9911796707
TMI Blog2006 (1) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... nd with that understanding the licensee has paid a sum as interest-free security deposit. Having read both these lease and license agreements, we are of the considered opinion that it is not a case where it can be held that assessee has taken the lease from month to month or for a period not exceeding one year or excluded from the clutches of sub-section ( iiib ) of section 27 of the I.T. Act. We, therefore, hold that assessee acquires a permanent right in tenancy in the property with the permission to sublet and make an addition and alteration in the property, as such, he is deemed owner of the property as per provision of section 27( iiib ) of the I.T. Act. In the instant case, assessee has subletted this property only to one person against the fixed rent which according to the assessee was called to be a license-fee. From the perusal of the record, we do not find any iota of evidence on the basis which it can be said that assessee was engaged in the business of licensing the tenanted premises as there was only one tenant in the premises and assessee was not required to do any other activity except recovering rent. We, therefore, of the considered view that rental income earned b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part thereof. The Assessing Officer accordingly held that the assessee with the tenancy rights over the last 9 years i.e., from September 1990 will be deemed owner of the building and is liable to be taxed under section 22 as income from house property, not as business income which the assessee has claimed. In support of his observations, the Assessing Officer has placed reliance upon the Judgment of the jurisdic-tional High Court in the case of CIT v. Arvindkumar Udhavji [1995] 213 ITR 551 (Bom.). The Assessing Officer accordingly disallowed the other expenses incurred by the assessee after holding that the assessee is entitled for deduction as per section 24 of the Act. Accordingly, 1/5th of the collected rent was allowed as deduction on account of repairs and maintenance. 3. Aggrieved, the assessee has preferred an appeal before the CIT(A) with the submission that the Assessing Officer has wrongly placed reliance upon the Judgment of the jurisdictional High Court in the case of Arvindkumar Udhavji ( supra ) whereas this judgment was rendered in different context. A general principle cannot be laid down in these type of cases that every letting is only to earn income from house p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended that the assessee has obtained the premises on lease from Shri Basantkumar Somani Memorial Trust on monthly rent of Rs. 750 payable by the lessee to the lessor on or before 10th of each and every month of lease in advance. In this lease agreement, nowhere it has been mentioned that the lease was executed from month to month. The property was given on lease to the assessee without specifying specific time. Meaning thereby, it was a lease in perpetuity and the lessee was given all powers to make addition and alteration in the property and also to sublet it to other tenants. The learned DR further pointed out that this leased premises was taken on lease on 3rd September, 1990 and till the impugned assessment year, no fresh lease was executed and by virtue of original lease deed, assessee was holding the possession. During the impugned assessment year, the premises was sub-letted to Prime Securities Ltd. against a monthly rent of Rs. 1,12,382 and besides it licensee has paid a sum of Rs. 13,48,596 as interest-free deposits which shall be repaid by the licensor to the licensee on termination of this lease and license. The learned DR further contended that it is settled position of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from month to month in favour of the assessee. Only the monthly rent was fixed at Rs. 750 payable by the lessee to the lessor on or before 10th of each and every month of lease in advance. By this sentence in the entire lease deed, the lease cannot be termed to be from month to month. A lease from month to month has a different meaning and in that case the lease starts from the first day of the month and ends on the last day of the month, thereafter, it further renews for another period of month and ends on the last day of the month. During the period of month, it cannot be terminated. It can only be terminated at the end of the month. 7. We have carefully gone through the provision of section 27( iiib ) of the Act according to which, a person who acquires any right (excluding any rights by way of lease from month to month or a period not exceeding one year) in or with respect to any building or part thereof, by virtue of any such transactions as is referred to in clause( f ) of section 269UA shall be deemed to be the owner of the building or part thereof. We are, therefore, of the view that the Legislature has excluded the short-term of tenancies from the category of deemed owner ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
