Applicability of Sec 269SS of I.T Act.

[MOHAMED YACOOB SHARIFF]

Sir,

one my client has entered into the lease agreement for his property where in the lessee has paid Rs.500000/ in cash to the Landlord (assessee) and taken the possession of the  property, with the condition that the NO rent will be paid and Rs. lease amount of Rs.500000/- will be refunded after 3 years, without any interest on the same.

Now the assessing officer says 1) Assessee should have received the lease advance by Chq only and not by cash, hence, the provisions of 269 will apply . 2) And Assessee has to officer the fair rent from such such property 

Pl clarify if he is correct, when there is an agreement.

Pl clarify with the case laws in favour of assesee.

[Rama Krishana]

The AO may be right as long as you say that amount of ₹ 5,00,000/- is refundable after 3 years or on expiry of lease, as the case may be.

It is your stand which will be the base of the final order. What is the nature of amount is question of facts and examination.

If you have got any view, please share with me.

AI Summary

Prohibition on cash receipts: a refundable cash lease advance may breach the cash receipt rule if characterized as refundable. The prohibition on cash receipts may apply where a lessee pays a cash lease advance that is refundable after the lease, because applicability depends on the legal character of the amount. If the sum is refundable, the rule forbidding prescribed cash receipts is engaged. Determination of whether the payment is a refundable advance or rent is a question of fact requiring examination of the lease agreement and surrounding circumstances; factual findings and evidence will control whether the assessing officer's contention stands.