TMI Blog1982 (2) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal to hold that on the relevant valuation date the property situated at 30A, Mahatma Gandhi Marg, was worth ten times of its annual rental income while in previous years the value of the said property was shown and accepted at Rs. 1,19,000 ? 4. Whether the Tribunal was right in holding that the property at 30A, Mahatma Gandhi Marg, was to be valued on the basis of its annual income along with other properties notwithstanding the property in question was commercial property while other properties were residential houses and whether the multiple upheld by the Tribunal is justified in law and on facts ? 5. Whether, on the facts and in the circumstances of the case, the multiple of ten times of the rental income in respect of property, 30A, Mahatma Gandhi Marg, is not excessive and wholly unjustified? " The facts briefly stated are that the assessee, P. G. Gandhi, an individual, owns a number of properties, viz., 28/22A, Mahatma Gandhi Marg, 30/22, Mahatma Gandhi Marg, 30A, Mahatma Gandhi Marg, 17/9A, Sardar Patel Marg, 19/9, Sardar Patel Marg, 21/9C, Sardar Patel Marg, 23/9B, Sardar Patel Marg, 32/18B, Lal Bahadur Shastri Marg and 30/18A, Lal Bahadur Shastri Marg. Out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals in part. From that order, both the assessee and the Department filed appeals before the Income-tax Appellate Tribunal. The case taken on behalf of the assessee before the Appellate Tribunal was that the basis of valuation of these properties at ten times their annual income except the property at 30A, Mahatma Gandhi Marg, for which the basis was the cost of construction, had been accepted by the assessee as also by the Department up to the assessment year 1970-71, and there was no proper justification for making any departure therefrom, In regard to property at 30A, Mahatma Gandhi Marg, it was contended that it was fetching a higher rent because of its location and not because of the intrinsic value of the building and, therefore, the cost of construction should be treated as the proper basis as had been done in the past. In the alternative it was contended that since all the properties stood on leasehold lands, the leases whereof had expired, they had no market value and the assessee, being a tenant at sufferance or by holding over, had no interest in the properties and as such the same did not constitute an "asset" within the meaning of s. 2(e)(v) of the Act. The Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may read s. 116 of the Transfer of Property Act at this place. This section reads: " If a lessee or under-lessee of property remains in possession thereof after the determination of the lease granted to the lessee, and the lessor or his legal representative accepts rent from the lessee or under-lessee, or otherwise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased, as specified in section 106." The expression " holding over " is used in the sense of retaining possession. A distinction should be drawn between a tenant continuing in possession after the determination of the lease, without the consent of the landlord and a tenant doing so with the landlord's consent. The former is called a tenant by sufferance and the latter is a tenant holding over. In our opinion, a lessee holding over with the consent of the lessor is in a better position than a mere tenant at sufferance or a tenant at will. A tenancy by sufferance is converted into a tenancy at will by the assent of the landlord. Such assent may be expressed by acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way by a decree in such a suit. It will always be open to him to establish his title in a regular suit and to recover back possession. " The court further observed: Law respects possession even if there is no title to support it, It will not permit any person to take the law in his own hands and to dispossess a person in actual possession without having recourse to a court. No person can be allowed to become a judge in his own cause. " It is thus established that even a tenant by sufferance has a juridical title and his possession is protected by s. 9 s. 6 of the Specific Relief Act. He is entitled to continue in possession of the tenanted property unless he is evicted by the landlord by due process of law. The landlord cannot deprive him of his possession otherwise than by taking recourse to legal proceedings. In other words he is not a trespasser. So far as a tenant holding over is concerned, a new tenancy is created by the assent of the landlord to the continuance of his tenancy after the determination thereof. This assent may be expressed by acceptance of rent from the tenant by the landlord or his otherwise assenting to the tenant continuing in possession. The basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, and there is neither assent nor dissent on his part to the continuance of occupation of such person, the latter becomes in the language of English law a tenant on sufferance who has no lawful title to the land but holds it merely through the laches of the landlord. If now the landlord accepts rent from such person or otherwise expresses assent to the continuance of his possession, a new tenancy comes into existence as is contemplated by section 116, Transfer of Property Act, and unless there is an agreement to the contrary, such tenancy would be regarded as one from year to year or from month to month in accordance with the provisions of section 106 of the Act. " The same position was accepted in Bhawanji Lakhamshi v. Himatlal Jamnadas Dani, AIR 1972 SC 819. In paragraph 9 it has been observed : "The act of holding over after the expiration of the term does not create a tenancy of any kind. If a tenant remains in possession after the determination of the lease, the common law rule is that he is a tenant on sufferance. A distinction should be drawn between a tenant continuing in possession after the determination of the term with the consent of the landlord and a tenant doi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod, may with the aid of other circumstances and in the absence of any contrary intention, reasonably give rise to an inference of assent. In Ram Barai Singh v. Tirtha Pada Misra [1956] 60 CWN 39; AIR 1957 Cal 173, where the tenant retained possession for 11 years after the expiration of the lease, the court inferred that there was a tenancy by holding over. If the facts and circumstances of the instant case are examined in the background of this legal position, it would appear that the assent of the landlord to the assessee's continuing in possession of these properties after the determination of the leases thereof by efflux of time can be reasonably inferred. As noted above, the leases of these properties expired in 1958 and that of 30A, Mahatma Gandi Marg, in 1963. Even though the lease of this property was going to expire in 1963 and in respect of other leasehold properties the assessee had received notice from the Collector in 1958, the assessee constructed a property on this land at a huge cost of Rs. 1,19,000. The notice was given only in 1958. There is nothing on the record to show that any attempt was made whatsoever by the State Govt. to enforce that notice. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Beaumont C.J. said in regard to the nature of periodical leases (p. 309): " A monthly tenancy, that is a tenancy subject to a month's notice, creates, in the first instance, a tenancy for two months certain. But as soon as the third month commences, that is not a new tenancy; it turns the original tenancy into a three months' tenancy, and when the fourth month begins, the tenancy becomes a four months' tenancy, and so on so long as the tenancy continues, until, that is to say, notice to quit is given. " Relying on this decision in Usharani Debi v. Research Industries Ltd., 1945] 50 CWN 461, Gentle J. said : " A monthly tenancy, in my view, is not a tenancy which commences or begins in one month and on its expiry a fresh tenancy is created in the following month or months, but is one tenancy for an period which is determinable by one or other of the parties giving a notice to quit." The decision of the Patna High Court in Firm Ganesh Das Ram Gopal v. Jamuna Das, AIR 1945 Pat 385, is to the like effect. The nature of the present tenancy, therefore, is that it is a tenancy for an unstated period and this being so there is no justification for saying, as contended by Sri Agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year commencing on the 1st day of April, 1969, or any earlier assessment year-... (v) any interest in property where the interest is available to an assessee for a period not exceeding six years from the date the interest vests in the assessee." In sub-cl. (v) of cl. (e) aforesaid, the words " from the date the interest vests in the assessee " were inserted by s. 2(b) of the W.T. (Amend.) Act of 1964. This sub-clause prior to its amendment stood as under: " (v) Any interest in property where the interest is available to an assessee for a period not exceeding six years." It would be seen that in effect this clause does not define the word "assets", but equates it with property. That expression has not been defined. Even the Transfer of Property Act has not defined it. However, in J. K. Trust v. CIT [1957] 32 ITR 535, at p. 541, the Supreme Court observed that this expression is a term of the widest import and subject to any limitation or qualification which the context might require, it signifies every possible interest which a person can acquire, hold or enjoy. In Amar Singh v. Custodian of Evacuee Property, Punjab, AIR 1957 SC 599, where their Lordships had occasio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est which the assessee has in the disputed properties is an asset within the meaning of s. 2(e)(v). It is not a mere hope or expectation which certainly cannot be regarded as a property unless and until it culminates into definite and indefeasible right or interest in the subject-matter. It is transferable and heritable right and it has been available to the assessee for a period exceeding six years from the date of its creation. Learned counsel placed reliance on the decision of the Supreme Court in CWT v. Smt. R. A. Muthukrishna Ammal [1969] 72 ITR 801. In our opinion that decision is distinguishable because it was rendered under sub-cl. (v) aforesaid as it stood before its amendment in 1964. We have mentioned above that by the aforesaid amendment, the words " from the date the interest vests in the assessee " were added at the end and now if an interest has been available to the assessee for a period exceeding six years from the date the interest vests in the assessee, it would be an asset while prior to its amendment, if an interest was not available to an assessee for a period not exceeding six years, it could not be treated as an asset. That provision can be interpreted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee in the disputed properties has been for a period exceeding six years from the date the new contract of tenancy came into existence. In our opinion, therefore, this decision does not help the assessee. In view of the discussion above we agree with the view taken by the Appellate Tribunal. Now, coming to questions Nos. 3, 4 and 5, as has been indicated above, the basis of valuation adopted in respect of the properties of the assessee except 30A, Mahatma Gandhi Marg, was a multiple of ten times of the annual rental income. For this property the basis was the cost of its construction. For the years under consideration, for this property as well, the basis of rental income has been adopted. In doing so, the reason given by the Appellate Tribunal is that the value of a building very much depends on its location which is certainly relevant for determining its market value. So far as this property is concerned, looking to its location and the rent which it is fetching, it has been considered proper to estimate its value on the net rental basis. In our opinion, the finding is based on consideration of relevant facts and there is no occasion for taking a contrary view. Our answ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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