Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2014 (4) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (4) TMI 486 - HC - Income TaxNature of expenses – Revenue or capital – Lease rents paid - Whether the Tribunal was right in holding that a lump sum paid by the assessee being lease rentals paid to Maharashtra Industrial Development Corporation is a revenue expenditure – Held that:- The transfer in favour of the assessee was absolute i.e., all rights, title and interest, which were derived by IFML were absolutely transferred in favour of the assessee – the decision in Palshikar (HUF) vs. CIT (S.C) [1988 (5) TMI 3 - SUPREME Court] followed - the lease for a long period namely 99 years, and the assessee has parted with an asset of an enduring nature, namely, the rights to possession and enjoyment of the properties leased for a period of 99 years subject to certain conditions on which the respective lease could be terminated - the grant of leases amounts to a transfer of capital assets as contemplated u/s 12B of the Income Tax Act, 1922 - thus, the nature of transaction amounts to a transfer of a capital assets. The assignment deed is of much leasehold interest, such assignment must be approved by MIDC and on approval, assessee had admittedly paid a further sum to the Corporation - it is difficult to draw inference of the agreement only to be treated as a sub-lease and not an assignment - the assignment deed itself does not say anything about the reversion of the property back to the hands of the assigner namely, IFML - On the other hand, the rights of the assignor on approval of the assignment comes to an end in toto - mere use of the word 'lease' or the fact that a long term is fixed would not by itself make the document in lease - there was no real distinction between mischief of such a transfer in perpetuity and a transfer for the long period of 96 years - a permanent lease is as much an alienation as a sale - the lump sum amount paid does not make a permanent lease any the less an alienation than a sale – thus, the order of the Tribunal is set aside – Decided in favour of Revenue.
|