Nature of occupancy matters for industrial relief: lease or sub-lease may count as a transfer under income-tax exemptions.

For relief under section 15C of the Indian Income-tax Act, 1922, and section 84 of the Income-tax Act, 1961, the character of the assessee's occupation of the premises is legally material. A lease or sub-lease may constitute a transfer for these provisions, so relief cannot be denied on the assumption that such arrangements are irrelevant. The Tribunal was required to determine the foundational factual question whether the premises were held under a leave-and-licence arrangement or under a lease or sub-lease, and then apply the statutory conditions, including the Explanation to section 84 where relevant. The Tribunal's view that the mode of occupation made no difference was incorrect, and the matter required reconsideration on the proper factual and legal basis.

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Issues: Whether the assessee's occupation of the premises in which the new industrial undertaking was set up constituted a transfer so as to affect eligibility for relief under section 15C of the Indian Income-tax Act, 1922, and section 84 of the Income-tax Act, 1961; and whether the Tribunal was required to examine the nature of the assessee's occupancy and the applicability of the Explanation to section 84.

Analysis: The Tribunal proceeded on the footing that even if the assessee were a sub-lessee, relief could not be denied because a lease or sub-lease was not treated as a transfer. That approach was held to be inconsistent with the earlier view of the High Court that the expression "transfer" in these provisions includes ordinary modes of transfer such as lease and sub-lease. At the same time, the court noted that the Tribunal had not determined the foundational factual question whether the premises were held on a leave-and-licence basis or under a lease/sub-lease, and that this distinction was material to the legal position. The court also observed that, for the later assessment years, the Tribunal had not considered the applicability of section 84 and its Explanation, and that the earlier years raised analogous questions under section 15C.

Conclusion: The Tribunal's view that the manner in which the assessee occupied the premises made no difference was incorrect, and the matter had to be reconsidered on the factual and legal issues indicated by the court.

Final Conclusion: The reference was answered by holding that the Tribunal had erred in law and that the eligibility for relief had to be re-examined on remand in light of the nature of the assessee's occupancy and the applicable statutory conditions.

Ratio Decidendi: For relief under section 15C of the Indian Income-tax Act, 1922, and section 84 of the Income-tax Act, 1961, the character of the assessee's right to occupy the premises is legally material, and a lease or sub-lease may amount to a transfer for these provisions.

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