TMI Blog1929 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... live Street were demised for 50 years to the Tata Industrial Bank Limited on a monthly rental of ₹ 50,000. The Tata Industrial Bank Limited had paid a premium of salami of 1 lakh of rupees and by the terms of the lease had undertaken to demolish the building then standing on the demised premises and to erect thereon a new office building in accordance with conditions to be approved by the lessors. In August 1923 the Tata Industrial Bank Limited, having expended a large amount of money upon the erection of the new building, went into voluntary liquidation for the purpose of a scheme of amalgamation with the Central Bank Limited. Thereupon the assessees, Gooptu Estates Limited, taking advantage of the forfeiture clause in the lease of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income derived , accrued and received in the year 1923 can in the circumstances, viz., the transfer of the amount from one account to another to suit the convenience of accountancy, be treated as assessable income in the year 1927-28. I propose to consider the second question first. The assessment order dated the 30th November 1927, has been included in the paper book and from this, as well as from the case stated it appears that the assessment was made under section 12 of the Act under section 12, and not under section 10 under the head business , the Income-tax authorities have refused to permit the assessee to take credit for any sum on account of depreciation of the buildings, etc., which are part of their capital assets. In a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned as part of the profit of the business, and was assessable accordingly to tax Commissioner of Taxes vs Melbourne Trust Limited ( 1914 ) AC 1001 In re Spanish Prospecting Company ( 1911 ) 1 Ch 92 Assets Company Limited vs Forbes 3 Tax Cas 542 . On the other hand on that view the assessee would be entitle to the allowance in respect of depreciation on buildings machinery, plant or furniture prescribed by clause (vi) of sub-section 2 of section 10. From this standpoint `profits' as Lord Moulton observed in In re Spanish Prospecting Co . ( 1911 ) 1 Ch 92 , implies a comparison between the state of a business at two specific dates usually separated by an interval of a year, and if the company was to be regarded as dealing in house p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is essential when accounting on this basis to exclude form either side of the account matters which in substance represent only a rise or fall in the value of the asset from which revenue is derived as distinct form the net revenue itself, or which represent only a change in the form of the investment, whether the change be a change into money or into some other from of property. Now case of salami, or premium upon a else may present considerable difficultly in amounting the distinction between capital and revenue accounts. In Raja Skiva Prosad's case Dawson Millar CJ discussed the question in the case of a holder of an impartable Raj who pressed Zemindari properties. The case before us is the case of a company and apparently of a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustrial Bank incurred a forfeiture of their lease the assessees instead of being interested merely as reversioners entitled to the rent reserved during the currency of the lease becomes at one stroke entitled to immediate possession of the property as it then stood. Their investment or capital asset had advanced suddenly in value and they were free to deal with it as they liked, subject only to the covenants in their own lease. Had they sold to no part of the purchase price could have been regarded as revenue. Had they sold a half share in to the same would still hold. What then did they do? By a bargain with the Central Bank they contrived to the extent of a lac of rupees to realise the enhanced value at once and the rest of the enhanceme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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