TMI Blog2005 (6) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... even if tenancy was not genuine, value of the flat received could not have been treated as income. 3. Briefly stated, the facts of the case are that the assessee, during the previous year relevant to the assessment year under appeal, had received one flat admeasuring 1,500 sq.ft. in a building known as Milton Tower , Khar, Mumbai, from its own sister concern, namely, M/s. Ajay Builders. The value of the said flat was shown at Nil . The Assessing Officer took the value of the said flat at Rs. 40,00,000 and added the same, after giving statutory deduction under section 10(3) of the Income-tax Act, 1961, to the total income returned by the assessee. It was contended by the assessee before the Departmental authorities that the assessee was a tenant of the outhouse standing on the plot of land on which M/s. Ajay Builders (sister concern) had subsequently constructed Milton Tower after demolishing the old building including the outhouse standing on the said plot. It was further submitted that the said flat was given free of cost to the assessee by M/s. Ajay Builders in lieu of the assessee having surrendered its alleged tenancy rights over the said outhouse. The Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... later between the assessee and its sister concern, M/s Ajay Builders. The second issue was as to what was the nature of receipt in the hands of the assessee if there was no genuine tenancy or agreement, as aforesaid. The learned CIT(A) examined the matter in detail and confirmed the action of the Assessing Officer by a well reasoned order against which the assessee is in appeal before the Tribunal. 6. In support of the appeal, the learned Authorised Representative for the assessee ( AR in short) invited our attention to the aforesaid factual aspects of the case and submitted that tenancy was genuine and supported by the following evidence : ( i )Copies of rent receipts showing receipt of rent from the assessee by Shri Virendra Madhavlal for the months of ( i ) May to December 1981, ( ii ) January to December 1982, ( iii ) January to December 1983, and ( iv ) January and February 1984. They have been placed at pp. 7-18 of the paper book filed by the assessee before us. ( ii )Copies of rent receipts issued by M/s. Ajay Builders showing receipt of rent by M/s. Ajay Builders (a sister-concern of the assessee) from the assessee for the months of ( i ) March 1984 to April 1985 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red the said tenancy rights in favour of the builders and Khar Milton Co-op. Housing Society Ltd. The learned authorized representative for the assessee further submitted that since the flat was allotted in consideration of surrender of tenancy rights, it was not liable to be taxed in the hands of the assessee in view of the decision of the Hon ble Supreme Court in Cadel Spinning Weaving Mills Ltd. [2005] 273 ITR 1. 8. As regards the non-production of Shri Virendra Madhavlal who had reportedly given the premises on tenancy to the assessee before the Assessing Officer, the learned AR submitted that it was the duty of the Assessing Officer to have issued summons to Shri Virendra Madhavlal if he wanted to make the enquiries from him. According to him the attendance of Shri Virendra Madhavlal was not at all necessary as the Consent Terms between Shri Virendra Madhavlal and Khar Milton Co-op. Housing Society Ltd. conveying the property clearly showed that the assessee was a tenant of Shri Virendra Madhavlal. As regards the certificate given by the solicitor, in which the name of the assessee is not shown as a tenant, the learned AR submitted that the said certificate was given b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upport of the genuineness of tenancy. We have perused his order and find the same to be well founded for rejecting the copies of rent receipts as reliable pieces of evidence. We are in complete agreement with his finding in this behalf and, therefore, do not wish to encumber this order by repeating what the learned CIT(A) has already mentioned in his order with utmost clarity. Nevertheless we have also perused the copies of rent receipts placed by the assessee in its paper book. Their perusal would show that they were prepared at one stretch and on the same typewriter. Secondly, the contents of the receipts, the font ( i.e. , letter size and letter style) used, the space (between the letters/words and lines) given, the erasures/corrections made and the text of all the receipts allegedly issued by Shri Virendra Madhavlal are exactly the same though they were issued over a period of 3-4 years. Thirdly, though all the receipts are typed ones, the month for which the rent was reportedly paid is handwritten in all the receipts without any exception. Fourthly, date of issue as given on all the rent receipts is rubber-stamped without any exception. All the rubber-stampings have same set o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses that the assessee had reportedly taken on tenancy was sufficient to dislodge the claim of the assessee regarding the genuineness of the alleged tenancy. For the detailed reasons recorded by him in his order, the learned CIT(A) has held that the assessee was never a tenant of the property in question and that it had obtained the flat from its sister-concern without surrendering any tenancy right. Having perused his order and examined the matter, we are inclined to agree with the CIT(A). 13. The learned AR has placed strong reliance on the Consent Terms dated 30-9-1986 (pp. 57 to 60 of the paper book) agreed upon between ( i ) KMCHS and Ajaya Builders being the plaintiffs, and ( ii ) the assessee being the defendant in Suit No. 4495 of 1986. We have perused the aforesaid Consent Terms. It is mentioned in the said Consent Terms that the assessee would be given an alternative permanent accommodation in consideration of its surrendering the tenancy rights in favour of the said plaintiffs. They do not however indicate the precise description of the property in which the assessee had tenancy rights and which it wanted to surrender in favour of the plaintiffs. The learned AR has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. CIT [1983] 141 ITR 466 (Guj.) and CIT v. CK Thakore [1982] 136 ITR 464(Bom.) are also apposite. In our humble view, the Consent Terms as agreed upon between the parties in the matter before us are not by themselves sufficient to establish the genuineness of the alleged tenancy claimed by the assessee. They may be relevant but are not sufficient to decide the matter in favour of the assessee considering other factors brought on record by the Departmental Authorities. 14. Let us now turn to the question as to whether the assessee had adduced best evidence available with it or within its reach at the earliest possible opportunity before the Departmental authorities. A matter is treated as proved not on the basis of quantity of evidence but on the basis of quality of evidence. Pieces of evidence emanating, inter alia , from independent sources, Governmental authorities/bodies, or from ordinary course of business carry qualitatively better evidentiary value than those coming from interested parties or which tend to serve ones own self interest. The assessee claimed that it was a tenant of Shri Virendra Madhavlal since November, 1980. But there is no tenancy agreement. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no independent evidence like electricity bill, water charges bill, telephone bill, payment of maintenance charges or any relevant record like bank account to establish the address of the assessee at a place which it reportedly occupied as a tenant. The genuineness of tenancy is essentially a question of fact and not a question of legal argument. It was the duty of the assessee to adduce best possible evidence, whether oral or documentary, to establish the genuineness of its tenancy. The assessee did not adduce the best possible evidence within its reach and, therefore, the case of the assessee falls flat on this ground alone. Besides, the departmental authorities have brought sufficient materials on record to show as to why the evidence adduced by the assessee was not at all reliable and sufficient to accept its claim of the tenancy. We see no infirmity in their orders. We, therefore, confirm their finding that the assessee has not been able to establish its claim of tenancy. Ground No. 1 taken by the assessee is dismissed. 16. Ground No. 2 taken by the assessee reads as under : "Without prejudice to the above, the learned CIT(A) failed to appreciate that even if tenancy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the sister concern without any consideration. 20. In reply, the learned Departmental Representative supported the orders of the departmental authorities. 21. We have considered the rival submissions. In the case before us what is being taxed is the receipt of amount represented by the value of the flat treating the same to be income in the nature of casual or non-recurring receipt. The first issue is whether the provisions of section 10(3) are at all applicable on the facts of the case. Sub-section (3) of section 10 stood, at the material point of time, as under : "10. Incomes not included in total income. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included (3) any receipts which are of casual and non-recurring nature, to the extent such receipts do not exceed five thousand rupees in the aggregate: Provided that this clause shall not apply to ( i )capital gains chargeable under the provisions of section 45; or ( ii )receipts arising from business or the exercise of a profession or occupation; or ( iii )receipts by way of addition to the remuneration of an employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly, not relevant. Sub-clause ( i ) is also not applicable on the facts of the case as it is applicable where the capital asset is transferred and there is a resultant gain. In the case before us, the assessee has neither transferred any asset nor the Department has even attempted to invoke section 45. The case before us is of receipt of asset and not receipt of money on sale of asset. We have already rejected the submission of the assessee that the receipt of flat from its sister concern was in consideration of surrender of tenancy rights. Thus, the case of the assessee is not excluded by any of the sub-clauses of section 10( 3 ) and hence, the receipt of flat in question is liable to be taxed as a casual and non-recurring receipt under section 56 read with section 10( 3 ). 24. As regards the reliance placed by the assessee on the decision in D.P. Sandhu Brothers Chembur (P.) Ltd. ( supra ) it should be sufficient to observe that the said decision is an authority for the proposition that that tenancy right is a capital asset and its surrender could attract section 45 and resultant gains would be assessable, if at all, only under the head "Capital gains". The Hon ble Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id submission of the assessee either. Section 122 of the Transfer of Property Act defines gift to mean transfer of movable or immovable property made voluntarily and without consideration by one person called the donor to another, called the donee and accepted by or on behalf of the donee. No evidence has been placed either before the Departmental authorities or before us that the flat was given by the sister concern to the assessee by way of gift. In fact, the stand taken by the assessee that it had received the flat in lieu of surrendering the alleged tenancy right itself contradicts the claim of the assessee that the flat was received by way of gift. Receipt of gift and that too of immovable property of the value of Rs. 40 lakhs cannot be accepted unless relevant materials in support of the gift are placed on record. The factum of gift having been made by Ajay Builders to the assessee has to be established with reference to the ingredients of section 122 and other provisions of the Transfer of Property Act and the Registration Act. No gift deed either registered or un-registered has been placed before us to substantiate the claim of the gift though the assessee wants us to belie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment." 34. In support of the appeal, the learned DR relied upon the order of the Assessing Officer and submitted that the addition made by the Assessing Officer was based on proper grounds and hence, the same should be restored. 35. In reply the learned authorized representative for the assessee supported the order of the learned CIT(A). He relied upon the following decisions of the Tribunal, which, according to him, covered the issue against the Department : ( i )Order dated 23-3-2004 passed by G Bench Mumbai in Asstt. CIT v. Milton Plastics. [IT Appeal No. 2004 (Mum.) of 1998] for the assessment year 1992-93. ( ii )Order dated 11-11-2003 passed by Mumbai Bench I of the Tribunal in Asstt. CIT v. Rising Star Plastics (P.) Ltd. [IT Appeal No. 5693 (Mum.) of 1998] for the assessment year 1992-93. ( iii )Order dated 27th December, 2002 in Asstt. CIT v. Steadfast Holdings (P.) Ltd. [IT Appeal No. 4453 (Mum.) of 1998] for the assessment year 1991-92. 36. We have perused the order of the learned CIT(A) and also considered the decisions relied upon by the learned counsel for the assessee. He has dealt with his issue in para 3.1 to para 3.5 of his order. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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