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TMI Blog1985 (12) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... f 5 years. The lessee had deposited a sum of Rs. 3 lakhs for the security of the theatre. Under clause 20 the lessee stated as follows: "I have agreed that due to any reasons if I abandon my right to exhibit the pictures within 5 years, then you may forfeit my deposit amount. And further, I have no right to ask for a refund of the amount. Further, I am liable for your legitimate loss." On 16-8-1976 the lessee discontinued the exhibition of films and the theatre reverted to the assessee. The sum of Rs. 3 lakhs was, therefore, forfeited. On these facts, the assessee claimed that this receipt of Rs. 3 lakhs was a capital receipt and not liable to tax. While the ITO rejected this claim, the Commissioner (Appeals) accepted it. The reason giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly rent. In such a breach of contract we must remember that under section 74 of the Indian Contract Act, 1872, the lessor would be entitled only to reasonable damages which could at best be the rent which he would fail to receive if he is not entitled to let the property out again. If the amount exceeded such an amount of compensation the sum stipulated in the contract will be a penalty and not enforceable. In the present case, the assessee has itself run the theatre without letting out it again and hence, there is no measure of the actual damages incurred by the assessee by the premature termination of the lease deed. In the circumstances and in view of the fact that the lessee has acquiesced in the forfeiture in the sum of Rs. 3 lakhs we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal of the revenue is with reference to the addition of Rs. 33,000 being the value of cash credits which was deleted by the Commissioner (Appeals). The Commissioner (Appeals) has found that the creditors being the partners had sufficient agricultural income and hence, the cash credits in their names could not be regarded as unexplained income of the assessee-firm. In the face of the evidence showing that they had sufficient agricultural income we are unable to entertain the objection of the revenue to this part of the order of the Commissioner (Appeals). 6. In the cross-objection of the assessee, ground Nos. 2 to 4 relating to the regularity of the assessment have not been pressed. Ground No. 5 pleads for an opportunity before impos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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