2015 (6) TMI 768

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....he following questions of law arise in this appeal: "( a) Whether the Tribunal was justified in law as well as on facts, in holding that the assessee has received compensation for surrender the tenancy right, and ignoring the fact that the assessee has not termed as tenant as per the Maharashtra rent control act? (b) Whether in the fact and circumstances of the case and in law, the tribunal was justified in holding that amount received by assessee on account of transfer of capital assets occupied by assessee within the meaning of "capital gain" even otherwise the deed of surrender of tenancy stated that it is a compensation in connection with loss of business, profit and convenience and hardship due to shifting elsewhere?" 3. Brief....

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....urther appeal, the Tribunal while allowing the appeal, placed reliance upon the definition of the tenant under Sections 5(11) and 15A of the Bombay Rent, Hotel &13 Lodging and House Rates Control Act, 1947 (the Rent Control Act), providing for deemed tenancy of premises in occupation of any person as on 1st February, 1973. On the above basis, the Tribunal concluded that surrender of occupation was surrender of tenancy i.e. capital asset and the amounts received was taxable under the head 'Capital gains' and not under the head 'Income from other sources'. Section 15A of the Rent Control Act provides that a person in occupation of the premises shall be deemed to be a tenant in respect of premises in its occupation. 5. For p....

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....e, he shall on that date be deemed to have become; for the purposes of this Act, the tenant of the landlord, in respect of the premises or part thereof, in his occupation. (2) The provisions of subsection (1) shall not affect in any manner the operation of subsection (1) of section 15 after the date aforesaid." 6. The grievance of the Appellant Revenue is that the Respondent Assessee cannot be considered to be a tenant of the subject premises, thus the giving up of occupation by it was not a surrender of capital assets. This on the basis that the Agreement dated 13th June, 1972 entered into by the Respondent Assessee clearly provided that it had rights only to the looms and machinery and use of the subject premises was only incidental....