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Issues:
1. Taxability of sum of Rs. 10 lakhs received as advances lease rent deposit. 2. Interpretation of the nature of the amount received - revenue receipt or capital receipt. Detailed Analysis: Issue 1: The appeal was against the CIT (A) order, which held that the sum of Rs. 10 lakhs received by the assessee as advances lease rent deposit is taxable as a revenue receipt. The facts involved the sub-lease of a property by the assessee to another entity, with an advance rent deposit of Rs. 15 lakhs to be adjusted against future rent payments. The ITO and CIT (A) held the amount as taxable based on precedents from Andhra Pradesh and Calcutta High Courts. Issue 2: The assessee contended that the amount was not taxable either as business profit or capital gain, citing a Tribunal decision in a similar case. The Tribunal analyzed the agreement terms and compared the case with a previous judgment involving a similar advance rent deposit scenario. The Tribunal noted that the amount was consistently shown as a liability in the assessee's balance sheets, indicating it was not income but an obligation. It distinguished between capital receipts and revenue receipts based on legal precedents from various High Courts and the Supreme Court. The Tribunal ultimately held that the sum of Rs. 10 lakhs received by the assessee was not taxable as revenue income, following the decision in the case of Mr. & Mrs. H.N. Kelawala. The Tribunal emphasized that the amount was treated as a liability by the assessee, to be adjusted against future rent payments, and therefore could not be considered as income for the year under appeal. The appeal was allowed, and the addition was deleted based on the established legal principles and precedents cited during the proceedings.
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