9911796707
TMI Blog1987 (7) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... se legal heirs would give lease of the said property to the assessee for a term of 98 years from 1-6-1979 on yearly rent of Rs. 30,000 with an option on the part of the assessee at the expiration of the said term to renew the said lease for a further period of 98 years reserving the same rent and continuing the terms and conditions and covenants contained in the said lease (except the covenant for renewal) or to purchase the reversion at or for the price of Rs. 1,50,000. The possession of the said land was to be given to the assessee on execution of this agreement. The assessee was entitled under the said agreement to demolish the existing structure and put up or construct new structure. It was further agreed that the structures that might be put up or constructed by the assessee would be of the ownership of the assessee. It was also provided in the said agreement that the new structures to be constructed would be of a value of not less than Rs. 8,00,000 and that the said construction would be made within two years from the date of agreement. The assessee was required to deposit Rs. 2,00,000 with the legal heirs of Mrs. Parmeshwaribai as a security for the due performance of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Shri Tirupati Builders at Bombay. The document has been executed in, favour of Canara Bank, who has been described as the Sub-Lessee/Purchaser. After recital of the above facts, it is mentioned in the document that the concurrence of the Lessors (Administrators of the estate of late Mrs. Parmeshwaribai Vishandas Raheja ' the Head Lessors ') had been obtained by the assessee and that with the said consent the assessee was granting to the sub-lessee a sub-lease for a term of 98 years from 1st June, 1979 of the said land on an yearly rent of Rs. 30,740 to be paid on the 20th day of June in each year without any deduction. About this sub-lease, it was further mentioned that it was renewable for a further term of 98 years and that the sub-lessee/Purchaser was entitled to purchase the reversion in fee simple in the land demised upon the payment of Rs. 1,50,000. There was covenant of forfeiture of sub-lease for failure to pay yearly rent and for breach of the other covenants of sub-lease. There was then a recital about the conveyance of the building standing on the land. In that portion of this deed, it was mentioned that the consideration for sale of the said superstructure known as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the same accrues due under the sub-lease towards the repayment of the said sum of Rs. 30,12,520 until such time as the said sum is repaid and/or adjusted in full. No interest will be charged by the bank on this amount of Rs. 30,12,520." 9. There is a covenant in this document that if for any reason whatsoever Canara Bank would be evicted from the premises sub-demised to it by the sub-lessor or if the sub-lessor would cease to be the lessee of the said property or to have any interest in the sub-demised premises or if the sub-lease was cancelled or terminated or declared void or nullity under any circumstances and for any reasons whatsoever, the Lessors and the beneficial owners would at the option of Canara Bank accept Canara Bank as direct lessee of the premises demised to it at the same rent and on the same terms and conditions as are contained in the said ' sub-lease-cum-conveyance ' executed in its favour and in that event the beneficial owners would claim from the sub-lessor and the sublessor would pay to the Lessors/Beneficial Owners, the balance of the amount remaining unadjusted and outstanding of the said sum of Rs. 30,12,520 and the same would be treated as paid b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The price for which the building is sold is mentioned at Rs. 12,16,000. Consequently, according to the deed of conveyance what is sold is the building and the price received by the assessee for sale of the building is Rs. 12,16,000. The initial presumption would be that what is mentioned in the registered document about the premises transferred and price paid is correct. As far as the demised land is concerned, it is not the subject-matter of sale. Admittedly, the assessee was not the owner of the demised land. Consequently, the assessee could not have sold the demised land. The assessee was a lessee of the demised land. The assessee had only a leasehold interest in the demised land. The recital in the registered document is that the assessee has sub-let the demised land with the consent of the owners. In the circumstances it cannot be said that the demised land had been sold by the assessee to Canara Bank. 13. As far as demised land is concerned, the registered document indicates that the assessee has right to receive Rs. 30,740 as yearly rent. This rent is payable on 20th June every year. As far as amount of Rs. 30,12,520 is concerned, the relevant document describes it as dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation. They have not treated any part of Rs. 30,12,520 as price of property purchased. The sum of Rs. 30,12,520 has been shown as " sundry asset/sundry debtor's A/c ". Rent of Rs. 30,740 was debited by them to rent of the premises and this amount was adjusted from the deposit amount. Thus the account of the Canara Bank is in conformity with the tenor of the documents. It is admitted before us that the assessee had shown Rs. 30,12,520 as liability in Wealth-tax Returns and this was accepted in wealth-tax assessment. It is not the case of the department that the legal heirs of Smt. Parmeshwaribai were not showing the demised land as property owned by them. In fact the administrators of the Estate of Parmeshwaribai have created equitable mortgage in respect of land in favour of the Bank. The conduct of all the concerned parties is in conformity with the tenor of the documents in question. 17. In the acquisition proceedings, the District Valuation Officer had valued the superstructure at Rs. 19,94,630. As already stated land has not been transferred and as such value of Rs. 17,36,800 pertaining to land mentioned therein is not relevant. The value of property sold could not be Rs. 42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roposal. All the three terms were to be accepted for entering into the transaction. When rent of 98 years is to be paid in advance, the amount of advance rent, from a Purchaser's point of view, would represent expenditure on acquiring the property because rent would also form an item of expenditure for acquiring the property. However, from legal point of view rent receivable by sub-lessor for use of land by sub-lessee would not represent price received for transfer of any property by sub-lessor to sub-lessee. 23. The advance rent received would not in law be the price for property transferred. Consequently, the above recitals in the proposal sent by the Officers of Bombay Circle to the Board of Directors of the Bank would not give rise to Inference that Price received by the assessee for sale of property was Rs. 42,62,520. It must be emphasised that in the last portion of the resolution proposed to be passed the expression is " Rs. 42,62,520 to be paid as detailed hereinbefore ". The details given before expressly mention that Rs. 30,12,520 would represent a deposit to be adjusted towards yearly rent and as such when those words are read in their real context they do not lead to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er-valuation in the deed of conveyance in which the price of property transferred (viz., building " Sangeeta " is mentioned at Rs. 12,16,000 and liability to pay rent for land taken on sub-lease is mentioned at Rs. 30,740 per year. There is no misrepresentation of facts in the reply given by the assessee in the acquisition proceedings. 27. In para 19 of his order, the learned Commissioner of Income-tax (Appeals) has observed that the Income-tax Officer had taken the view that consideration received for transfer of building was Rs. 12,16,000 + Rs. 28,00,000 and that even if this was not correct the receipt of Rs. 28,00,000 would be a business receipt in the hands of the assessee because it should be deemed to be a receipt for transfer of leasehold rights which constituted stock-in-trade of the assessee. Shri Jetley has not raised this plea and it appears obvious that the said view expressed by the learned Commissioner of Income-tax (Appeals) cannot be sustained. As already stated, there is no transfer of lease-hold rights. The assessee has sub-let the demised land. The amount received as deposit with stipulation that rent as and when they would fall due could not be regarded as c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities to hold that interest of sub-lessor had come to an end. In the present case the substance of the transaction is the same as described in the documents and not in any way different therefrom. 30. Another principle, we have to bear in mind is that the apparent should be considered to be real when there is no collusion between the parties. In the present case the contracting party is a nationalised bank acting through Board of Directors. There is no suggestion that the Board of Directors could have colluded with the assessee for gaining any personal advantage. The learned Commissioner of Income-tax (Appeals) has drawn an inference that they had colluded for saving stamp duty and registration charges (Para 25). We are unable to share this view. The nationalised bank could not have any objection to payment of higher stamp duty and registration charges if the document incorporating the real transaction necessitated payment of higher stamp duty, and higher registration charges. Another inference of the learned Commissioner of Income-tax (Appeals) is that the officers of the bank " agreed to sign manoeuvered documents ". We are unable to subscribe to this view. The bank was r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
