GULU G THADANI (HUF) Vs. INSPECTING ASSISTANT COMMISSIONER

JUDGEMENT

(1.) The assessee is aggrieved of the order dated 16-10-1981 of the learned Commissioner (Appeals).

(2.) The assessee is a HUF. It derives income from house property, share income from Mayfair Theatre and other sources. The only point urged before us in this appeal related to the assessment of income from rent received from the Vijaya Bank Ltd. who is the tenant of the assessee in the shop in Thadani Mansion adjacent to Mayfair Theatre building. In that connection, the facts are that those premises were earlier in the tenancy of the Allied Electric and Radio Corpn. Lucknow, since 1973 (Allied). An arrangement was arrived at between Allied, the Vijaya Bank Ltd. and the assessee whereby it was agree that Allied would vacate the portion occupied by them in favour of the Vijaya Bank Ltd. Vijaya Bank Ltd. paid a sum of Rs. 75,000 to Allied who vacated the shop. The Vijaya Bank Ltd. got this portion allotted to itself with the consent of the assessee. The rent of the portion occupied by the Vijaya Bank Ltd. was fixed at Rs. 2,500 per month but it was agreed that till the bank was in a position to recover Rs. 75,000 given to Allied on behalf of the assessee, it would pay to the assessee a sum of Rs. 1,250 per month only toward its rent liability, the remaining Rs. 1,250 being adjusted towards the aforesaid amount of Rs. 75,000. On the above facts, it was claimed by the assessee-HUF before the IAC (Assessment) that the assessee-HUF should be assessed on an income of Rs. 1,250 per month only ad not on Rs. 2,500 per month. However, the IAC (Assessment) did not accept this contention and assessed the income from rent from the Vijaya Bank Ltd. at the rate of Rs. 2,500 per month.

(3.) The assessee, being aggrieved, came up in appeal before the learned Commissioner (Appeals). The learned Commissioner (Appeals) took the view that the sum of Rs. 75,000 was in fact a payment by the assessee to get the premises vacated and was in the nature of capital expenditure which enabled the assessee to earn higher rent. According to him, the recovery of the loan taken for making this payment in installments of Rs. 1,250 per month out of the rent of Rs. 2,500 per month payable by the Vijaya Bank Ltd. could not affect the taxability of the rental income at the rate of Rs. 2,500 per month. Accordingly, he confirmed the order of the IAC (Assessment).