TMI Blog1981 (2) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... pears that a lease deed was executed in favour of the assessee by the President, that lease is not on record and the matters up to this stage have proceeded on the footing that the lease is subject to the terms and conditions set out in a memorandum of agreement dated December 30, 1954, between the President of India and one Vashesharan Devi. We shall, therefore, only refer to the terms of this agreement in deciding the question at issue. Broadly speaking, under the agreement, the President agreed to lease out the said plot of land to the lessee on payment of Rs. 24,400 as a premium. There are stipulations in the agreement which require the assessee to put up buildings and execute certain works on the plot of land with which we are not he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbefore mentioned, the President will grant or cause to be granted to the said intended Lessee and the said intended Lessee shall accept a lease of the buildings to be erected as aforesaid and of the said piece of land hereinbefore described in perpetuity from the thirteenth day of March One thousand nine hundred and fifty three at the yearly rent of Rs. 600 (Rupees Six Hundred only) of such other sum as may hereafter be assessed under the covenants and conditions contained in the printed form of lease attached hereto payable half-yearly in advance on the fifteenth day of January and July, in each year. The first of such payments to be made on the 15th July, 1953. XIX. In case the said intended Lessee shall commit any breach or make defau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of land and let out the property to the trade representative of the German Democratic Republic. The said tenant used only the first floor of the bungalow for his residence while the ground floor was being used by him as an office. The Land and Development Officer, New Delhi, raised an objection to the user of a part of the premises for non-residential purposes in view of cl. XIII of the agreement of lease earlier referred to. However, subsequent correspondence shows that the Land and Development Officer was willing to " regularise temporarily the change of purpose " on certain payments to be made by the assessee. This correspondence may now be referred to. By a letter dated 21st June, 1961, addressed by the Land and Development Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um, the cheque of Rs. 3,351 sent earlier being adjusted against the amounts so due. By letter dated 18th February, 1964, a fresh notice was given on behalf of the Govt. of India calling upon the assessee to show cause why the lease should not be forfeited for breach of cl. XIII. But again by the letter dated 14th May, 1964, the Chief Commissioner, Delhi, was stated to have " temporarily condoned the breach of cl. XIII of the agreement for lease conditional upon (the lessee) paying damages and penalty and rectification of breach by 30th March, 1963, for use of permises of office ", but asking why action under the lease deed should not be taken for the assessee's failure to rectify the breach. On 31st December, 1964, the Land and Development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid to the Land and Development Officer against income from property, has been rightly disallowed ? " Learned counsel appearing for the assessee submits that the amounts which the assessee had to pay to the Land and Development Officer which are described as additional charges or damages for misuse really represented the additional ground rent payable by him in respect of the property and was, therefore, permissible as a deduction under s. 24(1)(v) of the I.T. Act, 1961. In the alternative, he contended that since under cl. XIII, the Land and Development Officer could proceed against the property in the event of non-payment of rent or additional charges, the amounts in question were allowable as " annual charges " in respect of the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is whether the payments made by the assessee are really in the nature of rent or not. To us it appears that the payments answer this description. Clause XIII of the lease deed does not absolutely prohibit the use of the building erected on the land for other than residential purpose. It envisages the use of the premises for different purposes but with the previous consent in writing of the designated officer of the Land and Development Department. Again, cl. XIV refers to two types of payments to be made by the lessee in respect of the property, one is the premium amount of Rs. 24,400 and the other is " the yearly rent of Rs. 600 or such other sum as may hereafter be assessed under the covenants and conditions Contained in the printed form ..... X X X X Extracts X X X X X X X X Extracts X X X X
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