COMMISSIONER OF INCOME TAX Vs. AMAL GENERATORS LTD

JUDGEMENT

(1.) THE Revenue is on appeal as against the order of the Tribunal raising the following substantial questions of law:

(2.) AT the time of hearing, learned Standing Counsel placed before us further questions of law, which are stated to be substantial questions of law, as follows:

(3.) THE Revenue, however, submitted that as per the document dated 28.8.1978, SRVS was recognised as a tenant and they were paying the rent directly to the owner. Thus the assessee was not a lessee at all of the property in question after 28.8.1978 and it had no tenancy rights at all. The Revenue further pointed out that the assessee was never in possession of the leased property to contend that it had leasehold interest to surrender and hence, was capital in nature; in the light of the above, the Revenue took the stand that the receipt was to be taxed as income under the head "income from other sources". Even assuming that the receipt was to be treated as capital receipt, going by Section 55(2)(a)(ii), which, according to the Revenue, was procedural in nature, the receipts were to be taxed to capital gains. Thus, even though the cost of acquisition was nil, the entire receipt was taxable. In considering the rival submissions, the Tribunal overruled the objection of the Revenue to the admissibility of fresh evidence, viz., the lease deed entered in 1969 and 1978 and took the view that in a revisional proceedings under Section 263, there was no question of the assessee having any opportunity to furnish a fresh document before the Assessing Authority and the lease deeds dated 06.12.1969 and 28.08.1978 were necessary to decide the issue on hand. Thus, on going through the lease deed dated 06.12.1969, the Tribunal came to the conclusion that the assessee, as a lessee, was given a right to assign, sub -lease and part with possession of the property or any part thereof. As far as the document dated 28.8.1978 with SRVS and the original owner was concerned, the Tribunal arrived at a factual finding that the deed did not refer to continuation of any lease right to the assessee herein and for all intended purposes, SRVS was the lessee to the exclusion of others and the lease rentals were paid directly to the owner of the property. In considering the contention of the Revenue that the document dated 25.02.1994 never recognised SRVS as a tenant and that they had also filed a suit against SRVS, the Tribunal pointed out that the filing of the suit was a matter which was not denied by the assessee and the owners had filed an eviction suit against SRVS.