TMI Blog1978 (7) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... area of the premises leased out was 9,825 sq. ft. Under cl. 2 of the deed the rent of the premises was fixed at Rs. 1,500 per month for the first two years and, thereafter, at an increased rate of Rs. 100 per month after every nine years till the expiry of the lease, i.e., after 99 years. The ITO rejected the assessee's claim that the said sum of Rs. 50,000 received as premium or salami constituted capital receipt and was not tax- able as income. The ITO found that the property was situated in a predominantly business area where the market rent was quite high varying between 75 p. to Re. 1 per square foot. The stipulated rent was lower than the prevailing market rent. The ITO also noted that the lump sum payment was in consideration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the above reasons the AAC accepted the contentions of the assessee and allowed his appeal. From the order of the AAC the revenue preferred a further appeal to the Tribunal. The Tribunal found that the said sum of Rs. 50,000 had been paid by way of salami or premium and had been so recorded in the deed. The Tribunal also found that the other provisions in the deed justified the low rate of rent. The Tribunal concluded that the said sum of Rs. 50,000 received by the assessee as salami was a capital receipt and not liable to tax. At the hearing learned counsel for the revenue did not advance any contention except what had been stated by the ITO. The learned counsel for the assessee, on the other hand, cited a decision of the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary 23, 1946, but with effect from June 1, 1946. (e) The sub-lessees would enter in to possession after the cinema house was said to be completed. (f) The payment of the lump sum was of a non-recurring nature. On the basis of the aforesaid reasons the Supreme Court held that the said sum of Rs. 55,200 was a capital receipt and not income. It appears to us that the facts of the present case are very similar to the facts which were considered by the Supreme Court in the above decision and that the present reference is covered by the said decision. In the instant case the lease is for a long period with provision for escalation of rent. The rent fixed is higher than the previous rent. The lease provides for demolition of the old str ..... X X X X Extracts X X X X X X X X Extracts X X X X
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