TaxTMI 
TaxTMI 
2011 (2) TMI 65
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....emises after the expiry of the lease and for repair or damage to the premises by the tenant can be treated as an amount received by way of consideration for transfer of any tenancy right? C. Whether the said sum of Rs. 99,95,929 on account of compensation for occupation of the said premises for the period involved was in the nature of arrears of rent and could not be assessed in the assessment year involved? D. Whether the said sum of Rs. 99,95,929 could at all be considered in the hands of the appellant since it related to the period during which DT was the owner of the said premises? E. Whether the sum of Rs. 99,95,929 on account of compensation for occupation of the said premises for the period after the expiry of the lease and Rs. 16 lakhs on account of quarterly instalment for repair and damages to the tenanted premises being capital receipts not involving transfer of any capital asset could be assessed under the Act? F. Whether the Tribunal exceeded its jurisdiction in directing Assessing Officer to consider the entire amount of Rs. 100 lakhs payable on account of repair or damages during the next five years in the assessment year in question....
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....similar basis for the subsequent assessment years 1983-84 to 1991-92 assessing the income under the head 'House property' notionally on the basis of rent payable under the expired lease in respect of the said premises. (f) After prolonged litigation and at the intervention of the Central Government, a settlement was arrived at between DT and the Consulate General of USSR on 2-4-1991 by which the Central Government having arranged a plot of land at Raja Santosh Road, Kolkata for the said Consulate to shift, it was agreed that the Consulate would continue in occupation for a maximum period of five years commencing from 15-1-1991 and would vacate the premises not later than 14-1-1996. It was also stipulated that such obligation to vacate the premises was an absolute one and was irrespective of construction of the Consular Complex on the plot of land allotted by the Government. The Consulate by the said agreement agreed to pay for further occupation from 15-1-1991 till 14-1-1996 at the rate of Rs. 2,83,246 a month. The Consulate further agreed to pay compensation for remaining in occupation after the expiry of the lease from the period 15-1-1981 till 14-1-1991 a sum of Rs. 90 la....
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....ssessed as rental income under the head 'House property' for the said premises. The sum of Rs. 99,95,929 on account of arrears of rent and Rs. 16 lakh for building repair were assessed as business income. (l) On an appeal being preferred by the assessee against such order passed, the CIT (Appeals) held that the sum of Rs. 99,95,929 which admittedly represented arrears of rent could not be assessed to tax in view of the various judicial decisions and it was held that the sum of Rs. 16 lakh also could not be assessed as it was for damage to the house property which was a capital asset and was a capital receipt. (m) The Department filed an appeal before the Income-tax Tribunal, Kolkata, against the aforesaid order of CIT (Appeals) deleting from assessment the sum of Rs. 99,95,929 on account of arrears rent and Rs. 16 lakhs for damages to the property and by order impugned herein, the Tribunal disposed of the appeal by holding that sum of Rs. 90 lakhs received for occupation by way of compensation from the Consulate was not arrears of rent but was compensation for the tenancy right during post-lease-period of 10 years. The Tribunal further held that the further sum of Rs.....
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....said period of 2.5 months as has already been pointed out above. (ii) Whether the said damage compensation is assessable under this year and if so, under what head. It may be pointed out here that Assessing Officer has wrongly taken amount of the damage compensation at Rs. 16 lakhs going by the amount of the receipt thereof during this year. It may be pointed out that the Assessing Officer was not correct in going by the amount of receipt because the said agreement dated 2-4-1991 resulting in the amount of the compensation was entered into during this year. Therefore, the amount for consideration should be Rs. 1 crore and not Rs.16 lakhs." 6. In support of the aforesaid contention, Mr. Bajoria referred to the following three decisions : (1) S.P. Kochhar v. ITO [1984] 145 ITR 255 1 (All.); (2) State of Kerala v. Vijaya Stores [1979] 116 ITR 15 (SC); (3) Mcrop Global (P.) Ltd. v. CIT [2009] 309 ITR 4342 (SC). 7. Mr. Bajoria next contends that the receipts by the owner of a house property can only be assessed under the head 'House property' and the Tribunal below erred in law in assessing the same under the head 'Capital gain' for that year with cost of a....
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....l. In other words, according to Mr. Bajoria, the original grounds of appeal and such additional ground, as may by raised by the Appellant by the leave of the Tribunal, constitute the extent of jurisdiction of the Tribunal and it can adjudicate upon only those grounds and not beyond them. We are quite conscious of the position of law that even if a particular ground is not taken in the Memorandum of Appeal, an appellant may by taking leave of the appellate authority add grounds. In the case before us, however, neither in the Memorandum of Appeal any ground was taken in respect of the aforesaid Rs. 100 lakhs nor was any amendment sought for including such ground and the learned Tribunal below even in its judgment itself while considering the questions before it, referred to only those two points excluding the question of involvement of Rs. 100 lakhs. 14. Therefore, the Tribunal below acted without jurisdiction in enhancing the scope of the appeal although the appellant did not raise any such point. On that ground alone, the portion of the order passed by the Tribunal below relating to the reassessment of Rs. 100 lakhs should be set aside. 15. We, however, also find substance in the....
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....ng out of the selfsame house property under a different head after the same has been taxed as income under the head 'House property' on the basis of notional rent payable by the selfsame occupant. 19. Similarly, it is preposterous to describe the receipts as outcome of transfer of tenancy right as the assessee was not a tenant and as such no question of gaining anything by transferring the right of its tenancy arises. 20. We now propose to deal with the decision in the case of McDowell & Company Ltd. (supra), relied upon by Mr. Nizamuddin, the learned counsel for the revenue. Paragraph 17 of the judgment relied upon by Mr. Nizamuddin is quoted below : "17. We think that time has come for us to depart from the Westminster principle as emphatically as the British Courts have done and to dissociate ourselves from the observations of Shah, J. and similar observations made elsewhere. The evil consequences of tax avoidance are manifold. First there is substantial loss of much needed public revenue, particularly in a welfare State like ours. Next there is the serious disturbance caused to the economy of the country by the piling up of mountains of black money, directly causing inflati....