TMI Blog2009 (7) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... vested with the lessor and the pre-emption clause gave right to the lessee to pre-empt any sale by the lessor to third parties without selling the same to the lessee. This clearly showed that the entire land was transferred by the lessor ro the lessee. Both the appellate authorities had committed an error in determining the value of the property as declared by the assessee. Thus, order were to be set aside and the of the Assessing Officer restored. - 137 of 2004 - - - Dated:- 31-7-2009 - V. GOPALA GOWDA and ARAVIND KUMAR JJ. M.V. Seshachala and K.V. Aravind for the appellant. S. Parthasarathi for the respondent. JUDGMENT The judgment of the court was delivered by 1. Aravind Kumar J.-The above appeal is filed by the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two independent sale deeds dated November 30, 1957 and December 30, 1958. The said property came to be leased out by the said Sri N. Srirama Reddy in favour of S. V. Properties under a perpetual lease agreement dated November 27, 1980. The assessee under the said lease was being paid annual rent of Rs. 3,000 from June 1, 1986 and as consideration towards lease and 16,525 sq. ft. of the built-up area of the residential flats together with Rs. 6 lakhs non-refundable security deposit was paid to the assessee by the lessee, i.e., S. V. Properties. It seems that the construction of the flats was extended by a number of years. 3. The Assessing Officer while carrying out the recomputation found that capital gains had been computed by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this by variable discounting to the value of the fiats as on November 27, 1980, arrived at Rs.28,81,767 and came to the conclusion that the sale consideration for 11 flats including the unsold flat would be Rs. 46,61,000 and the average sale consideration for each square foot was arrived at Rs. 332.335 by adopting the said value. Further, the Assessing Officer also added the interest-free advance received by the assessee for the entire period of perpetual lease in computing the capital gains tax and accordingly passed the assessment order on March 31, 1994. 5. The assessee being aggrieved by the same filed an appeal before the Commissioner of Income-tax (Appeals), the said appeal resulted in success and the said order of the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to substitute the figures of Rs. 17,33,307 as capital gains as against the amount of Rs. 28,81,767 determined by the Assessing Officer. A perusal of the lease deed dated November 27, 1980 would show that the lessor will be the absolute owner of the built-up area. Clause (iv) of the said agreement would be of relevance to consider the rival legal contentions and consider the substantial question of law that is framed in this appeal. Hence, it is extracted hereinbelow : "The lessor shall be the full and absolute owner of the aforesaid built-up area and is at perfect liberty to sell, lease, mortgage or deal with it in any manner he likes." 8. In the said lease deed it is nowhere mentioned that the proportionate land pertaining to 11 flats ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onate land had also been given by the lessor to the lessee and what was conveyed back was also proportionate land of 11 flats. Hence, the contention of the assessee that the undivided share in the land was not belonging to the lessee and has continued to belong to the assessee does not hold water as is seen from the lease deed dated November 27, 1980, which is perpetual lease and particularly clause 20 which reads as follows : "In the event of the lessor desiring to sell the residuary right, title and interest in the schedule property, he shall offer the right of pre-emption to the lessee or its assignees or nominees including the private limited company or society that may be incorporated and registered under the Companies Act, 1956, or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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