TMI Blog1981 (3) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... aid at Re. 1 per month, but from 9th December, 1963, the rent was fixed at Rs. 11,250 per month payable on the 9th day of each English calendar month. The claim of the assessee before the ITO was that a sum of Rs. 14,500, which was paid as stamp duty for the lease deed, as well as a sum of Rs. 45,000 paid as brokerage to one Champaklal Kothar should be allowed to be deducted from its business income as the said expenditure was wholly and exclusively incurred for the purpose of the business of the assessee. The contention of the assessee before the ITO was that the income in the form of rent should be assessed as business income. The ITO took the view that the Iong-term lease for 98 years was in the form of an advantage of an enduring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible ? (2) Whether, on the facts and in the circumstances of the case, the income from the lease rent was assessable as business income or as income from other sources?" Mr. Joshi, the learned counsel for the Revenue, has contended before us that the only relevant provision under which the deduction, if at all, would be permissible would be under s. 57 of the I.T. Act, 1961 (hereinafter referred to as " the Act "), and, according to the learned counsel, under cl. (iii) of s. 57, before a deduction of expenditure can be made permissible, it will have to be proved that it was not an expenditure of a capital nature. Section 57, cl. (iii), reads as follows : "The income chargeable under the head 'Income from other sources' shall be com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come from land. The source of income is thus the land itself. The contract of lease cannot by any stretch of imagination be described as a source of income. The contract of lease may no doubt regulate the relationship between the lessor and the lessee, but that does not serve as a source of income because rent paid is for the use of land and, therefore, the land alone is the source of income. Thus, whenever a contract of lease is entered into between a landlord and a tenant, no new source of income is brought into being. If no source of income is brought into being as a result of the contract of lease, and if, as in the present case, it is not now in dispute that the expenditure was necessary to be incurred for the purposes of lease, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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