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TMI Blog1991 (8) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... a commercial property. The property initially was under lease with M/s Chandigo Sugar Mills Ltd. As a consequence of the drawing up of the Master Plan forDelhi, certain areas were marked as usable for commercial purposes and one such area was the adjoining areas in and aroundConnaught Place,New Delhi. The Master Plan for the development ofDelhiwas given the statutory recognition by the Statute Delhi Development Act, 1957. This Act prescribed the use of the land in various areas and thus, contrary use of the land in those areas was prohibited or would be treated unlawful. M/s Chandigo Sugar Mills Ltd. (hereinafter referred to as ' applicant '), had moved an application to the New Delhi Municipal Committee (NDMC) on Oct. 2, 1990, for the construction of a multi-storeyed building on plot no. 27, Barakhamba Road, by submitting the building plans, for sanction of the construction of the multi-storeyed building. NDMC onNov. 16, 1990after processing the plans, sent a set of the plans to the Land Development Officer, Government of India, attached to the Ministry of Works, Housing Urban Development. In this communication, (as stated by the assessee in its plaint before the Delhi High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of land no. 27,Barakhamba Road. In the terms it had specified the amount of additional premium of Rs. 9,19,771, and interest on additional premium upto Aug. 28, 1976 amounting to Rs.4,25,025.70 and thereafter at Rs.7,664.76 per month upto the date of receipt of the payments in this office, additional ground rent of Rs. 1,34,437.73, interest on the additional ground rent upto Sept. 14, 1976, and thereafter, Rs. 1,060.71 per month, upto the date of receipt by the said office, payment of ground rent from Jan. 15, 1971 to Nov. 4, 1976, together with interest for belated payment, additional ground rent in perpetuity, interest on the same, revised ground rent from Nov. 15, 1976, all aggregating to Rs. 15,41,141.53. The assessee wrote to the then Minister for modification of the terms and conditions onDec. 27, 1978and again onApril 21, 1979. The reply of the Minister datedJune 5, 1979, indicated that, interest is payable on the entire amount which became due for payment on the crucial date. The assessee vide its communication dt. April 29, 1989 to L DO, referring to its letter to the Minister in June 1979 stated that, the terms as provided by the lawyer of L DO have been accepted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the fact that, the silence on the part of L DO from June 15, 1979 to April 29,1989 was impossible and that the payment as made on April 29, 1989 indicated that the dispute of contractual liability got settled only in 1989, hence, there was no liability in the earlier years. The revenue placed reliance on the Supreme Court ruling in CIT v. Swadeshi Cotton Flour Mills (P.) Ltd. [1964] 53 ITR 134 ; in the Bombay High Court ruling in CIT v. Phalton Sugar Works Ltd. [1986] 162 ITR 622 and in the Calcutta High Court ruling in CIT v. Soorajmull Nagarmull [1981] 129 ITR 169. 6. The rival contentions on the issue have been very carefully considered along with the relevant documents that have been placed on our record, which are purported to have been placed on the records of the authorities below, which has not been disputed by the departmental representative. 6.1 The appellant had placed at page 24 of the paper book, the copy of the order of the Delhi High Court datedOctober 20, 1982, which reads " The application is not opposed. It is allowed as prayed. Amended petition be filed within 10 days with copy to counsel for the respondents who may now file return to the amended peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amply clear from the officers of the L DO inspecting the property sometime in 1972, which was followed by the notice of re-entry for violating the clauses of the agreement, of putting to use the land for commercial purposes, which was not so allowed. The lease agreement between a lessor and lessee is a pure contract between the two parties affecting their mutual rights. Any modification of the lease agreement results in a pure modification of the earlier contract between the two and any liability arising as a consequence of modification of the contract gives rise to a contractual obligation and liability. L DO no doubt is a wing of the Government of India and it might be re-modifying the earlier lease agreement as a consequence of the Statute Delhi Development Act of 1957, but, the contract of lease between L DO and the assessee remains a simple business transaction, binding the two to adhere to the terms and conditions specified in the lease-agreement, and any violation of any of the pan of the lease, would result in the breach of contract and for regularization of such breach, if the lessor demands any compensation, such a compensation is contractual simpliciter. A statutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was refused in June 1979. The assessee alleges to have written to the then Minister vide it communication dt.June 15, 1979, which is reproduced for the sake of facility. " We are in receipt of your letter no. D.O.No.LI(9)/148(50)/75/2480 dated5th June, 1979regarding 27,Barakhamba Road,New Delhi. Though what we have mentioned in our letter dated 27th December, 1978 is certainly a discrimination in giving the terms for our Project in comparison to the terms given to 19, Curzon Road, but as your goodself does not agree with this, we have, under the circumstances, no other choice but to accept the terms given by the Land Development Officer in order to avoid litigation. We, therefore, request you to please direct the Land Development Officer to prepare the necessary documents for execution by us according to the terms for withdrawal of the Re-entry orders, to regularize the Project and also enable us to pay the amount and withdraw the Writ Petition from the High Court." 6.4 The assessee waited for little over ten years before making full payment of the additional premium, vide its letter to the L DO datedApril 29, 1989. In para 6.2 above, we have clearly observed, that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee does not foster any responsibility on L DO When L DO has not responded to this offer, it only goes to indicate that, it had stuck to its earlier demand, which has been refuted by the assessee by raising of counter offer, and therefore, this gives a clear indication of the assessee disputing the contractual liability. Hence, the claim of the assessee, that, the liability had accrued to it is totally unfounded and, therefore, rejected. 6.5 The claim of the assessee is, that, its case is squarely covered by the special bench decision in Andhra Pradesh Paper Mills Ltd.'s case, which we shall now evaluate. In this case, the agreement between the State Government and the assessee, by which the assessee was to supply bamboo on payment of royalty, which was to be revised after five years. The term of five years ended onSept. 30, 1980. The State Government intimated the assessee on Feb. 6, 1981, that, the Government is still working the modalities of the revision of royalty and desired that, the assessee provide an undertaking that, it shall pay the royalty as per the revised rates as and when it was finalized. This was accepted by the assessee onFeb. 14, 1981. The rev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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