TMI Blog1970 (4) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... a complete annihilation of law. It must, however, be stated to the credit of Mr. Joshi, the learned counsel for the revenue, that he has made his best, but very discreet, efforts on behalf of the revenue by merely formulating his points without advancing any argument. The facts have just to be stated to be appreciated, no reference being necessary even to a text book of law, let alone decided cases. The question of law referred is : " ' Whether, on the facts and in the circumstances of the case, the amount of Rs. 95,620 received by the assessee-company as acquisition-compensation in respect of a portion of the lands held by the assessee on a lease agreement, is a capital receipt ? " The assessee is a private limited company which carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e grant of the said lease, the lessee shall be entitled to receive and be paid the whole of the compensation monies with any interest but no diminution shall be made in the agreement. If the lessee shall not become entitled to the grant of the said lease, the compensation monies with any interest shall be paid to the lessor. The lease shall contain a provision for the lessee to receive the whole of the compensation monies for any set-back during the lease, the lessee to continue to pay the full rent without reduction. In the event of any acquisition other than a set-back, the matter shall be governed by the Land Acquisition Act for the time being in force. " The Municipal Corporation of Greater Bombay gave a notice of acquisition of a por ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bay Municipal Corporation Act, 1888, contains elaborate provisions for demarcating of a road line and after the road line is demarcated it has to be officially published. There is no evidence that at the date of the agreement of lease any road line or set-back line had already been published, nor even that the preliminary proceedings had been started. It is quite clear that in the absence of any evidence or finding of such facts it must be assumed that at the date of the agreement there was not only no demarcated road line, but that even proceedings contemplating such demarcation had not been started. The Tribunal has observed : " There is no evidence whatever that the rent was not fixed as a whole for the entire plot of land as contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be entitled to receive and be paid the whole of the compensation monies with any interest earned thereon, but no diminution shall be made in the agreement diminution obviously refers to the monthly rent of Rs. 1,150. It provides that if the lessee shall not become entitled to the grant of the final lease, the compensation monies with any interest earned thereon shall be paid to the lessor. The agreement also contains a provision as to the rights and obligations of the parties if the set-back and acquisition takes place during the period of the lease which must mean after the execution of the lease. It further provides that the lease shall contain a provision that the lessee shall receive the whole of the compensation monies for any set-b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of the compensation. The clear idea on a commonsense analysis is that the compensation and the interest thereon earned by the lessee on its investment would off-set the continued liability of the lessee to pay the said rent in full without any deduction for the plot of land the use of, which the assessee would lose on its acquisition. It is nobody's case that acquiring lands, either outright or on lease, was the business of the assessee. In entering into this agreement of lease the assessee cannot be said to have traded in compensation on acquisition. The argument of the revenue that this sum of Rs. 95,620 is profit and liable to be brought to tax as such without even applying its mind whether it is a revenue or capital profit, comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a set-back and acquisition and payment of compensation would amount to an adventure in the nature of trade because the assessee had foreseen that there was going to be a profit. Mr. Joshi merely formulated these points, but he did not and in our opinion quite correctly -elaborate any of these points. The third point assumes that there was going to be an acquisition, but that fact has not been established and the assumption is therefore not justified. All the arguments covered by these three points have to be stated to be rejected and do not deserve to be placed on the high pedestal of requiring a reply. We, therefore, answer the question in the affirmative. The revenue to pay the assessee's costs. Question answered in the affirmati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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