9911796707
TMI Blog1990 (8) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... lakhs received by the assessee was a capital receipt and not chargeable to tax? The facts of the case, in brief, are that the assessee, during the relevant previous year, received ₹ 2 lakhs as salami for giving the third floor of premises No. 7, Red Cross Place, on leave and licence basis to Ramnagar Cane and Sugar Company Ltd. According to the Income-tax Officer, it was not a lease on long term basis nor was the agreement registered, it was merely an agreement of leave and licence which was for less than 20 years (5 years only in the present case). He observed that the provisions of the West Bengal Premises Tenancy Act, 1956, would apply, and the receipt cannot be treated as capital in nature. He held that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vance rent and that no evidence was led to show that the rent charged was low. He observed that, on the other hand, prima facie, it was seen that the rent per month agreed in the year 1977 could not be said to be low compared to the general rates prevailing in Calcutta at that time. He therefore, accepted the appeal by the assessee, following the decision in the case of Durga Das Khanna [1969] 72 ITR 796 (SC). Against the order of the Commissioner of Income-tax (Appeals), the Revenue came up in appeal before the Tribunal. The Tribunal dismissed the Revenue's appeal by observing that the Commissioner of Income-tax (Appeals) has given a finding that the rent charged was reasonable and this finding remains uncontroverted. The Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts which were considered by the Supreme Court in Durga Das Khanna [1969] 72 ITR 796 and this court in Purnendu Mullick [1979] 116 ITR 591. In Durga Das Khanna [1969] 72 ITR 796, the assessee had taken on lease premises for a term of 99 years with the right to assign the lease and alter the structure of the premises so as to convert it into a cinema house. After spending ₹ 35,000 on some alterations, the assessee executed a sub-lease by which the building was demised to the sub-lessees for 30 years. The sub-lessees agreed to pay to the assessee ₹ 55,200 towards the cost of erecting the cinema house and rent was agreed at ₹ 2,100 per month. On these facts, the Tribunal held that the said sum of ₹ 55,200 was recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mi constituted a capital receipt and was not taxable as income. On appeal, the Appellate Assistant Commissioner found that, even if payment of salami was influenced by the location of the property and the period of lease, it did not necessarily constitute an advance payment of rent. He held that, in any event, the difference between the fair market rent and the stipulated rent would not in fact be covered by payment of ₹ 50,000. The Appellate Assistant Commissioner accepted the contentions of the assessee and held that the receipt in question was a capital receipt. The Revenue came before the Tribunal and the Tribunal found that ₹ 50,000 had been paid by way of salami or premium and had been so recorded in the deed. The Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Ramnuggar Cane and Sugar Company to occupy the premises also ceased, and that is why the aforesaid leave and licence agreement was entered into. The Commissioner also came to a definite finding that the rent of ₹ 2.50 per sq. ft. per month in 1977 could not be said to be low compared to the generally prevailing rates in Calcutta at the material time. In our view, therefore, the principles laid down in the aforesaid decision of the Supreme Court in Durga Das Khanna [1969] 72 ITR 796 as applied by the court in Purnendu Mullich [1979] 116 ITR 591 will govern the instant case. The premium or salami paid in this case is a capital receipt. In that view of the matter, the question referred to this court is answered by ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
