TMI Blog2018 (2) TMI 1285X X X X Extracts X X X X X X X X Extracts X X X X ..... nly creates month to month tenancy and not a lease for a period exceeding one year. Conditions of clause (iiib) to Section 27, would not be therefore satisfied. It has to be held that the appellant was not an owner as defined in Section 27 of the Act. Consequently, the sub-license fee received by the appellant is not chargeable to tax under the head “income from house property”. It is not the case of the appellant that the said income was chargeable to tax under the head salary, profits and gains of business or profession, or capital gains. Thus, the said income has to be assessed under the residuary head “income from other sources”. - Decided in favour of the Revenue - ITA 731/2005, ITA 732/2005, ITA 735/2005 - - - Dated:- 31-1-2018 - MR. SANJIV KHANNA AND MR. CHANDER SHEKHAR, JJ. For The Appellant : Mr. S. Krishnan, Adv. For The Respondent : Mr. Asheesh Jain, Sr. Standing Counsel with Mr. Shahrukh Ejaz, Adv. SANJIV KHANNA, J. (ORAL) The aforestated appeals under Section 260A of Income Tax Act, 1961 (Act for short) filed by M/s Ram Krishan Associates Private Limited pertain to assessment years 1994-95 and 1996-1997 to 1997-1998 and arise from order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncement date') for carrying out the authorised purpose. At the option of the Licencee the Licence under this Agreement shall be renewed for an additional period of not exceeding 5 (five) years at a time. *except transport, traveling agency, beauty parlour, book shop, florist, cosmetics, chemist, food outlets etc. 3. During the currency of this Licence, the Licencee hereby agrees with the Licensor and undertake as follows:- (a) To pay to the Licensor a sum of ₹ 6,967/- (Rupees Six thousand nine Hundred sixty seven only) by 10th of every month, the first of such payment to be made on commencement; 6. Paragraph 4 of the said license agreement had stipulated as under:- 4. The Licensor hereby agrees with the Licensee as follows:- (a) To permit or cause to permit the Licensee, his servants and agent to enter and use the stipulated space; (b) To keep or cause to be kept the premises, in which the stipulated space Licensed to the Licensee is situated, in good condition; (c) To provide the following facility/services:- i) Central air-conditioning facility during business hours; ii) Cleaning and keeping in neat and tidy condition commo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch terms and condition as the Licensor/Asian Hotels Ltd. may notify from time to time in this behalf. Paragraph 8 of the license agreement had stipulated as under:- 8. The Licensor shall have the right to increase the amount of the consideration set out in the clause 3(a) hereof on 1st January 1985 and thereafter every 5 (five) years (in case term of the License is renewed beyond the initial period of 5 (five) years), provided, however, that such increase shall not exceeds 25%(twenty five percent) of the amount so being charged. 9. At the outset, we record that the counsel for the appellant, and in our opinion rightly, did not contend and submit that the appellant was a lessor. He accepts that the appellant was a licensee. However, it is submitted that the rights granted under the agreement dated 14.01.1986 should be considered as ownership. The license was renewable and was renewed. Thus, the sub-license fee paid to the appellant should be treated as rent taxable under the head Income from house property. The appellant was de-facto owner and the sub-license fees was nothing but rent. Reliance was placed on the decision of the Supreme Court in Commissioner of Income Tax v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882), shall be deemed to be the owner of that building or part thereof; (iiib) a person who acquires any rights (excluding any rights by way of a lease from month to month or for a period not exceeding one year) in or with respect to any building or part thereof, by virtue of any such transaction as is referred to in clause (f) of section 269UA, shall be deemed to be the owner of that building or part thereof; (iv) [***] (v) [***] (vi) taxes levied by a local authority in respect of any property shall be deemed to include service taxes levied by the local authority in respect of the property. 13. Clauses (i), (ii) and (iii) of Section 27, it is accepted, do not apply in the present case. The appellant does not rely upon clause (iiia). Clause (iiib) relates to a person, who has acquired any right, excluding right by way of month to month lease or a lease for a period not exceeding one year, in respect of a building or part thereof, by virtue of a transaction referred to in clause (f) to Section 269UA of the Act. Clause (f) to Section 269UA of the Act reads as under:- (f) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the head income from house property . It is not the case of the appellant that the said income was chargeable to tax under the head salary, profits and gains of business or profession, or capital gains. Thus, the said income has to be assessed under the residuary head income from other sources . 16. Supreme Court in Podar Cement Private Limited (supra) had interpreted the term owner as defined in Section 27 for the purpose of Section 22 of the Act. The assessees therein had acquired rights in flats in commercial buildings upon payment of entire sale consideration, but did not have registered sale deeds in their favour. Their claim was predicated on Section 53A of the Transfer of Property Act. Accepting the plea of the assessee and relying on clause (iiia) of Section 27 of the Act, it was held that amendment made vide Finance Act, 1987 enacting clause (iiia) was declaratory and principle of contemporaneous exposition was applied. We fail to fathom how the said decision aids and help the submission made by the appellant, once it is held and accepted that the appellant was not the owner of the shops under Section 27 of the Act. 17. In Raj Dadakar and Associates (supra), th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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