COMMISSIONER OF INCOME TAX Vs. KANHERE D L

JUDGEMENT

(1.) BY this reference under S. 66(1) of the Indian INCOME TAX ACT, 1922, the following two questions are referred to us for our determination :

(2.) THE assessee is the owner of three house properties. One of them has been equipped as a cinema theatre. All the three house properties were mortgaged with a view to secure repayment of losses in his speculation business. There were two mortgages in respect of these properties. Under the first mortgage deed all the three properties were mortgaged with a view to secure repayment of a loan of Rs. 3 1/2 lakhs and the interest payable thereunder. Later on, the assessee created a second mortgage in respect of the very same three mortgaged properties.

(3.) AS aforesaid, the building, Kohinoor Cinema, belonged to the assessee. Under an agreement of lease, dated June 27, 1956, made between the assessee as the landlord on the one hand and the partnership firm of M/s Kay and Kay Exhibitors on the other hand, the assessee as a landlord granted and the partnership accepted as tenant, a lease of the Kohinoor Cinema with all furniture, fixtures, articles and things lying therein for a term of 6 years commencing from the date on which the landlord was in a position to give possession after obtaining the possession from the present occupiers at a monthly rental of Rs. 4,000 payable every month. Two days later, a fresh agreement was entered into and by this agreement dated June 29, 1956, the assessee and the firm of Kay and Kay Exhibitors agreed to reduce the rent payable for Kohinoor Cinema from Rs. 4,000 per month to Rs. 2,800 per month.