99-year lease for premium can amount to transfer of a capital asset and attract capital gains tax

A 99-year lease granted for premium or salami was treated as a transfer of a capital asset because the lessor parted with possession and enjoyment for an enduring period and received valuable consideration. On those facts, the transaction fell within section 12B of the Indian Income-tax Act, 1922, so capital gains tax applied. The argument that the subject was only leasehold rights did not prevent section 12B from operating. A new objection based on absence of cost of acquisition was also not entertained, as it did not arise from the Tribunal's order or the questions referred.

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Issues: Whether the grant of 99-year leases for premium or salami amounted to a transfer of a capital asset so as to attract capital gains tax under section 12B of the Indian Income-tax Act, 1922.

Analysis: The land had been developed into building sites and the assessee had parted with rights of possession and enjoyment for a long period of 99 years. The leases were not mere short-term arrangements but conveyed an enduring interest for valuable consideration in the form of premium or salami. On these facts, the transaction fell within the meaning of transfer of a capital asset under section 12B. The additional contention that the matter involved only leasehold rights did not prevent the application of section 12B, and the attempt to raise a new objection based on absence of cost of acquisition was not entertained because it had not arisen from the Tribunal's order or the questions referred.

Conclusion: The grant of the leases amounted to a transfer attracting capital gains tax under section 12B, and the appeal failed.

Ratio Decidendi: A long-term lease of 99 years granted for premium or salami, whereby the lessor parts with an enduring interest in immovable property, constitutes a transfer of a capital asset for the purposes of capital gains taxation.

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