TMI Blog2011 (11) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Counsel for Appellant JUDGEMENT Per: Sanjiv Khanna: By order dated 13th April, 2004, the following substantial question of law was framed: Whether the Tribunal was right in holding that Section 10(3) of the Income Tax Act, 1961 was not applicable and that the amount received for surrender of tenancy right was not assessable to tax under the Income-Tax Act, 1961? 2. The present appeal under section 260A of the Income Tax Act, 1961 (the Act, for short) relates to assessment year 1993-94 and the respondent is an individual. She had received Rs.1 crore on account of surrender of tenancy rights in property No. 15, Motilal Nehru Marg from M/s Bennet Coleman and Company Limited. The said amount was claimed as a capital receipt but not taxable in view of the judgment of the Delhi High Court in Bawa Shiv Charan Singh versus CIT, (1984) 149 ITR 29. 3. The Assessing Officer treated Rs.1 crore as income taxable under Section 10(3) following the decision of Allahabad High Court in CIT versus Gulab Chand, (1991) 192 ITR 495 for the following reasons:- (i) The respondent assessee was not a tenant. (ii) The amount received was not a capital receipt but a casual and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not, by then, a family company or under the control of the assessee, when the agreement dated 17th November, 1992 was executed and the payment was made. The Assessing Officer has relied upon the original lease deed dated 17th March, 1959 and the clauses thereof that the tenant, Ram Krishan Dalmia, cannot create sub-tenancy. This, to our mind, is completely insignificant and is not relevant because the respondent-assessee had claimed inheritance of tenancy rights after the death of Ram Krishan Dalmia and their mother. Tenancy rights are inherited unless prohibited under a statute or if there is a contract to the contrary. 9. In Gian Devi Anand (supra), Bhagwati J. on the question of inheritance of tenancy, whether contractual or statutory in nature, has elucidated the same, observing: 2. The distinction between contractual tenancy and statutory tenancy is thus completely obliterated by the rent control legislation. Though genetically the parentage of these two legal concepts is different, one owing its origin to contract and the other to rent control legislation, they are equated with each other and their incidents are the same. If a contractual tenant has an estate or inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due process of law and the tenant under the general law of the land is hardly in a position to resist eviction, once the contractual tenancy has been duly determined... 11. There is no evidence/material to show that the tenancy of Ram Krishan Dalmia, which continued from month to month, was terminated. The agreement dated 17th November, 1992 indicates that the month to month tenancy was not terminated by issuance of notice under Section 106 the Transfer of Property Act, 1882. The month to month tenancy is recognised and permitted by law. The doctrine of tenant hold over is well recognised. The CIT(A) has held that the respondent assessee was a tenant. No eviction or ejectment proceedings were initiated. On the question of difference amongst the terms a tenant by sufferance, tenant holding over and a trespasser, it has been observed in Badrilal v. Municipal Corporation of Indore, (1973) 2 SCC 380, as under:- 8. It was then urged by Mr Gupte that the appellant having deposited the rent up to March 31, 1954 and the Municipal Commissioner having accepted it he should be deemed to be a tenant holding over. Leaving aside for the moment the contention put forward on behalf of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate a tenancy of any kind. If a tenant remains in possession after the determination of the lease, the common law rule is that he is a tenant on sufferance. A distinction should be drawn between a tenant continuing in possession after the determination of the term with the consent of the landlord and a tenant doing so without his consent. The former is a tenant at sufferance is English Law and the latter a tenant holding over or a tenant at will. In view of the concluding words of Section 116 of the Transfer of Property Act, a lessee holding over is in a better position than a tenant at will. The assent of the landlord to the continuance of possession after the determination of the tenancy will create a new tenancy. What the section contemplates is that on one side there should be an offer of taking a new lease evidenced by the lessee or sub-lessee remaining in possession of the property after his term was over and on the other side there must be a definite consent to the continuance of possession by the landlord expressed by acceptance of rent or otherwise. In Kai Khushroo Bezonjee Capadia v. Bai Jerbai Hirjibhoy Warden case the Federal Court had occasion to consider the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tually that there is no cost of acquisition of the grant of the lease. It held that the cost of acquisition of leasehold rights can be determined. In the present case however, the Department's stand before the High Court was that the cost of acquisition of the tenancy was incapable of being ascertained. In view of the stand taken by the Department before the High Court, we uphold the decision of the High Court on this issue. 13. Were it not for the inability to compute the cost of acquisition under Section 48, there is, as we have said, no doubt that a monthly tenancy or leasehold right is a capital asset and that the amount received on its surrender was a capital receipt. But because we have held that Section 45 cannot be applied, it is not open to the Department to impose tax on such capital receipt by the assessee under any other section. This Court, as early as in 1957 had, in United Commercial Bank Ltd. v. CIT held that the heads of income provided for in the sections of the Income Tax Act, 1922 are mutually exclusive and where any item of income falls specifically under one head, it has to be charged under that head and no other. In other words, income derived from differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.A.L. Narayan Row, ITR at pp. 432, 435. 18. The appeal is accordingly dismissed without any order as to costs. 15. In the said decision it has been held that tenancy rights are a capital asset and consideration received for surrender of the tenancy right is capital in nature. Further, once it is held that the income received was of capital nature, it cannot be brought in tax under Section 10(3) as casual income of non-recurring nature. 16. In the present case, the Assessing Officer has not held that it is possible to compute and calculate the cost of acquisition of the tenancy rights in the hands of the original tenant Ram Krishan Dalmia. The said exercise was not undertaken by him in the assessment order. In view of the aforesaid position, we are not required to determine, decide and compute income from capital gains under Section 45. A similar situation had had arisen in the case of D.P. Sandu Bros. Chembur (P) Ltd. (supra) and the Supreme Court had refused to examine and go into the said question, in view of the stand taken by the Revenue that it was not possible to compute the cost of acquisition of the tenancy rights when they were acquired. 17. In view of the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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