TaxTMI 
TaxTMI 
2020 (2) TMI 265
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....y treating arrear rent of Kolkata Port Trust (hereinafter referred to as "KPT"), paid by or on behalf of the Appellant, as consideration for alleged transfer of leasehold rights. 2. That the Ld. CIT (A) was erred in law as well as in facts in upholding the addition of the Ld. DCIT of Rs. 10,00,000 out of the addition made of Rs. 14,66,500/- as alleged undisclosed income from license fee, without appreciating the fact that Rs. 10,00,000 has been directly paid by the Appellant to KPT in terms of the agreement between the Appellant and its sub-lessee in view of commercial expediency." 3. These grounds are interlinked therefore we adjudicate them together. Facts of the case, which can be stated quite shortly are as follows: Assessee had got lease hold rights from Kolkata Port Trust [KPT over two plots of land at Hide Park Extension for a long time. Since 01.11.1970 assessee had stopped paying rent. In 1999 it entered into agreement with M/s. ARA Enterprises Pvt. Ltd. for sub leasing the premises to them. Since 01.02.1999 it started receiving monthly rent from M/s. ARA Enterprises Pvt. Ltd. Still assessee did not pay any rent to Kolkata Port Trust. The Kolkata Port Trust issued deman....
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....Tea Estate Ltd. 1975 98 ITR 175 SC. Even an assessee following the mercantile system of accountings is not entitled to claim a deduction until liability for the sum for which deduction is claimed has accrued. The reasons given by the High Court overlooked the plain terms of sec. 326 of the Companies Act, 1956. Sec. 326 prohibits the appointment or reappointment of a managing agent unless the Central Government approved such appointment or reappointment. The Central Government would not accord its approval unless the requirements specified in clauses (a),(b) &(c) of sub-section (2) of the section have been fulfilled. Therefore, it cannot be assumed that the Central Government will approve every proposed appointment or reappointment of a managing agent. Thus, in the instant case it was only when the Central Government conveyed its approval to the appointment of managing agents by its letter dated 02.09. 1957, that the appointment became effective and the company's liability to pay the remuneration of the managing agents accrued. b) Saurashtra Cement & Chemical Industries Ltd. 213 ITR 523/80 Taxman 61 (Guj] c) Addl. Comm -vs- farasol Ltd. 19871 163 ITR 364 [1985] 22 Taxman 4....
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....corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last proceeding census of which the relevant figures have been published before the first day of the previous year; or (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item(a) as the central Government may, having regard to the extent of and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the official Gazette; (iv) 6% per cent Gold Bonds, 1977, or 7 per cent Gold Bond:, 1980, or National Defence Gold Bonds, 1980, issued by the Central Government; (v) Special Bearer Bonds, 1991, issued by the Central Government; (vi) Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government Section 2(47) reads as under: Transfer in relation to a capital asset includes (i) the sale, exchange or relinquishment of the asset, or (ii) the extinguishment of any rights therein: or (iii) the com....
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.... According to section 2(14), the word 'capital asset' means, property of any kind held by an assessee'. Therefore, it does not necessarily mean that the property, which the assessee holds, must be his own. Any kind of property held by an assessee would come within the definition of 'capital asset'. From the decisions of the Supreme Court in A.Gasper v. CIT [1991] 192 ITR 382 and the Madras High Court in A.R.Krishnamurthy & A.R. Rajagopalan v. CIT[1982] 133 ITR 922/[1981] 6 Taxman 289, it is clear that transfer by way of lease is treated as transfer of a capital asset, on the principle that the lease creates an interest in the land and, therefore, to that extent, it extinguishes the right of the transferor. Therefore, when the assessee transfers his leasehold rights in the land in his occupation, by way of a sub-lease to another person, it amounts to extinguishing his rights in the property and since his leasehold rights had created an interest in the land, i.e., enjoyment and possession and, therefore, it would definitely come within the definition of 'capital asset', as defined under section 2(14). Whether the owner himself transfers by way of a lease....
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....ed period. No other rights were conferred on the lessee through this agreement. Refundable deposits were taken, which were equivalent to three months of rent and six months of rent was taken in advance to be adjusted against the monthly rent @ 50% of the rent. Assessee continued to have effective control over the premises and its Leasehold Rights were not affected in any manner. However, agreement dated 07.02.2008 was like transfer of Leasehold Rights. Assessee got lump sum payments equivalent to arrears of rent. Besides it was also entitled for monthly rental from the lessee. However, henceforth assessee did not have the power to terminate the agreement and evict M/s.ARA Enterprises Pvt. Ltd., so long as they continued to pay timely rent and complied with other conditions of the premises for their own use in future. They remained only a name lender in the records of KPT but effective control passed on to M/s.ARA Enterprises Pvt. Ltd. Thus enjoyment and possession of land passed on to M/s.ARA Enterprises Pvt. Ltd. In the first agreement M/s.ARA Enterprises Pvt. Ltd. were not required to discharge prior liabilities of the appellant whereas through the second agreement they agree....
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....his regard. However, it can be inferred that on full payment of arrear of rent during the year, eviction proceedings subsided and after that transfer of Leasehold Rights has taken place. Now the next issue is regarding the total consideration received for transfer of this Leasehold Rights. It is seen that M/s. ARA Enterprises Pvt. has paid Rs. 2,24,00,000/- on 31.03.2010 and balance amount of Ltd. arrear of Rs. 1,32,63,433/- has been paid during the year. These two amounts are basically the consideration for transfer of Leasehold Rights. Thus Rs. 3,56,63,433/- is the consideration for restoration and subsequent transfer of Leasehold Rights. Besides during the current year, M/s. ARA Enterprises Pvt. Ltd. has also paid 50% of the rent payable to Kolkata port Trust. However, this is in the nature of revenue receipt and assessee would keep receiving such income in subsequent years. Assessee has not provided the details of amount, if any, which it might have paid for acquiring the Leasehold Rights. Amount paid if any, would not be much as it was acquired a long time back. Under the circumstances, it is presumed that the cost of acquiring Leasehold Rights is almost Nil. Hence entire ....
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....ion 1.-For the purposes of sub-clauses (v) and (vi), "immovable property" shall have the same meaning as in clause (d) of section 269UA. Explanation 2.-For the removal of doubts, it is hereby clarified that "transfer" includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India;" Having gone through the explanation 2 of section 2(47) of the Act, we note that the transfer includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or in directly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement. Therefore, it is quite clear that M/s S....