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TMI Blog1989 (3) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... eed to provide alternate accomodation to the assessee (tenants). However, they were unable to procure one. Therefore, the purchasers made further negotiations with the assessee. As per that, the assessee was to yield up possession of the leased premises and relinquish all their rights on account of which the purchasers should pay Rs. 45 lakhs. This amount was received by the assessee from the purchasers during the previous year relevant to this assessment. 3. The character and complexion of Rs. 45 lakhs are the subject of controversy. It appears to as that the assessing officer initially was inclined to process this receipt under the provisions of capital gains. He, however, treated this as a revenue receipt and brought the entire amount to charge and be placed reliance upon the decision of the Supreme Court in the case of CIT v. Shamsher Printing Press [1960] 39 ITR 90. 4. The addition had been disputed in appeal by the assessee. The stand of the assessee was that Rs. 45 lakhs received from the purchasers was a capital receipt inasmuch as it was consideration received for giving up leasehold rights in respect of a factory premises. But it was claimed that the said receipt was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e quiet, vacant and peaceful possession of the said respective portions on the ground and first floor premises as set out hereinafter. " The above shows the situation that existed just prior to the agreement. The indenture witnesses (in clause 3) : " In consideration of the purchasers having agreed to pay aggregate sum of Rs. 45,00,000 (Rupees forty-five lakhs only) to the Tenants as lump sum consideration to enable the tenants to themselves arrange for alternate accommodation and as lump sum damages for losses and damages which the tenants may suffer or incur on account of such shifting and incidental thereto and surrender of their tenancy rights in respect of the said premises and out of which a sum of Rs. 20,000 (Rupees twenty lakhs only) is already paid simultaneously on the execution of these presents to the Tenants (the payment and receipt whereof the tenants do hereby admit and acknowledge and acquit, release and discharge the Purchasers from the Payment the receipt thereof) and balance amount of Rs. 25,00,000 (Rupees twenty-five lakhs only) is payable on Tenants delivering quiet, vacant and peaceful possessed of the said premises by the tenants we do hereby declare and co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... among other things, which had resulted on account of requisition order passed by the Government. Compensation was granted not only for vacation of the premises but also on account of loss of business. There was a specific claim in this behalf and in such circumstances Their Lordships held that it was a revenue receipt. This case law has no application to the present case which is entirely on a different set of circumstances. 10. We agree with the Commissioner (Appeals) that the entire compensation of Rs. 45 lakhs was towards relinquishment of the tenancy rights and that is a fair reading of not only was is stated in the preamble but in clause 3 of the agreement dated 10-12-1981. Such relinquishment or surrender of rights in a property is transfer in relation to a capital assest within the meaning of section 2(47), Income-tax Act. Reference may be made to the decision of the Gujarat High Court in the case of Rajabali Nazarali & Sons v. CIT [1986] 29 Taxman 419/[1987] 163 ITR 7. 11. It was contended for the assessee that though Rs. 45 lakhs is consideration for transfer of capital asset, there is no capital gains chargeable to tax since the asset had not been acquired incurring any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lease was rent paid in advance as an earnest deposit. Rent is payment towards use and occupation. Premium is consideration for the grant of lease. From the lease deed dated 26-12-1968 it is clear that no consideration had been paid for the grant of lease. There is no other material to show that the assessee had paid any other amount to obtain or acquire the leasehold rights. We, therefore, affirm the finding of the Commissioner (Appeals) that for acquiring the leasehold rights the assessee had not incurred any expenditure and the cost should be taken as nil. 13. Perhaps some of the cases cited by Sri Shah are distinguishable. Indeed they can be. In Clive Mills Co. Ltd.'s case, it was sale of loom hours and the capital asset was an intangible property which had been acquired on account of allotment. In the case reported in H. H. Maharaja Sahib Shri Lokendra Singhji the asset sold was a jagir property for the acquisition of which there was no cost in terms of money. Jagir is a Crown grant and as such element of cost is not involved at all. In Mrs. Shirinbai P. Pundole's case, it was a case of rejection of application under section 256(2). No doubt, their Lordships formulated the que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure was one which could not be disallowed under sec. 37(3A). It was argued for the revenue that the commission payment had the effect of sales promotion and as such the expenditure was one to which section 37(3A) applies. These amounts had been paid by the assessee to its dealers whenever they had exceeded the target. In support the decisions of the Tribunal in the case of Mopeds India Ltd. v. IAC [1984] 7 ITD 324 (Hyd.) and ITO v. Meera & Co. [1986] 15 ITD 227 (Chd.) were cited. In these cases, it has been held that payment made to dealers as an incentive to achieve certain target does not come under the mischief of section 37(3A). Following the same, we affirm the finding of the Commissioner (Appeals). 17. The last ground raised by the revenue is in regard to a disallowance made by the Income-tax Officer applying the provisions of section 43B. Here again there is a mistake in the ground in specifying amount. According to memorandum of appeal, the amount is Rs. 67,691 but from paragraph 16 of the order of the Commissioner (Appeals), the correct amount is Rs. 6,769. The learned departmental representative concedes this position. Rs. 6,769 was the amount payable by the assess ..... 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