TMI Blog1978 (3) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... GUHA. JUDGMENT SUDHINDRA MOHAN GUHA J.--We are concerned with the following questions in this reference under section 256(1) of the Income-tax Act, 1961 : " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee's right of tenancy under the landlords constituted a capital asset within the meaning of section 2(14) of the Income-tax Act ? (2) If the answer to question No. (1) is in the affirmative, whether on the facts and in the circumstances of the case, the Tribunal was right in holding that there was a transfer of the assessee's right of tenancy under the landlords within the meaning of section 2(47) of the said Act? (3) If the answer to question No. (2) is in the affirmative, Whether on the facts and in the circumstances of the case, the Tribunal was correct in holding that the sum of Rs. 1,83,201 represented capital gains assessable under section 45(1) of the said Act for the assessment year 1967-68 ? " The assessment year is 1967-68 for which the previous year ended on 31st March, 1967. The assessee is an individual and derived income practically from all sources including income from sub-letting premis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re encumbered by monthly tenancy held by the assessee and sub-tenancy created by him. It was further submitted that in order to remove this handicap the Associated Batteries after negotiation with the assessee agreed to pay Rs. 4,50,000 to him and, thereafter, the assesee allowed the Associated Batteries to proceed with the construction work. It was further contended that no capital asset within the meaning of s. 2(14) of the Act was transferred as per the provisions of s. 2(47) read with s. 45(1) of the Act. The AAC rejected the contentions and dismissed the appeal. The assessee then filed a further appeal before the Tribunal. The Tribunal accepted the case of the assessee that he was deriving income from this property by sub-letting certain portions of it. The Tribunal also accepted the case of the assessee that he became a licensee under the Associated Batteries in support of which a receipt dated 15th March, 1967, granted by the Associated Batteries to him was produced by him before the Tribunal. The arguments made on his behalf before the AAC were also reiterated before the Tribunal. It was further contended that his previous monthly tenancy under the landlords was not a t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are vested in the present occupier thereof) for the purpose of carrying out of the new works and otherwise carrying this agreement into full and complete execution and effect." "5. (1) Simultaneously with the execution of these presents Mr. Gasper will assign and transfer to the Associated Batteries all his present leasehold estate and interest in the said property described in the first schedule for such consideration as may be agreed upon between them before the execution of this agreement but subject to the sub-tenancy now existing in relation to the yellow-hatched land and the tea shop and to the payment of the monthly rent payable to the landlords in relation to Mr. Gasper's lease and the observance and performance of all stipulations and conditions affecting such lease and on the part of the lessee to be observed and performed ......". "5. (4) Mr. Gasper will continue to occupy the remaining portion of the ground floor of the said premises as a licensee under Associated Batteries until such time as the under-lease mentioned in clause 7(ii) hereafter is granted. He will pay such fees as compensation to Associated Batteries as may be agreed between him and Associated Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e he received part of the consideration, that is, Rs. 2,25,000." We, therefore, reject the aforesaid contention of Mr. Banerjee who then argues that the assessee was a monthly tenant under the landlords and that it was governed by the West Bengal Premises Tenancy Act, 1956, and, therefore, it is not a transferable property and as such it is not a capital asset under the I.T. Act, 1961. He also argues that the interest of a monthly tenant in a monthly tenancy is not an asset at all. Mr. Ajit Sengupta, learned counsel for the revenue, argues that cl. 5(1) of the agreement shows that the assessee was not a monthly tenant and that he had a leasehold interest in the property. According to him, a leasehold interest is a capital asset because s. 2(14) of the I.T. Act, 1961, lays down that capital asset means " property of any kind " and the word " property " is of the widest amplitude. He also argued that the finding of the Tribunal, namely, that the tenancy of the assessee was governed by the Transfer of Property Act and not by the West Bengal Premises Tenancy Act, 1956, is a mixed question of law and fact. It has not been challenged by the assessee by raising an appropriate question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idest import and subject to any limitation which the context may require, it signifies every possible interest which a person can clearly hold and enjoy. In CIT v. All India Tea and Trading Co. Ltd. [1979] 117 ITR 525, 531 (Cal), this court says as follows : " It is beyond dispute that where compensation is paid for acquisition of a non-agricultural leasehold land both to the lessor and lessee in accordance with their respective interests in such land, such compensation is assessable to capital gains in their respective hands, although the actual or physical possession remained with the lessee and the constructive possession remained with the lessor at the time of such acquisition. " The West Bengal Premises Tenancy Act, 1956, does not create any tenancy. It merely protects the tenant whose tenancy has been lawfully determined, from eviction if he fulfils certain conditions specified in it. Where a tenant has obtained the previous consent in writing of the landlord to transfer his rights and interests in the tenancy, he is entitled to transfer it in view of s. 14(1)(b) of the West Bengal Premises Tenancy Act, 1956. Hence, transfer of the rights and interests of a tenant in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the monthly tenancy or the leasehold estate and interest of the assessee in favour of the Associated Batteries was invalid because, according to him, the assessee did not execute any registered document transferring his monthly tenancy or leasehold estate and interest in favour of the Associated Batteries. He cites the cases of K. C. Pal Chowdhury v. CIT [1962] 46 ITR 1 (Cal), CIT v. Bhurangya Coal Co. [1958] 34 ITR 802 (SC) and Alapati Venkataramiah v. CIT [1965] 57 ITR 185 (SC), in support of his contention that the right, title and interest in an immovable property can only be transferred by a registered conveyance. But the aforesaid cases have no application to the facts and circumstances of the case. It was not even the case of the assessee before the Tribunal that no such registered document was executed by him, nor was it contended on his behalf that the transfer of his monthly tenancy or leasehold estate and interest was invalid. The Tribunal also did not express any opinion in this behalf. Therefore, the aforesaid plea is a new plea and it does not arise out of the order of the Tribunal, nor is it another aspect of any one of the questions before us. In the premise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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