TaxTMI 
TaxTMI 
1981 (2) TMI 59
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....in deciding the question at issue. Broadly speaking, under the agreement, the President agreed to lease out the said plot of land to the lessee on payment of Rs. 24,400 as a premium. There are stipulations in the agreement which require the assessee to put up buildings and execute certain works on the plot of land with which we are not here concerned. After the building was put up the following clauses of the agreement came into operation : " XIII. During the period of this agreement the said land shall be used only for the purpose expressly stated in Clause II hereof and subject to the terms of the covenant in that respect to be contained in the lease, no part of the buildings to be erected on the said land shall at any time hereafter without the previous consent in writing of the Chief Commissioner be used or allowed to be used for any purpose whatsoever other than as a residential building consisting of a single or two residential flats in all nor shall any act be done or caused or suffered to be done on the said land or in the said building which in the judgment of the Chief Commissioner, is likely to be or become a nuisance or a disparagement annoyance or inconvenience t....
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....uiring the Lessee to remedy the breach. And the intended lessee fails within a reasonable time from the date of service of the notice to remedy the breach, if it is capable of remedy and in the event of forfeiture or re-entry the said officer may in his discretion relieve against forfeiture on such terms and conditions as he thinks proper. Nothing in this clause shall apply to entry for breach of covenants against unauthorised sub-division." The assessee put up a bungalow on the above plot of land and let out the property to the trade representative of the German Democratic Republic. The said tenant used only the first floor of the bungalow for his residence while the ground floor was being used by him as an office. The Land and Development Officer, New Delhi, raised an objection to the user of a part of the premises for non-residential purposes in view of cl. XIII of the agreement of lease earlier referred to. However, subsequent correspondence shows that the Land and Development Officer was willing to " regularise temporarily the change of purpose " on certain payments to be made by the assessee. This correspondence may now be referred to. By a letter dated 21st June,....
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....y, 1965, on compliance by the lessee, inter alia, with the condition that damages should be paid with effect from 1st July, 1963, to 14th January, 1965, and these were worked out at Rs. 31,148.55. Again, by a letter dated 17th May, 1966, the breach was condoned temporarily up to 14th January, 1966, on payment of " additional charges of Rs. 20,194 per annum ". The lessee was asked to furnish an undertaking " to regularise the breach beyond 14th January, 1966, on the rates that may be fixed by the Government from time to time ". In this assessment for the assessment years under consideration, the assessee claimed deduction of Rs. 3,351 in respect of assessment years 1962-63 and 1963-64, of Rs. 11,775 in respect of assessment year 1964-65 and Rs. 20,200 in respect of assessment year 1965-66, which had been paid to the Land and Development Officer in due course as a deduction in the computation of the income from the above house property. This claim was rejected by the ITO, allowed by the AAC but again disallowed by the Income-tax Appellate Tribunal. The aggrieved assessee has sought reference to this court on the following question of law : Whether, on the facts and in the circu....
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....r, there is no such specific description and the question is whether the payments made by the assessee are really in the nature of rent or not. To us it appears that the payments answer this description. Clause XIII of the lease deed does not absolutely prohibit the use of the building erected on the land for other than residential purpose. It envisages the use of the premises for different purposes but with the previous consent in writing of the designated officer of the Land and Development Department. Again, cl. XIV refers to two types of payments to be made by the lessee in respect of the property, one is the premium amount of Rs. 24,400 and the other is " the yearly rent of Rs. 600 or such other sum as may hereafter be assessed under the covenants and conditions Contained in the printed form of lease attached hereto ". Our attention has not been drawn to any other type of payment which the lessee is liable to pay to the Government under the covenants and conditions referred to above other than the payment of the type with which we are at present concerned. Even cls. XIX and XX do not make the forfeiture of the lease an automatic consequence of use of the property for other tha....