COMMISSIONER OF INCOME-TAX Vs. VARDHINI AND CO

JUDGEMENT

(1.) In this reference made under section 256 of the Income-tax Act, 1961 ("the Act"), the Income-tax Appellate Tribunal. Bangalore Bench, Bangalore ("the Tribunal"), at the instance of the Revenue, has referred the following two questions of law for the opinion of this court :

(2.) In order to appreciate the questions referred to us, it is necessary to notice in the first instance the facts as found by the Tribunal.

(3.) Under a lease deed dated March 22, 1963, the assessee, a partnership firm of partners, had taken on lease a property known as "Singara Bagh" bearing Municipal Corporation No. 496 situated at Poonamalle High Road, Madras, from its then owner for a period of 20 years on a rent of Rs. 425 per month. On December 11, 1964, one Smt. Vengadammal who had become the owner of the said property entered into an agreement of sale of the aforesaid property with a firm called "Madras Property Development Company" to which the assessee was also a party. Under the said agreement, the assessee had to receive a sum of Rs. 1,34,400 in monthly instalments of Rs. 1,400 for a period of eight years as compensation or as premium.