9911796707
TMI Blog1970 (4) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... s on behalf of the revenue by merely formulating his points without advancing any argument. The facts have just to be stated to be appreciated, no reference being necessary even to a text book of law, let alone decided cases. The question of law referred is : " ' Whether, on the facts and in the circumstances of the case, the amount of Rs. 95,620 received by the assessee-company as acquisition-compensation in respect of a portion of the lands held by the assessee on a lease agreement, is a capital receipt ? " The assessee is a private limited company which carries on the business of manufacture and sale of pharmaceuticals. The relevant assessment year is 1955-56, the corresponding accounting year being the year ended on 28th February, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . If the lessee shall not become entitled to the grant of the said lease, the compensation monies with any interest shall be paid to the lessor. The lease shall contain a provision for the lessee to receive the whole of the compensation monies for any set-back during the lease, the lessee to continue to pay the full rent without reduction. In the event of any acquisition other than a set-back, the matter shall be governed by the Land Acquisition Act for the time being in force. " The Municipal Corporation of Greater Bombay gave a notice of acquisition of a portion of the said land admeasuring 956.20 sq. yds. on 29th October, 1952. Thereafter, a regular deed of lease was executed on 13th January, 1964. Thereafter, during the relevant accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence that at the date of the agreement of lease any road line or set-back line had already been published, nor even that the preliminary proceedings had been started. It is quite clear that in the absence of any evidence or finding of such facts it must be assumed that at the date of the agreement there was not only no demarcated road line, but that even proceedings contemplating such demarcation had not been started. The Tribunal has observed : " There is no evidence whatever that the rent was not fixed as a whole for the entire plot of land as contended for the appellant or that it was excessive in order to off-set the amount of compensation which was to be retained by the lessee... " Under the agreement of lease the period of the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the monthly rent of Rs. 1,150. It provides that if the lessee shall not become entitled to the grant of the final lease, the compensation monies with any interest earned thereon shall be paid to the lessor. The agreement also contains a provision as to the rights and obligations of the parties if the set-back and acquisition takes place during the period of the lease which must mean after the execution of the lease. It further provides that the lease shall contain a provision that the lessee shall receive the whole of the compensation monies for any set-back during the period of the lease, but that the lessee shall continue to pay the full rent of Rs. 1,150 per month without any reduction in respect of the land going in the set-back and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability of the lessee to pay the said rent in full without any deduction for the plot of land the use of, which the assessee would lose on its acquisition. It is nobody's case that acquiring lands, either outright or on lease, was the business of the assessee. In entering into this agreement of lease the assessee cannot be said to have traded in compensation on acquisition. The argument of the revenue that this sum of Rs. 95,620 is profit and liable to be brought to tax as such without even applying its mind whether it is a revenue or capital profit, completely ignores the basic consideration as to what is profit. Profit would be arrived at by deducting from that which is received the amount expended. The sum of Rs. 95,620 is what is rece ..... X X X X Extracts X X X X X X X X Extracts X X X X
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