TMI Blog1991 (5) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... equently erred in deleting the addition." 3. The arguments of the learned Departmental Representative and the learned counsel for the assessee were heard. 4. The assessee is a company registered under the Companies Act, 1956 and its primary object is to develop the World Trade Centre premises at Bombay which housed show-rooms, sales emporium, shopping arcades, etc. It took on lease a plot of land for 99 years from the Government of Maharashtra, and, after having built a building known as World Trade Centre thereon, leased out the shops, show-rooms, etc. to various lessees for a period of 60 years commencing from the date on which the lease premises were ready for 'occupation. For such lease, the assessee charged rent, which consisted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, sewages treatment plant and plant rooms, roads and pavings, car parks, lights, landscaping drains and sewers, all terraces, electricity charges, insurance premium, sinking fund at the rate of approximately 4% administrative expenses including wages and all expenses and all costs and expenses incurred by the Centre in discharging its obligations as Lessor, as the area of the premises hereby agreed to be leased bears to the total area of the Trade Centre building which the Centre shall decide to lease but which common outgoings shall be subject to increase or decrease by reason of any of the aforesaid expenses being increased or decreased. The common outgoings rent shall be paid by the Lessees to the Centre on or before the 5th of every m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. have been filed. On the basis of this certificate and the relevant provisions of the standard Lease Agreement it was contended by the learned counsel that the contributions to the sinking fund were capital receipts and were, therefore, not liable to be included in the total income of the assessee for taxation purposes. According to the learned counsel, the amount of the sinking fund was intended to be utilised to replace, or, to carry out major structural repairs to, the building of the World Trade Centre as and when so required. The amount of the Fund was not available to the assessee to be utilised for any purpose other than the said purpose and, therefore, the amount of the Fund could not validly be treated as a revenue receipt of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment, but a component of monthly recurring rent and is thus essentially a receipt of revenue nature. The mere giving of nomenclature of a 'Fund' or 'Sinking Fund' would not be decisive of the matter. For the purposes of taxation what is to be seen is the inherent and essential character of a receipt and not the nomenclature given to it by the recipient or, for that matter, by the payer. No one can be allowed to alter the inherent and essential character of a receipt by giving a nomenclature of its choice or convenience. In the Lease Agreement, the use of the words 'sinking fund' has been made only once and that too in an enumerative context. Neither the objects of the purposes of the Fund have been identified nor does the Agreement conta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port Corporations Act, 1950. The contributions out of the revenue of the Corporation were made towards the third party liability fund. The contributions were made under the legal obligation cast upon the Corporation under a statutory rule. It was in this background of the law that the High Court held that the contributions to the Fund were admissible as a deduction in computing the income of the Corporation. This ruling was rendered in the context of the statutory provisions and it does not in any way support the assessee's contention in the present case to the effect that contributions of the nature as in the present case are capital receipts or that such contributions are liable to be deducted out of the rent income of the assessee. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Supreme Court cannot in any way help the assessee before us. 12. In Poona Electric Supply Co. Ltd.'s case the contributions by the would be consumers of electricity were made towards and represented only a part of the capital cost of constructing the New supply lines, which works were regarded by the assessee as unremunerative and would not have been undertaken without the contributions in question. It was in that context that the Bombay High Court held that such contributions were not trading receipts, but were only capital receipts and were, therefore, not assessable to tax. It would be needless to say that the facts of that case before the Bombay High Court are clearly distinguishable from the facts of the case before us. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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