Tribunal Upholds Lease Income Assessment at Rs. 2,550/month, Rejects Lower Amount

The Tribunal ruled in favor of assessing the income from the lease of premises at Bombay at Rs. 2,550 per month, as per the original agreement between the parties. The Tribunal rejected the CIT(A)'s decision to consider only Rs. 1,004 per month for taxation, emphasizing the importance of adhering to the terms of the original agreement enforced by the Court. The Tribunal allowed the Revenue's appeal in part, holding that the income assessable should be based on the agreed rent of Rs. 2,550 per month, in line with legal principles and previous case law.

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Issues:
Income to be included in respect of the lease of premises at Bombay.

Analysis:
The judgment revolves around the income to be included concerning the lease of premises in Bombay. The premises were leased by the assessee-company to M/s Hero's Publicity Service at a rent of Rs. 2,550 per month in 1967, with the sub-lease expiring on 31st Jan., 1972. Litigation ensued between the parties, culminating in a consent order by the Bombay High Court on 24th Sept., 1974, directing M/s Hero's Publicity Service to deposit Rs. 2,550 per month in court. The matter was eventually settled out of court, and both suits were dismissed on 27th July, 1983.

The assessing authority contended that despite the rent being paid as per the agreement, the tenants claimed the standard rent should be Rs. 1,004 per month. The CIT(A) accepted the claim, ruling that only Rs. 1,004 should be considered for taxation, citing the interim nature of the High Court's order and the ongoing litigation.

The Departmental Representative argued that the agreed rent was Rs. 2,550 per month, as per the original agreement, and the High Court's order maintained this amount. The representative contended that the CIT(A) erred in deleting this account and should have upheld the income assessable at Rs. 2,550 per month.

The Tribunal held that the income assessable should be based on the original agreement's rent of Rs. 2,550 per month, as it was not only legally but also practically the income of the assessee. The Tribunal rejected the CIT(A)'s decision to tax only Rs. 1,004 per month, emphasizing that the accrual of income should be based on the original agreement enforced by the Court. The Tribunal allowed the Revenue's appeal in part, ruling in favor of assessing the income at Rs. 2,550 per month. The judgment also referenced various case laws supporting the decision.

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