TMI Blog1993 (11) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... d company and the assessment years involved are 1982-83 and 1983-84. One Smt. Champabati Devi Chamaria was the owner of four immovable properties including a three-storeyed building situated at 25A, Shakespeare Sarani, Calcutta. The said lady sold her undivided one per cent. share of the immovable properties each to ten of her close relatives through registered deeds. Subsequently, Smt. Champabati Devi and the other co-owners of this property formed a joint stock company in the name of Messrs. Champa Properties (P.) Ltd., namely, the present assessee. Smt. Champabati Devi, held 90 per cent. shares in the company and the other co-owners held the balance 10 per cent. shares. The company was incorporated on September 20, 1966. Before the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t such arrangement and/ or agreement shall not in any way prejudice the mutual obligations of the lessor and the lessee as agreed upon under the original lease agreement dated May 6, 1966. The agreements entered into by each of the lessees are all on similar lines which mention, inter alia, that in case negotiations for letting out the property by the lessor to the prospective tenant did not materialise within eight weeks from the date of the present agreement, i.e., June 15, 1971, "this agreement shall have no effect and shall be deemed to have been cancelled". It was expressly agreed upon, vide paragraph (?) of each of the aforesaid agreements, that "the lessor shall be liable to pay the said sum of Rs. 3,000 (rupees three thousand) per m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Officer by following the orders for the assessment years 1977-78 to 1980-81 included the said sum of Rs. 72,000 in computing the house property income of the assessee for each of the assessment years under appeal. Against the orders of the Income-tax Officer, the assessee appealed to the Commissioner of Income-tax (Appeals) who by following the appellate order for the assessment year 1981-82 deleted the addition of Rs. 72,000 made in each of the two assessment years under consideration. Aggrieved by the order of the Commissioner of Income-tax (Appeals), the Department came up in appeal before the Tribunal. On a consideration of the submission of the rival parties and the evidence brought on record, the Tribunal held that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not refer to the mutual agreement made by the assessee with the three lessees and consequently there was an application of income after the same was earned by the assessee in terms of the said agreement of July, 1971, with the Government of India. It is urged that the lessees surrendered their valuable right in the property, viz., enjoyment and possession of the three floors and thereby there was a surrender of a portion of the lease-rent of the assessee and payment made by the assessee to the lessees in terms of the agreement dated June 15, 1971, was on the capital field and consequently was not allowable in computing the house property income of the assessee. Reliance was placed on the decision of this court in A. Gasper v. CIT [1979] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to paragraph 8 of the agreement, the lessor and the lessees agreed that the lessor shall authorise the lessee's agent or bank to collect the rent and service charges and the essence of the covenant in paragraph 8 is that in case the lessee so requires, the payment of the lessee's share in the rent and service charges to be received from the incoming tenants as aforesaid may be paid to the lessee directly without the same being first received by the lessor and then paid by the lessor to the lessee. Thus, counsel for the assessee concluded that in view of the terms of the agreement dated June 15, 1971, the rent could not form part of the assessee's income at all and the assessee merely collected the amount receivable by the lessee and the pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival submissions. We find that the Tribunal was right in finding that the lease-rent payable as per the original agreement dated May 6, 1966, as modified by the deed dated September 16, 1966, by each of the three lessees at Rs. 1,000 per month has been deducted by the Income-tax Officer in computing the disallowable sum of Rs. 72,000 as the Income-tax Officer worked out the disallowance of Rs. 72,000 by deducting Rs. 1,000 from the sum payable of Rs. 3,000 as fixed in the agreement dated June 15, 1971, entered into by the assessee with each of the three partnership firms, i.e., Rs. 3,000 -- Rs. 1,000 = Rs. 2,000 x 3 x 12= Rs. 72,000. He considered the extra sum paid of Rs. 2,000 to each of the three lessees as an application of income, on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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