TMI Blog1994 (9) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... o building or buildings or structure or structures shall be constructed or erected on the portion of land, hereditaments and premises retained by the vendor or any part thereof out of the land hereditaments and premises described in the First Schedule hereunder written exceeding 35 feet in height from the ground level, nor will the existing buildings or structures thereon or any of them be added to or raised over a height of 35 feet from the ground level, and in the event of the vendor selling the whole or any part of the said portion so retained by it, then in that case the vendor shall procure from the purchaser or transferee thereof, as the case may be, a covenant in terms similar to this covenant." 4. In November 1985, one Mr. Parmeshwar Mittal informed the assessee-society that he was buying some plots of land located in Ruia Park, opposite the building owned by the society and that he proposed to construct building 60 feet high from the ground level and sought the permission of the society in respect of the height. Further, vide his letter dated 13-1-1986, he indicated that in the event of the society acceding to his request, he was prepared to pay a sum of Rs. 30 lakhs to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g section. 11. The learned Departmental Representative, on the other hand, contended that the charge is not sought to be created by virtue of section 10(3) but is by virtue of section 56. He also relied heavily on the orders of the lower authorities. 12. We have been lavishly treated by both the sides with erudite commentaries and judicial pronouncements on the subject and shall deal with them as we proceed to dissect the rival arguments in the following paragraphs. 13. To start with, it would be pertinent to note as to how the CBDT clarified about the taxability or otherwise of casual and non-recurring receipts in its Circular No. 158, dated 27-12-1974. The following is mentioned at para 2 of the said Circular: "Receipts which are of a casual and non-recurring nature will be liable to income-tax only if they can properly be characterised as 'income' either in its general connotation or within the extended meaning given to the term by the Income-tax Act." 14. Thus, it is obvious from the above clarification that in order to tax a casual receipt as income, the starting point would be to determine whether the receipt can be called income. In order to do that, we shall have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h a payment, an 'income' which is in the income-tax sense his own....The conclusion, therefore, I have reached is that, in construing the word of 'income' in the Indian Income-tax Act, one has to ask oneself whether, having regard to all the circumstances surrounding the particular payments and receipts in question, what is received is of the character of income according to the ordinary meaning of that word in the English language or whether it is merely a casual receipt or mere windfall." 18. Respectfully, we shall now apply the above test to the receipt in question before us. 19. At the outset, we may look into the intention of the parties to the contract. The assessee, while buying the land, had stipulated a restrictive covenant to which the vendor had agreed. Mr. Parmeshwar Mittal, the purchaser of the adjoining land on which the restrictive covenant was to be enforced, was also aware of the said covenant. Possibly, two courses were open to him, namely, one to straightway build the structure beyond the height of 35 feet in total disregard of the covenant, or, two, to approach the society with a request to relax or waive the covenant. If Mr. Mittal had opted for the former ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, that does not mean it is unenforceable. But the fact remains that the payment has resulted from the stipulation. In fact, payment made in spite of the absence of a stipulation as to the consequences or damages in the event of violation, strengthens the contention of the assessee that it is a voluntary payment as a gesture of goodwill. 23. As the transaction did not involve any 'transfer'--much less, of a capital asset,--the amount is not chargeable to tax even under the head "Income from capital gains". 24. The CIT (Appeals) upheld the action of the Assessing Officer on the ground that the onus for claiming exclusion from the net of taxation was on the assessee. For this contention, he relied on the decision of the Supreme Court in the case of Abdul Hussain Mulla Muhammad Ali. However, we do not agree with the contention of the CIT (Appeals) about the applicability of the said decision in the instant case. In Abdul Hussain Mulla Muhammad Ali's case, the transaction was of a commercial nature. It was never disputed by the parties to the transaction. However, the assessee claimed exemption on the ground of some obscure personal law applicable to Muslims for which no authorita ..... X X X X Extracts X X X X X X X X Extracts X X X X
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