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TMI Blog1992 (11) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhor Industries Limited on the following terms : (i) The ground rent was to be computed at the rate of Re. 1 per sq. yd. ; (ii) The licensee was required to construct a pucca one-storeyed building in accordance with the plans and specifications previously approved by the assessee at a cost of not less than rupees two lakhs; (iii) The licensee was entitled to use and enjoy such building free of any rent or compensation, but the licensee was required at its own cost to maintain and keep the building in tenantable repairs ; (iv) The licensee was also required to pay all municipal and other taxes which may be levied in respect of this construction ; (v) On the expiry of the lease by efflux of time or otherwise, the licensee was required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the year, the assessee accounted for the sum of Rs. 24,000 received by it as rent for the six months from October 1, 1971, to March 31, 1972. With regard to the written down value of the building which became vested in the assessee without payment of any compensation, the assessee claimed that it was a capital receipt. The Incometax Officer, however, held that the written down value of the property received by the assessee was a revenue receipt taxable in his hands as such. In appeal against the decision of the Income-tax Officer, the Appellate Assistant Commissioner confirmed the order of the Income-tax Officer in this regard. In appeal before the Tribunal, the Tribunal said that the written down value of the building in question wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt. The Tribunal, therefore, deleted the addition made on that account by the Income-tax Officer. From this finding of the Tribunal, the following two questions have been referred to us at the instance of the Department: "(1) Whether, on the facts and in the circumstances of the case, and having particular regard to the fact that the Tribunal itself had noticed that clause C of the agreement entered into between the assessee-company and Bhor Industries Ltd., on February 11, 1972, had recorded that, for a period of 12 years commencing on October 1, 1959, the assessee had been receiving a nominal compensation of Rs. 1,653 per annum from the latter, the Tribunal had material before it on the basis of which it could hold that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, did not permit the assessee to raise the additional ground. From this finding of the Tribunal, the following question has been referred to us at the instance of the assessee : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in not allowing the assessee to raise the additional ground and not deciding whether the assessee was entitled to deduction of the surtax payable by them under the Companies (Profits) Surtax Act, 1964, in determining their income under the Income-tax Act, 1961 ?" In respect of the two questions which are before us at the instance of the Department, the Tribunal, in its order, has given a finding that the Department has not produced any evidence to show that the rent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a reduced rate or that the building which was acquired at the expiry of the term of the lease represented a deferred rent. The court also took note of the fact that the lessee in fact expended much more than what it was required to, under the terms of the agreement, for the construction of the building. The court held that the sum of Rs. 77,870, which was held to be the value of the building in the hands of the assessee was not a revenue receipt in the hands of the assessee. This ratio directly applies to the present case also. In a subsequent case of Hemchand Amarchand v. CIT [1974] 95 ITR 411, another Division Bench of this court has followed the above judgment in the case of an assessee which had entered into a somewhat similar agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorise the company to let out the land which it may not immediately require for the purpose of its business. The Tribunal has held that the assessee was not engaged in the business of letting out lands. The assessee was engaged only in the business of manufacturing and sale of carbonic gas in its gaseous and solid state. There is, therefore, no reason why we should depart from the ratio laid down by the Division Benches of the High Court in the above two cases. The value of the building coming to the assessee is a receipt of a capital nature and not of a revenue nature. In the premises, both the questions are answered in the affirmative and in favour of the assessee. In respect of the question raised at the instance of the assessee, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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