TMI Blog1976 (11) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... ich he had constructed at Ghatkopar. The question relates, to the assessment year 1960-61, corresponding previous year being the one which ended on 31st March, 1960. Admittedly the assessee constructed a property for a sum of Rs. 93,432. Out of this amount, a sum of Rs. 39,432 was secured either by way of loans or by way of deposits from the tenants. The balance amount of Rs. 54,000 was claimed to have been received by the assessee as pagdi or salami from his tenants. In respect of these amounts which he received as pagdi or salami, no receipts were issued by him to the tenants, but some of the tenants who were examined by the taxing authorities confirmed that they had given to the assessee such amounts which according to them were by way o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding that the payments that were made by the tenants appear to be pagdi or salami payments made by them for getting accepted as tenants by the assessee and, therefore, the Tribunal ultimately held that the pagdi or salami payments by the tenants for getting accepted as tenants by the assessee could not be treated of the nature of income in the hands of the assessee. The Tribunal, therefore, directed that the amounts added should be deleted from the assessment. At the instance of the Commissioner of Income-tax, Bombay City No. III, the question specified above has been referred to us for our determination. Mr. Joshi, appearing for the revenue, has contended before us that the Tribunal was in error in applying the principle which was appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The characteristics and incidence of salami disclosed from the 'statements of the cases' are that it is a lump sum non-recurring receipt of money by a landlord from a tenant before making a settlement of the holding, which in C.A. No. 162 of 1955 varied from Rs. 7 to Rs. 10 per bigha and was less in other cases. He is also entitled to charge a fixed periodical amount of 11 annas per bigha per annum. Salami is charged whenever a fresh settlement is made whether it is of a piece of virgin land or of an auction-purchase holding. Thus, salami is a payment by a tenant to the landlord antecedent to the constitution of the relationship of landlord and tenant. It is really a payment by the tenant to the landlord for being allowed to take possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court. The material facts in that case were that on February 23, 1946, the appellant entered into a lease by which the building was demised to the lessees for 30 years and the lessees agreed to pay under the lease Rs. 55,200 to the appellant towards the cost of erecting the cinema house and the rent agreed to be paid was Rs. 2,100 per month and it was payable from June 1, 1946. The lease did not contain any condition or stipulation from which it could be inferred that the sum of Rs. 55,200 had been paid by way of advance rent. Nor was there provision for its adjustment towards rent or for its repayment by the appellant. The lessees entered into possession after the cinema house was completed which was subsequent to the date of the leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that was payable by each of those tenants to the assessee under the contract by 10 per cent. Moreover, the finding that has been recorded by the Tribunal is that this payment was made to the assessee by the tenants for getting them accepted as tenants. In other words, it was by way of a premium or salami that these payments were received by the assessee as a consideration for granting monthly tenancies to the tenants. Obviously, it was a non-recurring payment made by the tenants to the assessee for the purpose of getting the monthly tenancy. It is true that every payment by way of a salami or a premium need not necessarily be held to be of a capital nature or on capital account, but since prima facie that is the nature of such payment it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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