9911796707
TMI Blog1960 (2) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... that decision was confirmed on appeal by the Appellate Assistant Commissioner and by the Tribunal on second appeal. Against the decision of the Tribunal the assessee applied under section 66(1) of the Indian Income-tax Act and the question which has been forwarded to this court by the Tribunal is in these terms: Whether on the facts and in the circumstances of the case and on a proper construction of the lease deed dated 14th February, 1948, the income from the property which was covered by the said deed and which the applicant company purchased for ₹ 4,00,000 was assessable under section 9 or under section 12 of the Act? The question as framed assumes that the property covered by the indenture dated February 14, 1948, was purchased by the assessee for a sum of ₹ 4,00,000. If that were so, the answer to the question would be self-evident; but on hearing learned counsel on both sides, we have come to the conclusion that the question as framed does not bring out the real point in controversy between the parties, and, accordingly, we reframe the question in the following manner: Whether on the facts and in the circumstances of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 for the next 10 years, ₹ 5,000 for the next 10 years and ₹ 6,000 for the next 6 years which is the residue of the term. The lease contains various conditions to be observed by the lessee. The sum of ₹ 4,00,000 was to be paid by the lessee in the following manner: ₹ 1,00,000 was to be paid before the execution of the lease and the balance of ₹ 3,00,000 was to be paid in eight equal half-yearly installments of ₹ 37,500 each. According to the assessee, the lease is a single demise of the land together with all the structures standing thereon for a term of 66 years, whereas according to the Commissioner of Income-tax the lease can be divided into two parts, one part relating to the land underneath the structures and another part relating to the structures standing on the land. According to the Commissioner of Income-tax, the assessee company is a lessee in respect of the land underneath the structures, but it is the owner of the structures standing on the land. Mr. Mitra appearing for the assessed company, at one stage suggested that the assessee company had no opportunity to meet this case and that the question that the assessee company is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and clauses II(2) and IV(5), I held that by the deed the lessor really intended to sell the existing structures for a sum of ₹ 4,00,000. This conclusion is also supported by the fact that in clause IV(3) of the lease it is provided that in case of compulsory acquisition of the premises the lessor will get the entire compensation in respect of the land and the lessee will get the entire compensation for the old and existing structures, buildings or erections. Clause IV(4) of the lease further provides that in case a betterment fee is levied within twenty-five years from the date of the lease in respect of the demised properties, the lessee will be able to pay such betterment fee. These provisions, in my opinion, leave no room for doubt that by the lease the lessor was conveying his title to the existing structure to the lessee. Mr. Mitra, however, relied upon certain other clauses in the lease which, according to him, are inconsistent with the right of ownership of the lessee. These clauses are clause II(4), clause II(6), clause II(7), clause II (11) and clause II(12). I shall take each of these clauses separately. Clause II(4) requires the lessee to erect on the site of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contravention of the provision of clauses II(4) and II(9) of the lease and the lessor also retained his right to file a suit and to have a receiver appointed, in case the monthly rent reserved by the lease was not duly paid by the lessee and in case the installment of the price for the old and existing structures remained unpaid. Clause II(10) and clause II(11), which prohibit the lessee from storing any inflammable material on the demised premises without the previous consent in writing of the lessor, are, in may opinion, intended to protect the lessor's right under the forfeiture clause which is clause IV(1) and also clause IV(5) of the lease. Clause II(12) of the lease takes away the lessee's right to assign its interest in the demised premises without the consent in writing of the lessor. It is argued on behalf of the assessee that if the lessee became the owner of the existing structures, this provision against alienation would be void and it is argued that this restriction against alienation can be upheld only upon the hypothesis that the lessee was not the owner of the existing structures. Mr. Meyer appearing on behalf of the Commissioner of Income-tax has relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment is properly made in respect of the building under section 9 of the Indian Income-tax Act. If on a construction of the indenture of lease in the present case, it is found that although the land remained under the ownership of the lessor and the existing structures became the property of the lessee, as I have already found, there can be no escape from the conclusion that the principle of the decision in the Ballygunge Bank case applies to the facts of the present case. I should mention at this stage that in the Ballygunge Bank case the lease was for a term of forty years and on the expiration of the period of forty years the lessor had the right to take possession of the entire land with all the structures built upon the land by the lessee. In the case before us the lease is for a term of sixty-six years in the first instance with a right of renewal for a further period of thirty-three years and the lessee is given a period for twenty-five years within which he is to pull down the old and existing structures and rebuild new structures and the new structures, as soon as they are rebuilt, are to become the property of the lessor. Mr. Mitra was fair enough to invite our attent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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