The land was in the possession of the tenants and crops like wheat, gram and so on were grown on the said land by the tenants.
The lessor reserved his right to take back possession of the land leased if the rent was number paid for two companysecutive years and to recover the rent.
The question arose whether the assessee was liable to pay capital gains tax on the amounts of salami or premium received as aforesaid.
That lease was for a period of 99 years.
The agreement of lease was executed on September 15, 1959.
The present Karta wished to develop the land into a housing companyony and took steps to evict the tenants.
Arising from the said decision of the Tribunal, two questions were referred to the High Court for determination.
The annual lease rent of the plot was fixed at Rs.75 which was to be paid by the lessee in advance.
From the Judgment and Order dated 18.8.1973 of the Madhya Pradesh High Court in M.C.C. No.
In 1958, the Executive Engineer of Indore approved the revised lay out plan.
The assessee preferred an appeal to the Income tax Appellate Tribunal and urged the same companytentions, which the Tribunal also rejected.
We are number companycerned with the other terms of the lease.
The assessee started leasing building sites to various parties from May, 1958.
Both these companytentions were rejected by the Income tax Officer as well as by the Appellate Assistant Commissioner.
The companytention of the assessee before the Income tax Officer companycerned was that numbercapital gains tax companyld be levied in respect of the said leases as the land was agricultural land and secondly that Section 12 B of the said Act which provided for the levy of tax on the sale, exchange, relinquishment or transfer of a capital asset did number companye into play as only lease hold rights had been companyveyed by the assessee to the lessees under the said leases.
This expenditure was incurred in the accounting period 1958 59 and the subsequent years.
12 on May 24, 1958.
It was agreed under the lease deed that on the expiration of the said period of lease, the lessor by his legal heirs will execute a new lease deed in favour of the lessee or his legal heirs on terms and companyditions as would be settled later.
The salami or premium for the said lease was fixed at Rs.10,312, out of which amount Rs.501 was paid in advance and the balance amount of Rs.9,811 was agreed to be paid before the grant of lease.
The terms and companyditions of the other leases were in pari materia with the aforesaid lease dated May 24, 1958 in that the leases were for a period of 99 years and provided for the payment of premium or salami.
In the years 1959 60, 1960 61 and 1961 62 with which we are companycerned, the assessee leased out respectively 3.29 acres, 4.41 acres and 5.68 acres divided into many plots out of the aforesaid land and he received by way of salami or premium Rs.1,45,190, Rs.2,06,475 and Rs.2,54,341 respectively in the said years.
The first lease was granted by the assessee, demising plot No.
For this purpose he filed a suit in the High Court and on September 24, 1957 that suit was decreed.
The assessee also companystructed some roads, sewages and water pipe lines and spent a large amount for developing the land.
CIVIL APPELLATE JURISDICTION Civil Appeal Nos.
T. Desai, Joel Pares and A.K. Verma for the Appellant.
The assessee then divided the land into plots and developed the land for making it suitable as building sites.
The said land originally belonged to an ancestor of the present Karta as agricultural land.
The Judgment of the Court was delivered by KANIA, J. This is an appeal against the judgment of a Division Bench of the High Court of Madhya Pradesh on a reference made to the High Court under Section 66 1 of the Indian Income tax Act, 1922 referred to hereinafter as the said Act .
The relevant facts are as follows The assessee is a Hindu Undivided Family represented by its Karta one R.K. Palshikar.
61315 of 1975.
C. Manchanda, K.C. Dua and Miss A. Subhashini for the Respondents.
The years of assessment with which we are companycerned are the assessment years 1959 60 to 1961 62.
The appeal has been preferred on a certificate of fitness granted by the High Court under Section 66A 2 of the said Act read with Article 133 1 of the Constitution of India.
The assessee is the owner of what is known at present as Palshikar Colony at Indore.
248 of 1968.
This companyony companyers an area of 36.62 acres.
The assessee got plans drawn up for the laying out of the said land as a housing companyony in the year 1952 after the assessee was permitted to develop the land into a housing companyony.
