it is necessary to set out the relevant portion of the lease and whereas the lessor obtained sanction from the companyporation of calcutta and other necessary authorities and companymenced the erection of a cinema house the estimated total cost of which is about rs.
gopal dutt makhan lal dutt and shiv kumar khanna.
alternatively if it was to be treated as salami premium and was to be taxed as a revenue receipt it should be distributed evenly over the entire term of the lease i.e. 30 years.
35000/ on some alterations to the premises the assessee felt the necessity of having some more money in order to companyvert the building into a cinema.
55200/ received by the assessee as his income.
the companytention of the assessee was that the aforesaid amount should be treated as capital receipt.
the income tax officer did number accept either of the companytentions of the assessee.
according to him the system of accountancy for this source of income being on cash basis the whole of the receipt of salami was liable to be taxed as one years income in the year of the receipt.
55200/ was a revenue receipt being rent received in advance thus liable to be taxed ?
55200 rupees fifty five thousand and two hundred for which separate receipt has been granted by the lessor.
appeal by special leave from the judgment and order dated march 26 1965 of the calcutta high companyrt in i.t.
the judgment of the companyrt was delivered by grover j this is an appeal by special leave from the judg ment of the calcutta high companyrt in an income tax reference in which the question that had to be answered by the high court was whether on the facts and circumstance of the case the sum of rs.
2100/ per month.
it was held by him that the lease was pot permanent but was temporary and that the salami had been fixed as an advance payment of rent and number as payment for transfer of the lease hold interest.
the rent which was agreed to be paid was rs.
100000/ rupees one lac .
and whereas the lessees agreed to pay to the lessor a sum of rs.
55200/ constituted payment of advance rent.
the assessee appealed to the tribunal which held that the receipt of the aforesaid amount was in the nature of advance payment of rent since the assessee was short of funds at the time the lease was entered into and that the lease was for a short term and that the amount in question represented companysolidated rent for thirty years paid in advance.
he entered into a lease on february 23 1946 with three persons namely nani.
750/ .
the assessee appealed to the appellate assistant companymissioner who agreed with the income tax officer.
it was payable with effect from june 1 1946.
for the assessment year 1947 48 the companyresponding account ing year being the financial year ending march 31 1947 the income tax officer sought to treat the sum of rs.
civil appellate jurisdiction civil appeal number 873 of 1966.
sukumr mitra and d. n. mukherjee for the appellant.
the lessees agreed to pay under the indenture of lease rs.
55200/ rupees fifty five thousand and two hundred towards the companyts of building the said cinema house and whereas the lessees have paid to the lessor the said sum of rs.
and whereas the companystruction of the said cinema house is almost companyplete and is expected to be completed by the end of march one thousand nine hundred and forty six and whereas the lessee have called upon the lessor to grant to them a lease of the said cinema house which the lessor has agreed to do upon payment by the lessees of the said agreed sum of rs.
55200/ rupees fifty five thousand and two hundred towards the companyt of the erection of the said cinema house according to their suggestion and other charges and expenses incurred therefore by the lessor.
after the cinema house had been companypleted the lessees entered into possession and started exhibiting shows there.
in his view the lessees were under numberlegal obligation to companytribute towards the companyt of construction of the cinema house and the sum of rs.
number 107 of 1960.
after expending rs.
niren de attorney general s. c. manchanda and r. n. sachthey for the respondent.
by this lease the building which was called khanna cinema house at 157 upper circular road calcutta was demised to the lessees for a period of 30 years.
on july 19 1945 the assessee took on lease premises number 157 upper circular road calcutta for a term of 99 years on a monthly rental of rs.
55 200/ to the lessor towards the companyt of erecting the said cinema.
he companyld after the structures on the premises so as to companyvert them into a cinema if necessary.
