TaxTMI 
TaxTMI 
2006 (3) TMI 81
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....d to pay a monthly rent of Rs. 300. The lessee had also a right to create a sub-lease and she actually created a sub-lease in favour of M/s. Bhavani Shankar and Gopi Venkata Sanyasaiah Somanath by a deed dated February 10,1988, for a period of 97 years and 5 months starting from January 1,1988 to June 11, 2085. The assessee received a lump sum of Rs. 4,30,000 as consideration. It was stated to be adjustable against monthly rent of Rs. 367.83. The Income-tax Officer assessed tax and was of the view that an amount of Rs. 3,87,500 was capital gain and an amount of Rs. 42,500 was the cost of acquisition. Thereafter, in an appeal, the Commissioner of Income-tax, upheld the assessment following the decision of the Supreme Court in A.R. Krishnamurthy v. CIT [1989] 176 ITR 417. When the matter was taken to the Tribunal, the Tribunal also agreed with the Commissioner of Income-tax. Thereafter a request for reference was made by the assessee. Learned counsel for the assessee has relied on various judgments being R.K. Palshikar (HUF) v. CIT [1988] 172 ITR 311 (SC); Traders and Miners Lid. v. CIT [1955] 27 ITR 341 (Patna); A.R. Krishnamurthy v. CIT [1989] 176 ITR 417 (SC); A. Gasper v. CIT ....
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.... lease, premium has been charged by the assessee for the grant of the lease concerned. In Traders and Miners Ltd. v. CIT [1955] 27 ITR 341, a case decided by a Division Bench of the Patna High Court, the assessee let on lease for 99 years a portion of a zamindari (land) acquired by it. The lease related to the surface right together with nine mica mines located in that area. The consideration for the lease was the payment of a 'salami' and a reserve rent per year. The Income-tax Officer determined the cost to the assessee of the mineral rights and after deducting this amount from the salami, he assessed the balance to tax as capital gains under section 12B of the said Act. It was held by the Patna High Court that the gains arising from the said transaction were rightly taxed. This decision has been cited without comment by Kanga and Palkhivala in their Commentary on the Law and Practice of Income-tax (7th edition), at page 550, and no case to the contrary has been cited in the said text book or has been brought to our attention. It is true that the decision of the Patna High Court in Traders and Miners Ltd. v. CIT [1955] 27 ITR 341, relates to the case of a mining lease, but, to ou....
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....sferred by the grant of the lease. So far as the apportionment of the cost of acquisition is concerned, it is a question of fact to be determined by the Income-tax Officer in each case on the basis of evidence. The determination of the cost of the right to excavate clay in the land in terms of money may be difficult but is none the less of a money value and the best valuation possible must be made." In A. Gasper's case [1979] 117 ITR 581 (Cal) the question referred was: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee's right of tenancy under the landlords constituted a capital asset within the meaning of section 2(14) of the Income-tax Act?" The finding of the Tribunal was that the assessee had received the amounts for transferring his leasehold interest and the monthly tenancy to Associated Batteries, with the consent of the landlords. In these circumstances, the High Court of Calcutta held as follows: "Any profits or gains arising from the transfer of a capital asset shall be chargeable to income-tax under the head 'capital gains'." In Maharaja Chintamani Saran Nath Sah Deo's case [1966] 62 ITR 167 (P....
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....to enjoy the property made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent. The section, therefore, brings out the distinction between a price paid for a transfer of a right to enjoy the property and the rent to be paid periodically to the lessor. When the interest of the lessor is parted with for a price, the price paid is premium or salami. But the periodical payments made for the continuous enjoyment of the benefits under the lease are in the nature of rent. The former is a capital income and the latter a revenue receipt. There may be circumstances where the parties may camouflage the real nature of the transaction by using clever phraseology. In some cases, the so-called premium is in fact advance rent and in others rent is deferred price. It....