TaxTMI 
TaxTMI 
2007 (4) TMI 172
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....keting of chemicals, motors, engineering products and also in export business. The relevant assessment year is 1994-95 and the corresponding accounting year ended on 31.03.1994. The assessee is a company incorporated under the Companies Act. The assessee filed Return of income for the assessment year showing total loss at Rs.11,23,596/-. The case was processed under Section 143(1) of the Income-tax Act ("the Act" in short) on 12.01.1995 accepting the returned loss. Later, notice under Section 143(2) of the Act was served and the assessment was completed on 30.08.1996 under Section 143(3) of the Act, determining the net loss at Rs.7,61,580/-. During the course of assessment proceedings, it was noticed that an amount of Rs.99,00,000/- was credited in the Profit and Loss Account, under the head "Commission, Fees and Miscellaneous". It was explained by the assessee that the said amount had been received by way of surrender of tenancy rights and also claimed that this receipt was not taxable being in the nature of a capital receipt. The contention of the assessee was accepted by the Assessing Officer and hence the said amount of Rs.99,00,0....
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....Mill Pvt. Ltd. for surrendering its tenanted premises was held as its casual and non-recurring income for the assessment year 1990-91. 11. The facts being identical in the assessee's case, the decision of the Spl. Bench Mumbai reported in 217 ITR ITAT Report P.51 is followed and the amount of Rs.99 lacs received by the assessee on the surrender of tenancy rights is held to be in the nature of casual income chargeable u/s. 10(3) of the Income-tax Act. 12. The assessment for 1994-95 is, therefore, being erroneous and prejudicial to revenue, revised u/s.263 with a direction to the assessing Officer to assess the amount of Rs.99 lacs received by the assessee on the surrender of tenancy rights." 4. Aggrieved by the order, the assessee filed an appeal to the Income-tax Appellate Tribunal ("Tribunal" in short). The Tribunal dismissed the appeal and held that the amount is taxable on the basis that it results in transfer of capital asset and held as follows: "9. As observed earlier, notwithstanding the observation of the Commissioner to the decision of the Special Bench, the fact remains that the issue in the instant case is one of assignment of interest of tenancy ....
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....ears to the partners of Crema Industries, namely, Mr.Francis Theodore D'Souza and Mr.Mahadeo Soma Tamboskar. The said lease was renewed for a further period of 99 years by a Lease Deed dated 27.01.1988. On 24.09.1971, the assessee entered into a lease arrangement with Crema Industries to occupy and use an area measuring 4945 sq.ft. in Block A of the Sun Mill Compound, Lower Parale, Bombay. The rent payable by the assessee was Rs.1 per sq.ft. per month. The said Lease Agreement was to come into effect on 11.10.1971 and remain in force for a period of 36 months with a option to renew it for a further period of 36 months on the same terms. The assessee remained in possession even after the expiry of 72 months from 11.10.1971. On 22.01.1993, sub-lessee, the assessee requested the lessee, Mr.Francis Theodore D'Souza for permission to sub-let a portion of the above premises. Permission was given on 29.01.1993 to the assessee to sub-let the premises. On 10.06.1993, the assessee sub-let 3000 sq.ft. of the premises to Turel Sales Corporation at a minimum charge of Rs.25,000/- per month payable quarterly. On 01.12.1993, Mr.Francis Theodore D'So....
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....carriage permits and loom hours. Their cost of acquisition should be taken to be the amount of purchase price if those assets are acquired by purchase and in other cases nil. The amended provision takes effect from 1st April 1995. Here we are concerned with the assessment year 1994-95. The Courts held that transfer of goodwill and tenancy right are not subject to income-tax as capital gain. In the case of Commissioner of Income-tax, Bangalore Vs. B.C.Srinivasa Setty (128 ITR 294) the Apex Court considered the scope of Section 45 and Section 48 of the Act and held as follows: "Section 45 charges the profits or gains arising from the transfer of a capital asset to income-tax. The asset must be one which falls within the contemplation of the section. It must bear that quality which brings s.45 into play. To determine whether the goodwill of a new business is such an asset, it is permissible, as we shall presently show, to refer to certain other sections of the head "Capital gains". Section 45 is a charging section. For the purpose of imposing the charge, Parliament has enacted detailed provisions in order to compute the profits or gains under tha....
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.... be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset: "(ii) the cost of acquisition of the capital asset..." What is contemplated is an asset in the acquisition of which it is possible to envisage a cost. The intent goes to the nature and character of the asset, that it is an asset which possesses the inherent quality of being available on the expenditure of money to a person seeking to acquire it. It is immaterial that although the asset belongs to such a class, it may, on the facts of a certain case, be acquired without the payment of money. That kind of case is covered by s. 49 and its cost, for the purpose of s. 48, is determined in accordance with those provisions. There are other provisions which indicate that s. 48 is concerned with an asset capable of acquisition at a cost. Section 50 is one such provision. So also is sub-s. (2) of s. 55. None of the provisions pertaining to the head "Capital gains" suggests that they include an asset in the acquisition of which no cost at all can be conceived. Yet there are assets which are acquired by w....