a field. But it is clear that such picturesque similes cannot be used to limit the true character of income in general, and particularly when it is constituted by mining rent or royalties. These are periodical payments, to be made by the lessee under his covenants in consideration of the benefits which he is granted by the lessor. What these benefits may be is shown by the extract from the lease quoted above, which illustrates how inadequate and fallacious it is to envisage the royalties as merely the price of the actual tons of coal. The tonnage royalty is, indeed, only payable when the coal or coke is gotten and dispatched; but that is merely the last stage. As preliminary and ancillary to that culminating act, liberties are granted to enter on the land and search, to dig and sink pits, to erect engines and machinery, coke ovens, furnaces and form railways and roads All these and the like liberties show how fallacious it is to treat the lease as merely one for the acquisition of a certain number of tons of coal, or the agreed item of royalty as merely the price of each ton of coal. The contract is in truth much more complex. The royalty is "in "substance a rent; it is the compensation which the occupier "pays the landlord for that species of occupation which the "contract between them allows," to quote the words of Lord Denman C.J. in Reg. v. Westbrook (( 1847) 10 Q. B. 178, 205.). He was referring to leases of coal mines, clay pits and slate quarries. He added that in all these the, occupation was only valuable by the removal of portions of the soil. It is true that he was dealing with occupation from the point of view of rating, but occupation has the same meaning in its application to matters of taxation such as are involved in this case. There is, therefore, in their Lordships judgment, no real justification for treating the royalties as capital payments. It is true that he was dealing with occupation from the point of view of rating, but occupation has the same meaning in its application to matters of taxation such as are involved in this case. There is, therefore, in their Lordships judgment, no real justification for treating the royalties as capital payments. They think that they are " income " within the meaning of the Act, whatever may be the exact definition of that word in the Act. Its applicability may in particular cases differ because the circumstances, though similar in some respects, may be different in others. Thus the profit realized on a sale of shares may be capital if the seller is an ordinary investor changing his securities, but in some instances, at any rate, it may be income if the seller of the shares is an investment or an insurance company. Income is not necessarily the recurrent return from a definite source, though it is generally of that character. Income, again, may consist of a series of separate receipts, as it generally does in the case of professional earnings. The multiplicity of forms which "income" may assume is beyond enumeration. Generally, however, the mere fact that the income flows from some capital assets, of which the simplest illustration is the purchase of an annuity for a lump sum, does not prevent it from being income, though in some analogous cases the true view may be that the payments, though spread over a period, are not income, but instalments payable at specified future dates of a purchase price. Such a case is illustrated by Secretary of State for India v. Scoble ([ 1903] A. C. 299.). But, in their Lordships judgment, the royalties here are clearly income and not capital. They are periodical payments for the continuous enjoyment of the various benefits under the leases. The actual acquisition of the property in a particular ton of coal at the moment when the lessees have cut and taken away the coal is only the final stage. The authorities already cited, and many others to the same effect, show that the fact that the mines, which form an element in the consideration for the royalties, are wasting assets is irrelevant. The English cases are sufficiently collected and explained by the Court of Appeal in Alianza Co. The authorities already cited, and many others to the same effect, show that the fact that the mines, which form an element in the consideration for the royalties, are wasting assets is irrelevant. The English cases are sufficiently collected and explained by the Court of Appeal in Alianza Co. v. Bell ([ 1905] 1 K. B. 184.), affirmed in the House of Lords ([ 1906] A. C. 18.). That case states principles which are generally applicable in India as well as in England. If the receipts are income, it is not material for tax purposes that that for which they are paid comes from a wasting property. If the payment ceases because the source ceases so does the tax. Once it is established that the royalties are income within the meaning of the Act it is not material that the mines are in course of being exhausted unless there is provided in the Act that there should be a deduction from the income on that particular ground. But there is under the Indian Act no provision for allowance for amortization in respect of the minerals being exhausted. Law. Rep. 70 Ind. App. 180 ( 1942- 1943) Raja Bahadur Kamakshya v. C ommissioner of Income-Tax 92 Indeed, where, as here, the lease is for nine hundred and ninety-nine years, an attempt to quantify the appropriate allowance would be scarcely practicable. However, s. 12, sub-s. 2, already quoted in this judgment, expressly excludes allowances in respect of capital expenditure. Any ordinary expenditure incurred by the appellant in connexion with the leases, such as the cost of collection of the royalties, has been duly allowed. For these reasons, which are substantially those given by the learned judges of the High Court, their Lordships agree with them in their conclusions. Accordingly, the appeal fails and should be dismissed. Their Lordships, in doing so, are in agreement with the current of judicial opinion in the Indian Courts. They may start by citing the decision of the Calcutta High Court in 1907 in Manindra Chandra Nandi v. Secretary of State for India (( 1907) I. L. R. 34 C. 257.), and the elaborate judgment of Mookerjee J. (Ibid. 283.), which has never been dissented from in India. Similar views were expressed in the comparatively recent cases in the Patna High Court to which full reference has been made in the judgments under appeal. 283.), which has never been dissented from in India. Similar views were expressed in the comparatively recent cases in the Patna High Court to which full reference has been made in the judgments under appeal. Their Lordships do not think it necessary to repeat here what has been so fully explained in these judgments. It is enough here to say that their Lordships substantially agree with them. They refer particularly to the judgment of Dawson Miller C.J. in Sri Raja Shiva Prasad Singh v. The Crown (( 1924) I L. R. 4 Pat. 73.). It may be added that on the question at issue there is no difference in principle between the effect of the Act of 1922 and its predecessor, the Act of 1886. Their Lordships are of opinion that the judgment of the High Court should be affirmed, and the appeal dismissed with costs. They will humbly so advise His Majesty.