2001 (6) TMI 197
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....as raised by the parties, it is necessary to bring in briefly the facts relating to the receipt of Rs. 99 lakhs. The assessee was provided a lease of godown measuring 4945 sq.ft. that was located in Sunmill Compound, Lower Parel, Bombay. The lease was so given by Mr. Francis Theodore D'Souza and Mr. Mahadeo Soma Tamboskar, who were partners in M/s. Crema Industries. The lessors in the instant case were lessees of the owner of the property, New Sunmill Co. Pvt. Ltd. The lessees of the owner of the property by means of an agreement dated 24th September, 1971 had leased out as a second lease in favour of the assessee. The lessees Mr. Francis Theodore D'Souza and Mahadeo Soma Tamboskar got their lease renewed for a period of 99 years on 27-1-1988. The second lessee, apparently the assessee, requested permission of the first lessee by means of letter dated 22nd January, 1993 to permit them to sublet a portion of the godown to the third lessee in the series. The first lessee accordingly on 29th January agreed to subletting by the second lessee, Le. the assessee. The assessee accordingly entered into a sub-lease with M/s. Turel Sales Corporation on 18th June, 1993 giving 3000 sq.ft. of th....
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....; Rs. -------------------------------------------------------------------------------- HO/91 30-3-94 DD922629 28-3-94 Zaran Trading 50,00,000 - 4688 Agencies BOM/92 31-3-94 597657 31-3-94 Turel Garments 20,00,000 92/0250 4709 31-3-94 &nb....
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....Corporation at or for the price of Rs. 1,65,00,000 (Rupees one crore sixty five lacs only) upon the terms and conditions therein mentioned, out of which the Assignees to pay Rs. 99,00,000 (Rupees Ninety-nine lakhs only) to the Confirming Party and the balance of Rs. 66,00,000 (Rupees sixty-six lakhs only) to the Assignor." Immediately after the said clause (i), the said agreement reads as under : 'AND WHEREAS the Assignees requested the Assignor to execute these presents and assign and transfer whatever rights, title and interest the Assignor has in the said land hereditaments and premises as hereinafter appearing to which the Assignor agreed to upon the Confirming Party joining in and executing these presents as hereinafter appealing. NOW THIS INDENTURE WITNESSETH that in pursuance of the hereinbe fore recited Agreement dated 19th July, 1994, and in consideration of the sum of Rs. 99,00,000 (Rupees Ninety-Nine Lakhs only) paid by the Assignee to the Confirming Party (the payment and receipt whereof the Confirming Party doth hereby admit and acknowledge and further acquit, release and discharge the Assignee for ever) and in consideration of the further sum of Rs. 66,00,000 (Rupe....
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....w consider the arguments advanced by the parties. At the outset the facts as above go to indicate that the entire arrangement was between the first lessee, the assessee and the third lessee who are the sub-tenant of the assessee. The third tenant in the series, who was sub-tenant of the assessee, wanted to be substituted in place of the first tenant which also required the assessee to move out. Clause (i) that is reproduced earlier shows that the third tenant Turel Sales Corporation had agreed to pay Rs. 165 lakhs to get off the right, title, interest that the assignor had in the property and because the first lessee had given on sub-lease to the assessee and had required vacation of both the lessee and the assessee, he had split up the total consideration of Rs. 165 lakhs into two portions. The first portion of Rs. 66 lakhs was given to the first lessee from whom the assessee had received the sub-lease. The second part of the consideration of Rs. 99 lakhs was received by the assessee. 6. The issue is, is it a case of surrender of tenancy or is it a case of transfer of tenancy. The agreement as was entered into between Mr. Francis Theodore D'Souza with Turel Sales Corporation in w....
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....within the meaning of section 2(14) of the Act. The term "transfer" is defined in section 2(47) of the Act as relating to capital asset and it includes sale, exchange, or relinquishment of the asset or extinguishment of any rights therein. The right, title etc. in the instant case was assigned in favour of the third tenant for a consideration and, therefore, it involved exchange. Consequent to such assignment in favour of the third tenant, the assessee gave away its right, title etc. in favour of the third tenant resulting in extinguishment of any right therein. Therefore, the transaction as could be seen from our discussion above is a case of transfer of a capital asset. Because the capital asset was held by the assessee for a long period of more than 36 months, gains from such transfer would result in long-term capital gain. 7. The claim of the assessee that it was surrender of tenancy rights, because there was an agreement between the assessee and the first lessee, cannot be accepted merely because of the existence of such an agreement. The substance and the nature of the transaction is what is the deciding factor and not the terms that are used in the agreement between the two....