TMI Blog1965 (2) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ven a lease of premises mentioned below to B. N. Elias Co. Ltd. on June 17, 1941, which would terminate on February 27, 1957. On September 21, 1945, B. N. Elias Company Limited executed and registered a lease in favour of Godfrey Phillips (India) Ltd., of a piece and parcel of land with buildings being premises Nos. 139 and 139/1, Beliaghata Road, for the period commencing from July 1, 1946, and expiring on February 27, 1957, on the following terms and covenants : The lessee was-- (a) to pay the monthly rent of Rs. 2,200 only besides municipal taxes, assessments, etc. ; (b) to execute and perform at its own cost and expense such necessary repairs to the demised premises during the said term as the lessor was under obligation to carry out in accordance with the provisions of the lease executed by the Gramophone Company Limited in favour of the lessor ; (c) not to make any alterations in the demised premises which might depreciate the value thereof ; and (d) at the expiration or sooner determination of the term to yield and deliver up possession of the demised premises to the lessor in the condition in which the same should then be. There is no dispute that the real ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved and performed including the payment to the confirming party of the monthly rent therein reserved. In pursuance of the said agreement and in consideration of the premises the confirming party confirmed the transfer and assignment of the premises mentioned in the schedules unto the assignee. The assignor covenanted with the assignee that the lease dated September 21, 1945, was of full force and effect. The assignor also agreed that, in the event of the assignee being called upon on the expiration of the lease dated September 21, 1945, to re-excavate the said tank and the assignee being legally liable to do so, the assignor undertook and agreed to cause the tank to be re-excavated at its own cost and to indemnify and keep indemnified the assignee from and against all costs, damages, expenses, etc., by reason of such tank not being re-excavated and restored to the same position in which the tank was then existing. The confirming party covenanted with the assignor and the assignee that it had not committed or suffered or been party or privy to any act, deed or matter whereby the said premises or any part thereof may be impeached, affected or encumbered in estate, title or otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration was for the wiping out of the liability to pay the monthly rent, it would partake of the capitalised value of the liability and as such of a revenue receipt. The same remark applied to the obligation to effect repairs and discharge rates, taxes and impositions. All this liability was of a periodic nature which the lessee had to discharge. This would not hold true of the obligation not to make any alteration in the demised premises. Such alteration would affect a capital asset, and any payment made to compensate the owner for change in the demised premises would savour of a capital payment. So far as the contentions of the revenue were concerned the court held that the payment was not in the nature of a mutation fee. Neither was it salami or in the nature of salami. With regard to the last contention of the revenue that if the payment was in the nature of a revenue receipt the assessee was not entitled to any exemption under section 4(3)(vii) of the Act as being a receipt of a casual or non-recurring nature, the court held that, on the materials, it was not possible to hold that the receipt arose from business. According to the Division Bench " the payment of Rs. 50, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly shows that a part of the sum of Rs. 50,000 was taken for the consent given to the filling in of the tank. This part cannot be described as a revenue receipt. We are only concerned now with the balance of the consideration of Rs. 50,000. The lessee, Godfrey Phillips India Ltd., was under no obligation to take the consent of the assessee to the assignment of the lease but by such assignment confirmed by the assessee the lessee certainly rid itself of the liability to pay rent and to keep the demised premises in repair. But for the consent given to the transfer, the assessee might have enforced the covenants under the original lease to Godfrey Phillips India Ltd. and sued it from time to time to recover the rent reserved under the lease as also to enforce other covenants with regard to repairs, etc. Mr. Mitra appearing for the assessee raised a two-fold contention before us. His first contention was that we should consider whether the receipt of Rs. 50,000 was of a revenue nature and secondly, whether the receipt even if it partook of that character was " casual " so as to attract section 4(3)(vii). The first point was developed in the following way : Mr. Mitra said that one mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in no way disturbed by the consent to the assignment. The release of Godfrey Phillips India Ltd. from the obligations under the lease can more readily be likened to the loss of an enduring asset, i.e., the lease, and to that extent the analogy of the test formulated in Kettlewell Bullen Company's case is applicable. It can be said that what the assessee has parted with in this case in lieu of money or money's worth received by him is the right to derive rents regularly from a responsible lessee. It may be that the assignee is no less responsible and respectable but that is not what we are concerned with. The matter does not seem to have been argued in this light before it was remitted for a supplementary statement of the case to the Tribunal. As against this our attention was drawn to the first order of the Tribunal at page 29 of the paper book of paragraph 4 where the Tribunal had observed " since no capital asset or right in a capital asset was involved in respect of the payment of the said sum of Rs. 50,000 and as the assessee wanted to gain a sum of Rs. 50,000 in respect of the transaction mentioned supra, we consider that the amount that had been received by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... January, 1933, some three months before the liquidation. Kingsman subsequently assigned the premises with the consent of the plaintiffs to a company, Manns Motors Ltd. This company was unable to pay any rent since December 25, 1933, and a large sum of money became due to the plaintiffs in respect of rent. When they sought to get their rent and found that Manns Motors Ltd. were apparently insolvent, they made an application against the company and found that it had been dissolved. It then started the action against Goodman, the liquidator. Bennett J., who tried the action, observed " it was argued for the defendant, and this is the proposition which was asserted by Mr. Christie (counsel for the defendant) that, in a case where a company, whilst still a going concern, has assigned a lease to an assignee with the licence of the landlord as required by the terms of the lease, there is nothing whatever to prevent the company from liquidating and distributing its assets to its creditors and shareholders and being dissolved in the ordinary way. " His Lordship came to the conclusion that if the liquidator had done his duty and kept the assets, the plaintiffs' claim for rent under the leas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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