TMI Blog2001 (8) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... ot entitled to the deduction of Rs.21,110 paid by it as commission for renting office premises on the ground that the said payment was in the nature of capital expenditure?" The dispute relates to the assessment year 1970-71. The factual position in a nutshell is as follows: The assessee a public limited company claimed deduction of Rs.23,735 as commission for renting office premises. Rs.2,625 was paid for renting office premises at 12-13/F, Connaught Place, New Delhi. These premises were vacated on September 14, 1969, and new office premises were taken on the first floor of the Allahabad Bank Building, 17, Parliament Street,New Delhi, for the renting of which, the assessee-company claimed to have paid Rs.21,110 to one Shri V. P. Kapa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax v. Sindhurani Chaudhurani [1957] 32 ITR 169 and Maharaja Chintamani Saran Nath Sah Deo v. CIT [1961] 41 ITR 506, the indicia of salami are (i) its single non-recurring character, and (ii) payment prior to the creation of the tenancy. It is the consideration paid by the tenant for being let into possession and can be neither rent nor revenue but it is a capital receipt in the hands of the landlord. In the former case it was observed that salami is a payment by a tenant as a price for parting by the landlord with the rights under the lease of a holding as a consideration for what the landlord transfers to the tenant. The broad principle relating to the term salami are as follows: (1) Prima facie salami or premium is not income; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enjoy the benefits granted to him by the lease. Money paid to purchase the said general right is a payment on capital account. (8) Salami is the amount of money which a landlord insists on receiving is a condition precedent for parting with the land in of the lessee and that it was received by the landlord, not because of the use of the land, but before the land was put into use by the assessee. (9) The question of salami should not be decided on the length of the period of the lease, but on the nature of the right converted. The characteristics of the payment should be decided without reference to the nature of the lease including the wasting nature of the assets under the lease. These broad principles were summarised by the Calcut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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