9911796707
TMI Blog2016 (1) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... ingh Budhuria Vs CIT Bengal (1933 (3) TMI 20 - THE PRIVY COUNCIL) and also by the decision of CIT Vs Sitaldas Tirathdas [1960 (11) TMI 17 - SUPREME Court] . In both these cases, there was a charge for maintenance created against the assessee. In the case before us too, as evident from the above discussion, the lease rent was to go to Shri Sameer Bojwani by virtue of the specific clauses of Leave and Licence Agreement dated 27.11.2004. Since it stood pre-created against the assessee and in keeping with the enunciation by the Privy Council in Raja Bejoy Singh Budhuria (supra), the income must not be deemed to have reached the assessee, since it was actually earned by Shri Samir Bojwani. Therefore, the case of the present assessee falls squarely within the ratio of Raja Bejoy Singh Budhuria (supra) as considered in Sitaldas Tirathdas (supra). - Decided in favour of assessee. Addition on deemed interest earned by the assessee - Held that:- As mentioned elsewhere, the security deposit was taken by Shri Samir Bojwani pursuant to the Leave and Licence Agreement entred by him with M/s. Accor Radha Krishna Corporate Service Private Limited and since as mentioned elsewhere, the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the flat on 10th May 2005 from Mr. Samir Bojwani being the owner of flat, she is entitled to the Leave License Rent of ₹ 44,00,000/-, which is liable to be charged to tax under the head Income from House Property as per provisions of section 22 23 of the Income Tax Act 1961. To this, we would like to submit that the Assessee has purchased the flat at 'SAMSHIBA' vide Agreement dt 10th May 2005 on Ownership Basis from the Vendor Mr. Samir Narain Bhojwani subject to Leave License Agreement which was executed between the Vendor the Licensee namely Accor Radha Krishna Corporate Services Pvt. Ltd on 27th November 2004 and registered at the office of the Sub-Registrar of Assurances at Bandra under no BDR 1-01304-2005 on the 14th February 2005. In other words, the Leave License Agreement was executed by the Vendor namely Samir Bhojwani with Accor Radha Krishna Corporate Service Private Limited on 27th November 2004 which is prior to the date of Agreement of Sale which was executed with the Assessee on 10th May 2005 with Mr. Samir Bhojwani. Under the said Leave and License Agreement the Vendor i. e. Mr. Samir Bhojwani as Licensor therein has received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on has been received on 16th February 2006, as per the provisions of section 2 (47) (v) of the Income Tax Act 1961 transfer in relation to capital asset includes any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53 A of the Transfer of Property Act 1882. Since the Assessee has received the possession of property on 16th February 2006, the transfer date would be effective from 16th February 2006 not on 10lh May 2005. Even if the transfer date is taken from 16th February 2006 the assessee would be entitled for rent from 1st December 2006. The sum of ₹ 44,00,000/- received from Accor Radha Krishna Corporate Services Private Limited on 16th February 2006, pertains to advance rent of ₹ 44,00,000/- i. e. ₹ 4,00,000/- per month from 1st December 2006 to 31st March 2007 which is offered for tax in the financial year 2006 - 07 relevant to Assessment Year 2007- 08. As the Assessee has not received any rent during the financial year there is no reason why the same should be taxed in the financial year 2005- 06. Without pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of the obligation which is the decisive fact. There is a difference between an amount which a person is obliged to apply out of his income an amount which by the nature of the obligation cannot be said to be a part of the income of the assessee. Where by the obligation income is diverted before it reaches the assessee, it is deductible; but where the income is required to be applied to discharge an obligation after such income reaches the assessee, the same consequence, in law, does not follow. It is the first kind of payment which can truly be excused not the second. The second payment is merely an obligation to pay another a portion of one's own income, which the income never reaches the assessee, who even if he were to collect it, does so, not as part of his income, but for on behalf of the person to whom it is payable . Hence this is a case of diversion of income by overriding title and certainly not a case of application of income to discharge an obligation. Relying on the principle of diversion of income by overriding title laid down in Raja Bejoy Singh Dudhuria (1 ITR 135) and the case of CIT V Sitaldas Tiradhdas (1961) 41 ITR 367 (SC) and in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s long as the transaction is not a colorable device that Income Tax Department cannot overrule an agreement between two parties which is Registered with the Registrar of immovable property. As per the Registered Agreement of Sale dt 10th May 2005 entered into by both the parties, have mutually agreed that the rent which is received in advance by Mr. Samir Bhojwani for the period 10th May 2005 to 30th Oct 2006 the Assessee (i. e. Purchaser) will not be entitled for the same the Assessee has agreed to that effect. The Assessee has also given copy of confirmation letter from Mr. Samir Bhojwani along with copy of acknowledgment of Income Tax Return filed by him for the Assessment Year 2006-07, wherein he has offered the Rental Income for tax, hence the learned Assessing officer will have tax the Assessee based on the facts available on records unless he is able to prove it is a colorable devise. In light of the said facts circumstances of the case, the assessee has proved beyond doubt that the income was neither actually received by her nor was it the same could be charged to tax u/s. 22 or 23 of the Income Tax Act 1961. With this we have submitted you all the inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment dated 10.5.2005 by which the impugned flat was purchased by the assessee. Vide Clause (w) of this agreement, it was made clear that the impugned flats are subject to a registered Leave and Licence Agreement executed between Shri Samir Bhojwani with Accor Radha Krishna Corporate Service Private Limited. The terms and conditions of the said Leave and Licence Agreement were also made clear to the assessee. Vide Clause-3, the purchase consideration was fixed at ₹ 3.75 lakhs and the Stamp Duty value has been assessed on this consideration only. Vide clause-5, it was made very clear that the purchaser (assessee) shall not claim from the seller Shri Samir Bhojwani any part of the said sum of ₹ 88,00,000/- being the license fees for the period of 22 months commencing on 1st February, 2005 and ending on 30th November, 2006. Vide clause-7, the assessee was given an option to continue the said Leave License with the same licensee i.e. Accor Radha Krishna Corporate Service Private Limited. The most important clause is Clause-8 wherein it is specifically mentioned that the purchaser (assessee) is entitled to receive the physical possession of the said premises only on expiry ..... X X X X Extracts X X X X X X X X Extracts X X X X
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