NAHALCHAND LALOOCHAND P. LTD, MUMBAI V. DCIT 5(2)(1), MUMBAI

ITA 6041/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9932 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 1990-1991
• Appeal Filed On: 23-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIKLD
• Assessee Lawyers: DEVENDRA JAIN LD
• Keywords: Gift; Business income; Opportunity of being heard; Principle of natural justice; Additional evidence; Set aside
• Section: 143(3); 133(6); 250; 207; 13; 27; 54; 56; 10

Judgement Text

M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ ITA NOS. 6041 TO 6049/MUM/2018 ( / ASSESSMENT YEARS: 1990-91 TO 1992-93, 1994-95, 1998 -99, 2000-01 TO 2003-04 ) M/S NAHALCHAND LALOOCHAND P.LTD. KANTILAL HOUSE, 14 MAMA PARMANAND ROAD MUMBAI-400 004. / VS. D CIT - (5)(2)(1) 571, 5 TH FLOOR AAYKAR BHAVAN, M.K. ROAD NEW MARINE LINES MUMBAI-400 020. #$ ./ ./PAN/GIR NO. AAACN-4472-C ( $& /APPELLANT ) : ( '($& / RESPONDENT ) ASSESSEE BY : SHRI DEVENDRA JAIN - LD. AR REVENUE BY : MS. KAVITA P. KAUSHIK LD. DR / DATE OF HEARING : 25/11/2019 / DATE OF PRONOUNCEMENT : 02/01/2020 / O R D E R PER BENCH 1. THE GRIEVANCE OF THE ASSESSEE IN ALL THE AFORESA ID APPEALS FOR SEVERAL ASSESSMENT YEARS IS COMMON. IT IS ACCEPTED POSITION THAT ADJUDICATION IN ANY ONE YEAR WOULD EQUALLY APPLY TO ALL THE OTHER YEARS SINCE IMPUGNED ORDER IS COMMON ORDER FOR ALL THE YE ARS WHICH HAS BEEN PASSED BY LD. COMMISSIONER OF INCOME-TAX (APPEALS)- 10, MUMBAI [CIT(A)] ON 06/07/2018. THIS IS THIRD ROUND OF APP EAL BEFORE TRIBUNAL. M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 2 2. THE MATTER IN THE FIRST ROUND TRAVELLED UP-TO TH E LEVEL OF HONBLE SUPREME COURT WHEREIN THE HONBLE COURT REMANDED TH E MATTER TO TRIBUNAL TO RENDER DEFINITE FINDING OF FACT ABOUT T HE PRE-REQUISITES OF SECTION 269UA(F)(I) READ WITH EXPLANATION THERETO. IN THE CONTEXT OF SAID SECTION, IT WAS ALSO OBSERVED BY HONBLE COURT THAT FOR COMPUTING THE PERIOD OF TWELVE YEARS, IT WAS NOT NECESSARY THAT I NITIAL TERMS OF LEASE MUST BE OF TWELVE YEARS, BUT IF THE LEASE PROVIDES FOR EXTENSION OF LEASE AND SUCH LEASE HAS BEEN EXTENDED BY A FURTHER TERM OR TERMS AND THE AGGREGATE OF SUCH TERMS IS NOT LESS THAN TWELVE YEA RS, IT IS DEEMED TO BE A TRANSFER OF IMMOVEABLE PROPERTY AND SUCH TRANSFER EE IS DEEMED TO BE OWNER OF SUCH IMMOVEABLE PROPERTY U/S 27(IIIB). THE REFORE, THE MATTER WAS REMANDED BACK TO TRIBUNAL WHICH WAS ADJUDICATED IN THE SECOND ROUND VIDE ORDER DATED 28/10/2016. VIDE SAID ORDER, THE MATTER WAS REMITTED BACK TO THE FILE OF LD.AO WITH CERTAIN DIR ECTIONS. HOWEVER, IN SET- ASIDE PROCEEDINGS, THE ASSESSEES CLAIM WAS NOT ACC EPTED BY REVENUE AUTHORITIES AND HENCE THE PRESENT APPEAL BEFORE US. THE GROUNDS RAISED BY THE ASSESSEE READS AS UNDER: - BEING AGGRIEVED BY THE ORDER DATED 06.07.2018 PASSE D BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-L0, MUMBAI. [' LD. CIT(A)'] U/S 250 OF THE INCOME-TAX ACT,1961 ('ACT'), YOUR APPELLANT PREFERS THIS APPEAL, AMONG OTHERS, ON THE FOLLOWING GROUNDS OF APPEAL, EACH OF WHICH IS W ITHOUT PREJUDICE TO, AND INDEPENDENT OF, THE OTHER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LD. CIT(A) ERRED IN REJECTING THE APPELLANT'S CONTENTION THAT THE RENTAL INCOME OF RS.6,29,047/- RECEIVED BY THE APPELLANT FROM SUB-LETTING OF THE ' KANTILAL HOUSE' PREMISES TO BANK OF BARODA, IS NOT TAXABLE EITHER U/S.22 OR U/S.56 O F THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE APPELLANT IS A DEEMED OWN ER OF THE AFORESAID PREMISES U/S.27(IIIB) READ WITH SECTION 269UA(F)(I) OF THE A CT, AND IS NOT A 'MONTHLY TENANT' AS CLAIMED BY THE APPELLANT; AND CONSEQUENTLY, THE LD. CIT(A) ERRED IN HOLDING THAT THE AFORESAID RENTAL INCOME IS TAXABLE U/S.22 OF THE AC T AS 'INCOME FROM HOUSE PROPERTY'. IN VIEW OF ABOVE, THE APPELLANT RESPECTFULLY PRAYS THAT THE LD. AO BE DIRECTED NOT TO ASSESS THE AFORESAID RENTAL INCOME, THE SAME BEING NOT CHARGEABLE TO TAX. M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 3 3. AT THE OUTSET, THE FACTS AS WELL AS CONTROVERSY, AS CRYSTALLIZED BY THE TRIBUNAL IN SECOND ROUND, VIDE ORDER DATED 28/10/20 16 COULD BE EXTRACTED IN THE FOLLOWING MANNER: - THESE BUNCH OF APPEALS FILED BY THE ASSESSEE AND ON E BY THE DEPARTMENT ARISE OUT OF SEPARATE ORDERS OF THE LEARNED COMMISS IONER (APPEALS), MUMBAI, PERTAINING TO ASSESSMENT YEARS 199091, 199 192, 199293, 199495, 199899, 200001, 200102, 200203 AND 200 304. 2. THE CORE COMMON ISSUE ARISING FOR CONSIDERATION IN THE AFORESAID APPEALS IS, WHETHER THE LEASE RENTAL RECEIVED BY TH E ASSESSEE FROM A HOUSE PROPERTY NAMED AS KANTILAL HOUSE AT OPERA HOUSE ROAD, MUMBAI, IS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS AS CLAIMED BY THE ASSESSEE OR UNDER THE HEAD INCOME FROM HOUSE PROPERTY AS CLAIMED BY THE REVENUE. SINCE THE FACTS INVOLVE D IN ALL THESE APPEALS ARE MORE OR LESS COMMON, FOR THE SAKE OF CO NVENIENCE, WE WILL DISCUSS THE FACTS AS INVOLVED IN APPEAL BEING ITA N O.6550/MUM. /1995, FOR ASSESSMENT YEAR 199192, WHICH IS TAKEN AS A LE AD APPEAL. 3. BRIEF FACTS ARE, THE ASSESSEE A COMPANY IS REGULARL Y FILING ITS RETURN OF INCOME AND IS ASSESSED TO TAX. IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 199192, THE AS SESSING OFFICER WHILE EXAMINING THE PROFIT & LOSS ACCOUNT OF THE AS SESSEE NOTICED THAT THE ASSESSEE HAS DECLARED A LOSS OF RS. 11,52,199, UNDER THE HEAD LEASE RENTALS . ON VERIFYING THE DETAILS SUBMITTED BY THE ASSESSE E, THE ASSESSING OFFICER FOUND THAT IN THE RELEVANT PREVIO US YEAR, THE ASSESSEE HAD RECEIVED LEASE RENTALS AS UNDER: DESCRIPTION OF PROPERTY TO WHOM LET OUT RENT / COMPEN SATION WHEN THE PROPERTY PURCHASED GR. FLOOR (PT.) KANTILAL HOUSE, 1 ST FLOOR BANK OF BARODA 6,29,047 ASSESSEE COMPANY IS A TENANT OF THE PREMISES SHANKER GULLY, KANDIVALI (W), BOMBAY 67 STATE BANK OF INDIA 4,83,552 ASSESSEE IS THE OWNER OF THE PREMISES BAGWADA GATE, STATION ROAD, PATAN VARIOUS PARTIES 39,600 DO 4. THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO E XPLAIN WHY THE LEASE RENTALS RECEIVED FROM LEASING OUT THE PROPERT IES OWNED BY THE ASSESSEE SHOULD NOT BE TREATED AS INCOME FROM HOUSE PROPERTY . IN RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE THAT IN ASSESSMENT YEAR M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 4 198586, THE LEARNED COMMISSIONER (APPEALS) HAS ACC EPTED ASSESSEES CLAIM OF BUSINESS INCOME IN RESPECT OF KANTILAL HOU SE PROPERTY LET OUT TO BANK OF BARODA. IT WAS FURTHER SUBMITTED, THE SAME REASONING OF THE LEARNED COMMISSIONER (APPEALS) WOULD EQUALLY APPLY TO THE OTHER PROPERTIES FROM WHICH THE ASSESSEE DERIVED RENTAL I NCOME. AS FAR AS LEASE RENTAL RECEIVED FROM KANTILAL HOUSE PROPERTY IS CONCERNED, THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT D ID NOT DISTURB THE ASSESSEES CLAIM. HOWEVER, IN RESPECT OF OTHER TWO PROPERTIES VIZ. AT SHANKER GALI, KANDIVALI (WEST) AND BANGWADA GATE, S TATION ROAD, PATAN, THE ASSESSING OFFICER TREATED THE LEASE RENTAL INCO ME RECEIVED BY THE ASSESSEE AS INCOME FROM HOUSE PROPERTY . BEING AGGRIEVED OF THE AFORESAID DECISION OF THE ASSESSING OFFICER, ASSESS EE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5. THE LEARNED COMMISSIONER (APPEALS), AFTER CONSIDERI NG THE SUBMISSIONS OF THE ASSESSEE AND IN THE CONTEXT OF F ACTS AND MATERIAL ON RECORD, AGREED WITH THE ASSESSING OFFICERS DECISIO N IN ASSESSING THE RENTAL INCOME FROM SHANKAR GALI PROPERTY AND BHAGWA DA ROAD PROPERTY AS INCOME UNDER THE HEAD HOUSE PROPERTY . AS FAR AS RENTAL INCOME RECEIVED FROM KANTILAL HOUSE PROPERTY, THE LEARNED COMMISSIONER (APPEALS) DIFFERING WITH THE VIEW EXPRESSED BY HIS PREDECESSORINOFFICE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 198586, HELD THAT THE RENTAL INCOME DERIVED FROM LETTING OUT TO BANK OF BARODA A LSO HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY . WHILE COMING TO SUCH CONCLUSION, THE LEARNED COMMISSIONER (APPEA LS) OBSERVED THAT THE ASSESSEE HAD BEEN THE TENANT OF THE SAID PROPER TY FOR A LONG PERIOD EXCEEDING 12 YEARS, THEREFORE, THE ASSESSEE HAS TO BE TREATED AS DEEMED OWNER OF THE PROPERTY UNDER SECTION 27(IIIB). HE OB SERVED, LEASING / LETTING OUT OF PROPERTIES IS NOT THE BUSINESS OF AS SESSEE. THEREFORE, THE INCOME DERIVED FROM LEASE RENTALS HAS TO BE TREATED AS INCOME FROM HOUSE PROPERTY . HE OBSERVED, THE CONTENTION OF THE ASSESSEE THAT LETTING OUT OF THE PROPERTY TO THE BANK IS FOR THE PURPOSE OF ASSESSEES BUSINESS IS NOT A VALID ARGUMENT. RELYING UPON CERTAIN JUDIC IAL PRECEDENTS, THE LEARNED COMMISSIONER (APPEALS) FINALLY CONCLUDED TH AT LEASE RENTALS RECEIVED BY THE ASSESSEE INCLUDING THE LEASE RENTAL S RECEIVED FROM KANTILAL HOUSE IS TO BE TREATED AS INCOME FROM HOUSE PROPERTY . BEING AGGRIEVED OF THE AFORESAID DECISION OF THE FIRST AP PELLATE AUTHORITY, ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL. 6. THE TRIBUNAL IN A COMMON ORDER PASSED FOR THE ASSES SMENT YEAR 199091, 199192, 199293 AND 199394, VIDE ORDER D ATED 3 RD NOVEMBER 2003, IN ITA NO.6549/BOM./1995 AND OTHERS, DISPOSED OFF THE APPEALS FILED BY THE ASSESSEE. WHILE DEALING WITH T HE ISSUE PERTAINING TO THE TREATMENT OF LEASE RENTAL INCOME FROM KANTILAL HOUSE, WHETHER INCOME FROM BUSINESS OR INCOME FROM HOUSE PROPERTY, WHICH IS THE ISSUE IN DISPUTE IN THE PRESENT APPEALS, THE TRIBUNAL IN PARA10, OF THE ORDER, THOUGH, AGREED THAT THE ASSESSEE WAS NOT THE OWNER OF THE HOUSE PROPERTY, HOWEVER, TAKING NOTE OF THE FACT THAT THE ASSESSEE HAS TAKEN M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 5 THE HOUSE ON LONG LEASE AND HAD BEEN OCCUPYING THE PREMISES FOR A PERIOD OF MORE THAN 12 YEARS APPROVED THE FINDING O F THE LEARNED COMMISSIONER (APPEALS) THAT BY VIRTUE OF PROVISIONS OF SECTION 27(IIIB), R/W CLAUSE (F) OF SECTION 269UA, THE ASSESSEE SHOUL D BE TREATED AS DEEMED OWNER OF THE PROPERTY. ACCORDINGLY, THE TRIB UNAL DISMISSED THE GROUND RAISED BY THE ASSESSEE BY UPHOLDING THE ORDE R OF THE LEARNED COMMISSIONER (APPEALS). AGAINST THE ORDER OF THE TR IBUNAL, ASSESSEE PREFERRED APPEALS BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT. 7. THE HON'BLE JURISDICTIONAL HIGH COURT IN JUDGMENT D ATED 28 TH NOVEMBER 2005, IN ITA NO.388/2004, ITA NO.389/2004 AND 458/2004, UPHELD THE DECISION OF THE TRIBUNAL ON THE ISSUE HO LDING AS UNDER: 3. AS FAR AS FIRST SUBMISSION IS CONCERNED, THE DEF INITION EXCLUDES ONLY THOSE TENANTS FROM MONTH TO MONTH OR WHICH ARE FOR A PERIOD NOT EXCEEDING ONE YEAR. IN THE INSTANT CASE, THE ASSESSEE HAS BEEN A TENANT FOR A LONG PERIOD AND HA D LET OUT THE PREMISES FURTHER TO BANK OF BARODA. SURELY, THE INC OME THEREFROM WILL HAVE TO BE COVERED UNDER THE DEFINIT ION AS IT HAS BEEN AMENDED WITH EFFECT FROM APRIL 1, 1988. AS FAR AS THE JUDGMENT IN THE CASE OF CIT V/S T.P. SIDHWA (SUPRA) IS CONCERNED, IT WAS RENDERED ON DECEMBER 10, 1980, ON THE LAW AS IT THEN STOOD. THAT BEING SO, WE DO NOT FIND ANY ERROR IN THE DECISION OF THE TRIBUNAL. 8. STILL AGGRIEVED WITH THE DECISION OF THE HON'BLE JU RISDICTIONAL HIGH COURT, ASSESSEE CHALLENGED THE SAME BEFORE THE HON' BLE SUPREME COURT. 9. THE HON'BLE SUPREME COURT, WHILE DISPOSING OF ASSES SEES APPEAL FOR THE ASSESSMENT YEAR 199192 IN CIVIL APPEAL NO. 1930/2007, IN ORDER DATED 24 TH SEPTEMBER 2014, REFERRING TO THE PROVISIONS CONTAI NED UNDER SECTION 27(IIIB) AND 269UA(F) OBSERVED, AS PER SUB CLAUSE (I) SECTION 269UA(F), TRANSACTIONS OF LEASE FOR A TERM OF NOT L ESS THAN 12 YEARS AMOUNTS TO TRANSFER IN RELATION TO IMMOVABLE PROPER TY REFERRED TO IN SUB CLAUSE (I) OF CLAUSE (D) OF SECTION 269UA(F). THE H ON'BLE SUPREME COURT OBSERVED, EXPLANATION APPENDED TO SUBCLAUSE (I) OF SECTION 269UA(F), CLARIFIES THAT THE LEASE WHICH PROVIDES FOR EXTENSI ON OF TERM BY A FURTHER TERM OR TERMS SHALL BE DEEMED TO BE A LEASE IF THE AGREED TERM FOR WHICH SUCH LEASE IS TO BE GRANTED AND FURTHER TERM OR TER MS IS NOT LESS THAN 12 YEARS. THE HON'BLE SUPREME COURT OBSERVED IF THE AG REED TERM OF LEASE IS NOT LESS THAN 12 YEARS, IT IS DEEMED TO BE A TRANSF ER OF IMMOVABLE PROPERTY AND SUCH TRANSFEREE IS DEEMED TO BE THE OW NER OF IMMOVABLE PROPERTY UNDER SECTION 27(IIIB). HAVING HELD SO, TH E HON'BLE SUPREME COURT OBSERVED THAT NEITHER THE TRIBUNAL NOR THE HO N'BLE JURISDICTIONAL HIGH COURT HAVE GIVEN A DEFINITE FINDING OF FACT AB OUT THE PREREQUISITE OF SECTION 269UA(F)(I) R/W EXPLANATION EXCEPT, OBSERVI NG THAT THE ASSESSEE HAS BEEN TENANT FOR A LONG PERIOD AND HAS LET OUT T HE PREMISES. THE HON'BLE SUPREME COURT, THEREFORE, RESTORED THE MATT ER BACK TO THE FILE OF THE TRIBUNAL FOR DECIDING AFRESH IN ACCORDANCE WITH LAW. RELEVANT M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 6 OBSERVATIONS OF THE HON'BLE SUPREME COURT IN THIS R EGARD IS EXTRACTED HEREUNDER FOR CONVENIENCE: 4. NEITHER THE ORDER OF THE INCOME TAX APPELLATE TR IBUNAL NOR THE ORDER OF THE HIGH COURT INDICATE ANY CONSIDERAT ION OF THE ABOVE ASPECTS IN RESPECT OF THE HOUSE PROPERTY NAME D KANTI LAL HOUSE EXCEPT OBSERVING THAT THE ASSESSEE HAS BEEN A TENANT FOR A LONG PERIOD AND THAT IT HAD LET OUT THE PREMISES. NO DEFINITE FINDING OF FACT ABOUT THE PREREQUISITES OF SECTION 269UA(F)(I) READ WITH EXPLANATION AS NOTED ABOVE HAS BEEN RECOR DED EITHER BY THE TRIBUNAL OR BY THE HIGH COURT. 5. HAVING REGARD TO THE ABOVE FLAW IN CONSIDERATION OF THE CASE, WE ARE SATISFIED THAT THE MATTER NEEDS RECONSIDERAT ION BY THE TRIBUNAL SINCE THE QUESTION INVOLVES DETERMINATION OF FACTS AS INDICATED ABOVE. WE, ACCORDINGLY, DEEM IT APPROPRIA TE TO REMAND THE MATTER TO THE INCOME TAX APPELLATE TRIBU NAL, MUMBAI. 6. CONSEQUENTLY, CIVIL APPEAL IS ALLOWED. THE IMPUG NED ORDER OF THE HIGH COURT DATED 28.11.2005, IN I.T.A. NO.458 O F 2004 AND THE ORDER FO THE INCOME TAX APPELLATE TRIBUNAL DATE D 03.11.2003 IN I.T.A. NO.6550/BOM./95 (ASSESSMENT YE AR 1991 1992) ARE SET ASIDE. I.T.A. NO.6550/BOM/95 (ASSESSM ENT YEAR 19911992) ARE IS RESTORED TO THE FILE OF THE INCOM E TAX APPELLATE TRIBUNAL, I BENCH, MUMBAI, FOR FRESH HE ARING AND DISPOSAL IN ACCORDANCE WITH LAW. 10. FOLLOWING THE AFORESAID DECISION, IDENTICAL ISSUE A RISING IN OTHER ASSESSMENT YEARS UNDER APPEAL WERE ALSO RESTORED BA CK TO THE FILE OF TRIBUNAL BY THE HON'BLE SUPREME COURT IN SEPARATE O RDERS. 11. THE FACTS AND ISSUE ARE IDENTICAL IN OTHER ASSESSM ENT YEARS EXCEPT FOR THE ASSESSMENT YEAR 199495, WHEREIN THOUGH, TH E LEARNED COMMISSIONER (APPEALS) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, HOWEVER, THE TRIBUNAL REVERSED THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) BY HOLDING THAT RENTAL INCOME RECEIVED FR OM KANTILAL HOUSE HAS TO BE ASSESSED AS INCOME FROM HOUSE PROPERTY. THIS IS HOW THE PRESENT APPEALS CAME UP FOR ADJUDICATION BEFORE US. 12. LEARNED AUTHORISED REPRESENTATIVE REITERATING THE S TAND TAKEN IN THE EARLIER ROUND OF LITIGATION SUBMITTED THAT THE ASSESSEE HAS ENTERED INTO TENANCY WITH THE ORIGINAL OWNER ON MONTHLY BAS IS, THEREFORE, IT CANNOT BE SAID THAT PROPERTY HAS BEEN LEASED OUT TO THE ASSESSEE FOR A PERIOD EXCEEDING 12 YEARS. TO DEMONSTRATE SUCH FACT S, THE ASSESSEE SOUGHT TO RELY UPON CERTAIN ADDITIONAL EVIDENCES AN D THROUGH A SEPARATE PETITION FILED UNDER RULE 29 OF THE INCOME TAX (APP ELLATE TRIBUNAL) RULE, 1963, SOUGHT ADMISSION OF THE SAME. THE LEARNED AUT HORISED REPRESENTATIVE IN THIS CONTEXT REFERRED TO THE PHOT OCOPY OF A CERTIFICATE DATED 7 TH JANUARY 1998, PURPORTEDLY ISSUED BY HIMMATLAL KANT ILAL, CLAIMED TO BE THE LANDLORD OF THE SUBJECT PROPERTY, STATING THEREIN THAT THE ASSESSEE HAD BEEN OCCUPYING THE PREMISES PRIOR TO THE YEAR 1950 ON M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 7 MONTH TO MONTH BASIS. THE LEARNED AUTHORISED REPRES ENTATIVE ALSO REFERRED TO THE LEASE AGREEMENT ENTERED WITH THE BA NK OF BARODA ON 29 TH MARCH 1996 AND SPECIFICALLY REFERRED TO CLAUSE (B) OF THE SAID AGREEMENT TO IMPRESS UPON THE FACT THAT THE ASSESSEE IS TENAN T OF KANTILAL HOUSE. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, TH OUGH, THE ASSESSEE MIGHT BE OCCUPYING THE PROPERTY FOR A LONG PERIOD, BUT, IT IS ONLY BY VIRTUE OF ORAL AGREEMENT AND THERE WAS NO WRITTEN AGREEMEN T. THEREFORE, THE OWNER AT ANY TIME CAN ISSUE NOTICES TO THE ASSESSEE TO VACATE THE PREMISES. THE ASSESSEE ALSO REFERRED TO THE RENTAL RECEIPT SOUGHT TO BE PRODUCED AS ADDITIONAL EVIDENCE. LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, AFTER THE DEATH OF OWNER HIMMATLAL KANTI LAL, THE ASSESSEE CONTINUES TO BE A TENANT OF THE PROPERTY WHICH IS A DMINISTERED BY THE ESTATE. THE LEARNED AUTHORISED REPRESENTATIVE SUBMI TTED, SECTION 27(IIIB), DOES NOT APPLY TO LEASE ON MONTH TO MONTH BASIS OR FOR A PERIOD NOT EXCEEDING ONE YEAR. HE SUBMITTED, AS PER SECTION 10 6 OF THE TRANSFER OF PROPERTY ACT, 1882, A LEASE OF IMMOVABLE PROPERTY F OR ANY PURPOSE OTHER THAN AGRICULTURAL OR MANUFACTURING SHALL BE DEEMED TO BE A LEASE FROM MONTH TO MONTH IF THERE IS NO WRITTEN CONTRACT OR T HERE IS A LOCAL LAW OR USAGE TO THE CONTRARY AND SUCH LEASE SHALL BE DETER MINABLE ON THE PART OF EITHER LEASEE OR LESSOR BY GIVING 15 DAYS NOTICE EX PIRING WITH THE END OF A MONTH OF THE TENANCY. HE SUBMITTED, AS THERE IS NO WRITTEN CONTRACT BETWEEN THE ASSESSEE AND THE LANDLORD, THE CONDITIO NS OF SECTION 106 OF TRANSFER OF PROPERTY ACT, IS FULFILLED AND THE TENA NCY IS ON MONTH TO MONTH BASIS. REFERRING TO SECTION 107 OF THE TRANSFER OF PROPERTY ACT, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED IN A CA SE WHERE THE LEASE IS FOR MORE THAN ONE YEAR REGISTERED INSTRUMENT IS MAN DATORY. IN THIS CONTEXT, HE REFERRED TO SOME JUDICIAL PRECEDENTS AS SUBMITTED IN THE PAPER BOOK. HE SUBMITTED, AS PER THE AFORESAID PROV ISION OF TRANSFER OF PROPERTY ACT, UNTIL NOTICE TO VACATE / QUIT IS GIVE N, TENANCY CONTINUES FROM MONTH TO MONTH AND SUCH NOTICE DURATION IS UNCERTAI N, HENCE, THE TENANCY IS CLASSIFIED AS MONTH TO MONTH. HE SUBMITT ED, MONTH TO MONTH TENANCY DOES NOT CEASE TO BE SUCH MERELY BECAUSE TH E LESSEE IS IN POSSESSION OF THE PREMISES FOR A LONG TIME OR BUILT STRUCTURES WHICH ARE COSTLY AND SUBSTANTIAL. IN THIS CONTEXT, HE RELIED UPON THE FOLLOWING DECISIONS: I) AMBIKA DEVI V/S SANCHITA NANDAN PRASAD, AIR 196 0 PATNA 289; II) DR. SUDHIR KUMAR MUKHERJEE & ORS., V/S NIRSI D HOBIN & ORS., AIR 1961 PATNA 321; AND III) BAJRANG SAHAI V/S MT. MULIA, 28 AIR 1941 ALLA HABAD 399. 13. LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, THOUGH , THE AFORESAID FACTS WERE BROUGHT ON RECORD BY THE ASSES SEE ON OATH THROUGH AFFIDAVITS BEFORE THE HIGH COURT AND SUPREME COURT, THE REVENUE HAS NOT CONTROVERTED ASSESSEES AVERMENTS MADE IN AFFIDAVIT . HE SUBMITTED, AS M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 8 THE ASSESSEE IS A TENANT ON MONTHLY BASIS, HE CANNO T BE TREATED AS DEEMED OWNER UNDER SECTION 27(IIIB), THEREFORE, REN TAL INCOME DERIVED FROM KANTILAL HOUSE SHOULD BE TREATED AS BUSINESS I NCOME OF THE ASSESSEE. 14. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER SU PPORTING THE VIEW EXPRESSED BY THE LEARNED COMMISSIONER (APPEALS ) AND THE TRIBUNAL SUBMITTED THAT THE VERY FACT THAT THE ASSESSEE HAD BEEN OCCUPYING THE PROPERTY PRIOR TO THE YEAR 1950 SUGGESTS THAT IT IS A LONG TERM LEASE. HE SUBMITTED, THE ASSESSEE HAS LEASED OUT THE PROPERTY TO BANK OF BARODA FOR A PERIOD EXCEEDING 12 YEARS WHICH INDICATES THA T THE ASSESSEE HAS GOT LEASE OF THE PROPERTY FOR MORE THAN 12 YEARS. HE, T HEREFORE, SUBMITTED THAT THE ASSESSEE IS DEEMED OWNER OF THE PROPERTY I N TERMS OF SECTION 27(IIIB) R/W SECTION 269UA(F). IN SUPPORT OF SUCH C ONTENTION, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE FOLLOWI NG DECISIONS: CIT V/S PODAR CEMENT PVT. LTD. [1997] 226 ITR 625 (SC) MYSORE MINERALS LTD. V. CIT (1999) 239 ITR 775 (SC) 15. WE HAVE CAREFULLY AND PATIENTLY CONSIDERED THE CONT ENTIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD IN THE L IGHT OF DECISIONS RELIED UPON. AS COULD BE SEEN FROM THE ORDER OF THE HON'BL E SUPREME COURT WHILE RESTORING THE MATTER BACK TO THE FILE OF THE TRIBUNAL REPRODUCED HEREIN ABOVE, THE SPECIFIC DIRECTION OF THE HON'BLE SUPREME COURT IS TO FIND OUT WHETHER THE PERIOD OF LEASE IS NOT LESS TH AN 12 YEARS TO SATISFY THE CONDITIONS OF SECTION 269UA(F)(I) R/W SECTION 2 7(IIIB). UNDISPUTEDLY, IT IS EVIDENT FROM THE FACTS ON RECORD THAT THE ASSESS EE HAD BEEN A LESSEE OF KANTILAL HOUSE PROPERTY SINCE THE YEAR 1948. IT IS ALSO EVIDENT THAT THE ASSESSEE HAS ENTERED INTO LEASE AGREEMENT WITH BANK OF BARODA FOR LEASING OUT THE GROUND FLOOR OF THE PROPERTY ADMEAS URING 2,300 SQ.FT. FOR A TERM OF 12 YEARS COMMENCING FROM 1 ST APRIL 1962 AND EXPIRING ON 31 ST JULY 1974. IT IS FURTHER EVIDENT, AFTER THE EXPIRY OF THE SAID AGREEMENT, THE ASSESSEE ENTERED INTO ANOTHER AGREEMENT WITH BA NK OF BARODA ON 30 TH MARCH 1973, LEASING OUT NOT ONLY THE PART OF THE G ROUND FLOOR EARLIER LEASED OUT TO THEM BUT ALSO LEASED OUT ADDITIONAL S PACE AND SUCH LEASE AGREEMENT WITH BANK OF BARODA CONTINUED FROM TIME T O TIME AS IS EVIDENT FROM LEASE AGREEMENT DATED 29 TH MARCH 1996, SOUGHT TO BE PRODUCED BEFORE US BY WAY OF ADDITIONAL EVIDENCE. IT IS PERT INENT TO MENTION HERE, IN RESPONSE TO A QUERY RAISED BY THE BENCH, THE LEA RNED AUTHORISED REPRESENTATIVE ON THE INSTRUCTIONS OF ASSESSEE SUBM ITTED THAT THE LEASE CONTINUED WITH BANK OF BARODA TILL THE YEAR 2004 WH EN IT VACATED THE PREMISES, THOUGH, THE ASSESSEE IS STILL OCCUPYING T HE PREMISES TILL DATE. THUS, FROM THE AFORESAID FACTS, IT IS EVIDENT THAT THE ASSESSEE IS IN POSSESSION OF THE KANTILAL HOUSE PROPERTY SINCE THE YEAR 1948 AND CONTINUES TO OCCUPY THE SAME EVEN AFTER THE DEATH O F THE LANDLORD. AS OPPOSED TO AFORESAID FACTS, TO GET OVER THE MISCHIE F OF SECTION 27(IIIB) R/W SECTION 269UA(F), THE ASSESSEE HAS ATTEMPTED TO TAK E SHELTER BEHIND THE M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 9 PROVISIONS OF SECTION 106 AND 107 OF THE TRANSFER O F PROPERTY ACT, BY STATING THAT THERE IS NO WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND THE LANDLORD AND THE ASSESSEE IS A TENANT ON MONTHLY BA SIS. TO SUBSTANTIATE SUCH CLAIM THE ASSESSEE HAS RELIED UPON A PHOTOCOPY OF THE CERTIFICATE PURPORTEDLY ISSUED BY THE LANDLORD LATE SHRI HIMMAT LAL KANTILAL ON 7 TH JANUARY 1998 CERTIFYING THAT THE ASSESSEE IS OCCUPY ING THE PREMISES ON MONTHLY BASIS. LEARNED AUTHORISED REPRESENTATIVE HA S ALSO RELIED UPON CLAUSE (B) OF THE LEASE AGREEMENT WITH BANK OF BARO DA TO DEMONSTRATE THAT THE ASSESSEE IS A TENANT OF THE SUBJECT PREMIS ES. BESIDES, THE ABOVE, IT IS THE CONTENTION OF THE ASSESSEE THAT THE AVERM ENTS MADE IN THE AFFIDAVIT FILED BEFORE THE HIGH COURT AND SUPREME C OURT TO THE EFFECT THAT THE ASSESSEE IS A MONTHLY TENANT HAS NOT BEEN CONTR OVERTED BY THE DEPARTMENT. KEEPING IN VIEW THE AFORESAID FACTS, IT NEEDS TO BE DECIDED WHETHER THE ASSESSEE IS A MONTHLY TENANT AS PER EXC EPTION PROVIDED UNDER SECTION 27(IIIB) OR IT FULFILLS THE CONDITION OF SECTION 269UA(F)(I) ALONG WITH ITS EXPLANATION. AS NOTED EARLIER, THE A SSESSING OFFICER WHILE COMPLETING THE ASSESSMENT HAS ACCEPTED ASSESSEES C LAIM OF BUSINESS INCOME AS FAR AS RENT RECEIVED FROM KANTILAL HOUSE SIMPLY ON THE BASIS THAT THE ASSESSEE IS NOT THE OWNER OF THE SAID PROP ERTY. AS IT APPEARS, THE ASSESSING OFFICER HAS NEITHER EXAMINED THE APPLICAB ILITY OF SECTION 27(IIIB) R/W SECTION 26UA(F(I) NOR HAS MADE ANY ENQUIRY TO F IND OUT WHETHER THE ASSESSEE CAN BE TREATED AS DEEMED OWNER OF THE PROP ERTY. THE LEARNED COMMISSIONER (APPEALS), AS IT APPEARS, WHILE COMING TO THE CONCLUSION THAT THE ASSESSEE IS DEEMED OWNER OF THE PROPERTY A T KANTILA HOUSE HAS ALSO NOT FACTUALLY EXAMINED, WHAT IS THE EXACT PERI OD OF LEASE. IN FACT, AS IT APPEARS FROM THE ORDER OF THE LEARNED COMMISSION ER (APPEALS), THE CONTENTION OF THE ASSESSEE FOR TREATING RENTAL INCO ME FROM KANTILAL HOUSE AS BUSINESS INCOME IS, THE PROPERTY WAS LEASED TO B ANK OF BARODA FOR OPENING ITS BRANCH FOR THE BUSINESS PURPOSE OF THE ASSESSEE AS THE ASSESSEE WAS TO BENEFIT FROM THE SERVICE OR SERVICE S FROM THE BANK IN ITS PREMISE AND THE DOMINANT PURPOSE OF SUCH LETTING OU T IS TO RUN THE BUSINESS MORE EFFICIENTLY AND SMOOTHLY WITH THE SAI D BANK SERVICE AVAILABLE IN THE PREMISES. IT DOES NOT APPEAR FROM THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) THAT THE ASSESSEE EV ER CLAIMED THAT IT WAS A TENANT ON MONTHLY BASIS. EVEN BEFORE THE TRIB UNAL ALSO, AS IT APPEARS FROM THE FACTS RECORDED BY THE TRIBUNAL IN PARA11 OF ITS ORDER PASSED EARLIER, THE ASSESSEE NEVER TOOK THE CONTENT ION THAT HE IS A TENANT ON MONTHLY BASIS, HENCE, OUTSIDE THE PURVIEW OF SEC TION 27(IIIB) OF THE ACT. THUS, AS IT APPEARS, ASSESSEES CLAIM OF BEING A TENANT ON MONTH TO MONTH BASIS AND ALSO THE FACT THAT THERE IS NO WRIT TEN AGREEMENT BETWEEN THE ASSESSEE AND THE LANDLORD WAS NOT EXAMINED AT A NY STAGE EARLIER I.E., EITHER BY THE ASSESSING OFFICER OR BY THE LEARNED C OMMISSIONER (APPEALS). MOREOVER, THE CERTIFICATE DATED 7 TH JANUARY 1998, PURPORTEDLY ISSUED BY THE LANDLORD HAS NOT BEEN REFERRED TO EIT HER BY THE ASSESSING OFFICER OR BY THE LEARNED COMMISSIONER (APPEALS) OR EVEN IN THE EARLIER ORDER OF THE TRIBUNAL. MOREOVER, THE AUTHENTICITY A ND GENUINENESS OF THE CERTIFICATE ALSO NEEDS VERIFICATION / EXAMINATION. IT IS ALSO NECESSARY TO M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 10 OBSERVE, TO DEMONSTRATE THAT THE ASSESSEE IS A TENA NT, THE LEARNED AUTHORISED REPRESENTATIVE HAS RELIED UPON THE LEASE AGREEMENTS WITH BANK OF BARODA. ADMITTEDLY, THESE LEASE AGREEMENTS WERE NOT BEFORE THE DEPARTMENTAL AUTHORITIES AND THE ASSESSEE HAS SOUGH T TO PRODUCE THEM FOR THE FIRST TIME BY WAY OF ADDITIONAL EVIDENCE. T HEREFORE, NATURAL JUSTICE DEMANDS THAT THE DEPARTMENT MUST ALSO EXAMINE SUCH EVIDENCE FILED FOR THE FIRST TIME BEFORE US. MOREOVER, CONSIDERING THE FACT THAT THE ASSESSEE IS IN OCCUPATION OF THE SUBJECT PREMISES AS A TENAN T SINCE THE YEAR 1948 AND CONTINUES TO DO SO EVEN TODAY, PRIMAFACIE, GIV ES AN IMPRESSION THAT THE ASSESSEE HAS TAKEN THE PREMISE UNDER A LONG TER M LEASE. THEREFORE, FOR PROVING THE FACT THAT IT HAS TAKEN THE PREMISE ON A MONTHLY TENANCY, THAT TOO, IN THE ABSENCE OF A WRITTEN AGREEMENT REQ UIRES HIGH DEGREE OF EVIDENCE. THE ENTIRE ONUS IS ON THE ASSESSEE TO PRO VE THAT HE IS A TENANT ON MONTHLY BASIS, MORE SO, WHEN THE ASSESSEE HAS EN TERED INTO LONG TERM LEASE AGREEMENT EXTENDING BEYOND PERIOD OF 12 YEARS WITH BANK OF BARODA BY LETTING OUT THE PREMISE. A QUESTION ARISE S, WHEN THE ASSESSEE ITSELF IS NOT SURE OF THE PERIOD OF TENANCY AS IT I S ON MONTHLY BASIS AND THE LANDLORD CAN TERMINATE IT AT ANY TIME ON 15 DAYS NO TICE IN TERMS OF SECTION 106 OF T.P. ACT, HOW THE ASSESSEE CAN ENTER INTO AN AGREEMENT WITH A NATIONALIZED BANK FOR A LONG TERM LEASE FOR 12 OR MORE YEARS. THEREFORE, HEAVY ONUS IS CAST UPON THE ASSESSEE TO PROVE THE FACT THAT HE IS A TENANT ON MONTHLY BASIS, THEREFORE, COMES WITH IN THE EXCEPTION PROVIDED UNDER SECTION 27(IIIB) AND THE LEASE IS NO T FOR A PERIOD EXCEEDING 12 YEARS TO ATTRACT THE PROVISIONS OF SECTION 269UA (F). AS THE MATTER REQUIRES THOROUGH INQUIRY AND INVESTIGATION TO ASCE RTAIN ASSESSEES CLAIM OF TENANCY ON MONTHLY BASIS AND FURTHER, ADDITIONAL EVIDENCE ON THE BASIS OF WHICH THE ASSESSEE HAS SOUGHT TO DEMONSTRATE / E STABLISH HIS CLAIM OF MONTHLY TENANCY WAS NOT BEFORE THE DEPARTMENTAL AUT HORITIES AND WITHOUT PROPERLY EXAMINING THE SAID EVIDENCES AS WE LL AS THE ASSESSEES CLAIM OF MONTHLY TENANCY WHICH HAS NOT AT ALL BEEN EXAMINED AT ANY STAGE EARLIER, WE ARE INCLINED TO RESTORE THE MATTE R BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY ASSESSEES CLAIM OF MON THLY TENANCY. AS STATED EARLIER, A HEAVY BURDEN IS CAST UPON THE ASSESSEE T O PROVE THE FACT OF MONTHLY TENANCY BY PRODUCING CLINCHING EVIDENCE, CO NSIDERING THE FACT THAT IT CONTINUES TO BE IN OCCUPATION OF THE PROPER TY SINCE THE YEAR 1948. THE ARGUMENT OF THE LEARNED AUTHORISED REPRESENTATI VE THAT THE AVERMENTS MADE IN AFFIDAVITS FILED BEFORE THE HIGH COURT AND SUPREME COURT CLAIMING MONTHLY TENANCY HAS NOT BEEN CONTROV ERTED BY THE DEPARTMENT IS TOO SIMPLISTIC AND GENERAL IN NATURE, HENCE, CANNOT BE ACCEPTED ON THE FACE OF OF IT WITHOUT A THOROUGH IN QUIRY OR THE ASSESSEE DEMONSTRATING IT THROUGH POSITIVE EVIDENCE. MOREOVE R, THE HON'BLE SUPREME COURT HAS SPECIFICALLY DIRECTED THE TRIBUNA L TO EXAMINE THE EXACT PERIOD OF LEASE TO SATISFY THE CONDITION OF SECTION 269UA(F)(I). HAD IT BEEN A FACT THAT ASSESSEES CLAIM OF MONTHLY TENANCY WAS UNCONTROVERTED, THEN NOTHING REMAINS TO BE DECIDED. WE, THEREFORE, DO NO T ACCEPT ASSESSEES CONTENTION THAT ASSESSEES CLAIM OF MONTHLY TENANCY HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT. M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 11 16. IN VIEW OF THE AFORESAID, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND RESTORE T HE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISS UE RELATING TO THE PROPER HEAD UNDER WHICH THE RENTAL INCOME FROM KANTILAL HO USE IS TO BE ASSESSED AFTER THOROUGH INQUIRY AND INVESTIGATION AND ONLY A FTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 17. THE AFORESAID DECISION OF OURS APPLIES MUTATIS MUTA NDIS TO ALL OTHER APPEALS. 18. IN THE RESULT, ALL THE APPEALS ARE ALLOWED FOR STAT ISTICAL PURPOSES. (UNDER-LINED BEING EMPHASIS SUPPLIED BY US) AS EVIDENT FROM PARA-15, IT WAS OBSERVED BY CO-ORDI NATE BENCH THAT THE ASSESSEE WAS IN OCCUPATION OF KANTILAL HOUSE SINCE THE YEAR 1948 AND CONTINUES TO DO SO EVEN TODAY WHICH PRIMA-FACIE WOU LD ESTABLISH THAT THE PREMISE WAS TAKEN UNDER LONG-TERM LEASE. THEREFORE, IN THE ABSENCE OF ANY WRITTEN CONTRACT, THE SUBMISSIONS THAT TENANCY WAS ON MONTH TO MONTH BASIS WOULD REQUIRE HIGHER DEGREE OF EVIDENC E. THE ENTIRE ONUS WAS PLACED ON ASSESSEE TO PROVE THE SAME BY CLINCHI NG EVIDENCES IN THE BACKGROUND OF THE FACT THAT THE ASSESSEE ENTERED IN TO LONG TERM LEASE AGREEMENT EXTENDING BEYOND A PERIOD OF 12 YEARS WIT H BANK OF BARODA . IT WAS ALSO OBSERVED THAT WHEN THE ASSESSEE WAS NOT SURE OF THE PERIOD OF TENANCY THEN HOW COULD IT ENTER INTO A LEASE AGR EEMENT WITH A NATIONALIZED BANK FOR A PERIOD OF 12 OR MORE YEARS. THEREFORE, HEAVY ONUS WAS CASTED UPON ASSESSEE TO PROVE THAT HE WAS TENANT ON MONTHLY BASIS AS COVERED BY EXCEPTION PROVIDED U/S 27(IIIB) AND THE LEASE WAS NOT FOR A PERIOD EXCEEDING 12 YEARS SO AS TO ATTRAC T THE PROVISIONS OF SECTION 269UA(F). ACCORDINGLY, THE MATTER WAS RESTO RED BACK TO THE FILE OF LD. AO TO VERIFY THE ASSESSEES CLAIM OF MONTHLY TE NANCY. 4.1 PURSUANT TO THE AFORESAID DIRECTIONS, THE MATTE R WAS RE-EXAMINED BY LD.AO VIDE ORDER DATED 08/12/2017 U/S 143(3) R.W .S. 254 OF THE ACT. M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 12 DURING SET-ASIDE PROCEEDINGS, THE ASSESSEE WAS REQU IRED TO FURNISH COPIES OF LEASE AGREEMENT ENTERED INTO WITH BANK OF BARODA AND TO FURNISH DETAIL OF PROPERTY ASSESSMENT WITH BOMBAY MUNICIPAL CORPORATION ALONG WITH COPIES OF RETURNS FILED BY ASSESSEE THE REUNDER. 4.2 TO VERIFY THE ASSESSEES CLAIM OF MONTHLY TENAN CY, NOTICE U/S 133(6) WAS ISSUED TO THE LEGAL HEIRS OF LATE SHRI HIMATLAL KANTILAL , WHO RESPONDED BY SUBMITTING THAT ASSESSEE HAS PAID MONT HLY RENTS FOR THE SAID PREMISES AND ALSO MENTIONED THAT THE ASSESSEE IS OCCUPYING THE PREMISES SINCE 1948 AND NO RENTAL AGREEMENT HAS BEE N MADE FOR THEM. THE LD. AO OBSERVED THAT SUB-LETTING WOULD NOT BE P OSSIBLE UNLESS THERE WAS AN UNDERSTANDING THAT THE ASSESSEE HAD THE RIGH T TO SUB-LET THE PREMISE. THE PAYMENT ON MONTHLY BASIS WAS DONE FOR CONVENIENCE AND NOT ON THE BASIS OF ANY SUCH BINDING AGREEMENT. 4.3 SO FAR AS THE ASSESSEES RELIANCE ON SECTIONS 1 06 & 107 OF THE TRANSFER OF PROPERTY ACT WERE CONCERNED, THE SAME W ERE CONTROVERTED BY LD. AO BY OBSERVING THAT THE PREMISE WAS LET OUT TO BANK OF BARODA FOR A PERIOD OF MORE THAN 12 YEARS. THE ASSESSEE LEASED O UT GROUND FLOOR FOR A TERM OF 12 YEARS FROM 1 ST APRIL 1962 EXPIRING ON 31 ST JULY, 1974. AFTER EXPIRY, ANOTHER AGREEMENT DATED 30/03/1973 WAS ENTE RED INTO FOR LEASING OUT NOT ONLY THE PART OF GROUND FLOOR AS LEASED OUT EARLIER BUT SOME ADDITIONAL SPACE WAS ALSO LEASED OUT. THE LD.AO OPI NED THAT SUCH AGREEMENT WOULD NOT BE POSSIBLE UNLESS THE ASSESSEE HAS ENTERED INTO LEASE AGREEMENT / HAS AN UNDERSTANDING WITH SHRI HIMATLAL KANTILAL THAT THE ASSESSEE WOULD CONTINUE OVER THE POSSESSION OF THE PROPERTY AS A TENANT FOR THE PERIOD WHICH WAS MORE THAN 12 YEARS. IT WAS ALSO NOTED THAT ALTHOUGH THE LEASE WITH BANK OF BARODA CONTINUED TILL 2004, HOWEVER, M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 13 THE ASSESSEE WAS STILL OCCUPYING THE PREMISE EVEN A FTER THE DEATH OF ORIGINAL LANDLORD I.E. SHRI HIMATLAL KANTILAL . IN THE ABOVE BACKGROUND, THE SHELTER TAKEN BY THE ASSESSEE U/S 106 & 107 OF THE TRANSFER OF PROPERTY ACT & SEC. 27(IIIB) R.W.S. 269UA(F) WERE FOUND TO B E NOT TENABLE. FINALLY, IT WAS HELD THAT THE RENTAL INCOME WOULD BE TAXABLE AS INCOME FROM HOUSE PROPERTY. 4.4 IN THE ALTERNATIVE, AS HELD IN QUANTUM ORDER FO R AY 1994-95 ORDER DATED 27/01/1998, IT WAS OPINED THAT SUCH INCOME WO ULD BE TAXABLE UNDER RESIDUARY HEAD I.E. INCOME FROM OTHER SOURCES . THE CASE LAW OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S T. P. SIDHAWA (133 ITR 840) WAS HELD TO BE NOT APPLICABLE SINCE IN THAT CASE, T HE RENTAL INCOME WAS NOT CHARGEABLE TO TAX. 5. AGGRIEVED, THE ASSESSEE ASSAILED THE STAND OF LD . AO VIDE IMPUGNED ORDER DATED 06/07/2018 WHEREIN FIRST APPEL LATE AUTHORITY, AFTER APPRECIATING THE CONTROVERSY, CONFIRMED THE STAND O F LD. AO BY OBSERVING AS UNDER: - 6.4.4 THE UNDISPUTED FACTS THAT EMERGE FROM THE AB OVE ORDER OF THE HON'BLE TRIBUNAL ARE THAT THE APPELLANT IS IN POSSESSION OF THE KANTILAL HOUSE PROPERTY SINCE THE YEAR 1948 AND CONTINUES TO OCCUPY THE SAME PREM ISES TILL DATE, EVEN AFTER THE DEATH OF THE LANDLORD. IT IS ALSO EVIDENT THAT THE APPELLANT HAS ENTERED INTO LEASE AGREEMENT WITH BANK OF BARODA FROM 1 ST APRIL-1962 AND THE LEASE CONTINUED WITH THE BANK TILL THE YEAR 2004 WHEN IT VACATED THE PREMISE S. HOWEVER, TO GET OVER THE MISCHIEF OF SECTION 27(IIIB) R.W.S. 269UA(F), THE A PPELLANT HAS ATTEMPTED TO TAKE SHELTER BEHIND THE PROVISIONS OF SECTION 106 AND 10 7 OF THE TRANSFER OF PROPERTY ACT, BY STATING THAT THERE IS NO WRITTEN AGREEMENT BETWE EN THE APPELLANT AND THE LANDLORD AND THE APPELLANT IS A TENANT ON MONTHLY BASIS. TO SUBSTANTIATE SUCH CLAIM THE APPELLANT HAS RELIED UPON A PHOTOCOPY OF THE CERTIF ICATE PURPORTEDLY ISSUED BY THE LANDLORD LATE SHRI HIMMATLAL KANTILAL ON 7 TH JANUARY 1998 CERTIFYING THAT THE APPELLANT IS OCCUPYING THE PREMISES ON MONTHLY BASI S AND FURTHER RELIED UPON THE LEASE AGREEMENT WITH THE BANK TO DEMONSTRATE THAT T HE APPELLANT IS A TENANT OF THE SUBJECT PREMISES. HOWEVER, TAKING NOTE OF THE FACT THAT THE APPELLANT IS IN OCCUPATION OF THE SUBJECT PREMISES AS A TENANT SINCE THE YEAR 1948 AND CONTINUES TO DO SO EVEN TODAY, WHICH PRIMA FACIE GIVES AN IMPRESSION THAT T HE ASSESSEE HAS TAKEN THE PREMISE UNDER A LONG TERM LEASE, THE HON'BLE TRIBUN AL HAS HELD THAT 'THE ENTIRE ONUS IS ON THE ASSESSEE TO PROVE THAT 'HE IS A TENANT ON MONTHLY BASIS, MORE SO, M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 14 WHEN THE ASSESSEE HAS ENTERED INTO LONG TERM LEASE AGREEMENT EXTENDING BEYOND PERIOD OF 12 YEARS WITH THE BANK BY LETTING OUT THE PREMISE', 'MORE SO, WHEN THE ASSESSEE HAS ENTERED INTO LONG TERM LEASE AGREEMENT EXTENDING BEYOND PERIOD OF 12 YEARS WITH BANK OF BARODA BY LETTING O UT THE PREMISE.' 6.4.5 THUS, TAKING NOTE OF THE FACT THAT THE ADDITI ONAL EVIDENCE ON THE BASIS OF WHICH THE ASSESSEE HAS SOUGHT TO DEMONSTRATE / ESTABLISH HIS CLAIM OF MONTHLY TENANCY I.E. THE LEASE AGREEMENTS WITH BANK OF BARODA AND THE CE RTIFICATE DATED 7 TH JANUARY 1998, PURPORTEDLY ISSUED BY THE LANDLORD, WERE NOT BEFORE THE DEPARTMENTAL AUTHORITIES, AND CONSIDERING THAT ASSESSEE'S CLAIM OF BEING A TENANT ON MONTH TO MONTH BASIS WAS NOT EXAMINED AT ANY STAGE EARLIER I .E., EITHER BY THE AO OR BY THE LD. CIT(A) AND FURTHER THAT THE AUTHENTICITY AND GE NUINENESS OF THE CERTIFICATE ALSO NEEDS VERIFICATION / EXAMINATION, THE HON'BLE TRIBU NAL HAS RESTORED THE MATTER BACK THE FILE OF THE AO TO VERIFY ASSESSEE'S CLAIM OF MO NTHLY TENANCY, PURSUANT TO THE DIRECTIONS ISSUED BY THE HON'BLE TRIBUNAL, THE AO H AS ASSESSED THE RENTAL INCOME FROM THE DEMISED PREMISES AS 'INCOME FROM OTHER SOU RCES', AFTER VERIFYING THE FACTS. 6.4.6 THE FACTS OF THE PRESENT CASE ARE NOW TESTED IN THE LIGHT OF THE ABOVE BACKGROUND. THE MAIN THRUST OF THE ARGUMENTS OF THE APPELLANT IS THAT THE RENTAL INCOME WAS NOT AT ALL CHARGEABLE TO TAX SINCE THE A PPELLANT WAS NOT THE OWNER OF THE PROPERTY BUT ONLY A MONTHLY TENANT. THE APPELLANT H AS SOUGHT TO DEMONSTRATE / ESTABLISH HIS CLAIM OF MONTHLY TENANCY RELYING ON T HE LEASE AGREEMENTS WITH BANK OF BARODA AND THE CERTIFICATE DATED 7 TH JANUARY 1998, PURPORTEDLY ISSUED BY THE LANDLORD. 6.4.7 THE 'INCOME FROM HOUSE PROPERTY' IS AN ARTIFI CIALLY DEFINED INCOME AND THE LIABILITY ARISES FROM THE FACT THAT THE ASSESSEE IS THE OWNER OF THE PROPERTY. THE LIABILITY IS IRRESPECTIVE OF THE FACT WHETHER THE P ROPERTY HAS BEEN LET OUT, WHETHER THE OWNER HAS RECEIVED RENT ETC. SECTION 27, IN ITS CER TAIN CLAUSES, ENACTS DEEMING PROVISIONS ABOUT OWNERSHIP FOR THE PURPOSES OF SECT ION 22 TO 26 OF THE ACT. THE RELEVANT CLAUSE (IIIB) OF SECTION 27 READS AS UNDER : 'OWNER OF HOUSE PROPERTY', 'ANNUAL CHARGE', ETC., D EFINED. 27. FOR THE PURPOSES OF SECTIONS 22 TO 26 (I) *** (II) *** (IIIA) *** (IIIB) A PERSON WHO ACQUIRES ANY RIGHTS (EXCLUDING ANY RIGHTS BY WAY OF A LEASE FROM MONTH TO MONTH OR FOR A PERIOD NOT EXCEE DING ONE YEAR) IN OR WITH RESPECT TO ANY BUILDING OR PART THEREOF, BY VIRTUE OF ANY SUCH TRANSACTION AS IS REFERRED TO IN CLAUSE (F) OF SECTION 269UA, SHALL BE DEEMED TO BE THE OWNER OF THAT BUILDING OR PART THEREOF;] 6.4.8 THE PROVISIONS OF SECTION 27(III) WERE SUBSTI TUTED BY THE FINANCE ACT, 1987 (W.E.F. 01.04.1988) AND THE SCOPE AND EFFECT OF THE AMENDMENT MADE IN SECTION 27 OF THE ACT IS ELABORATED IN THE FOLLOWING PORTION O F THE DEPARTMENT CIRCULAR NO. 495 DATED 22 SEPTEMBER 1987. ENLARGING THE MEANING OF OWNERSHIP OF HOUSE PROPERT Y 23.1 THE AMENDING ACT HAS EXTENDED THE MEANING OF THE EX PRESSION 'OWNERSHIP' FOR THE PURPOSE OF COMPUTING INCOME UND ER THE HEAD 'INCOME FROM HOUSE PROPERTY'. THE EXPRESSION 'OWNERSHIP' ME ANING LEGAL OWNERSHIP HAD THE EFFECT OF EXCLUDING CASES WHERE AN ASSESSEE POSSESSED ALL RIGHTS TO AN IMMOVABLE PROPERTY EXCEPT THE HUSK OF THE TITLE. M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 15 23.2 ...... THERE IS ANOTHER PRACTICE WHEREBY PROPERTY I S TRANSFERRED TO THE PURCHASER AFTER RECEIVING THE CONSIDERATION BUT WIT HOUT GETTING THE SALE REGISTERED UNDER S. 54 OF THE TRANSFER OF PROPERTY ACT. THIS IS DONE BY EXECUTING POWER OF ATTORNEY IN FAVOUR OF A PERSONS WHO BY VIRTUE OF THAT POWER OF ATTORNEY ENJOYS THE PROPERTY. IN SUCH CASE S, LEGALLY, THE PROPERTY REMAINS WITH THE REGISTERED OWNER BUT FOR ALL PRACT ICAL PURPOSES THE HOLDER OF THE POWER OF ATTORNEY IS THE OWNER. A SIMILAR SITUA TION ARISES WHERE POSSESSION OF ANY IMMOVABLE PROPERTY IS ALLOWED TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERR ED TO IN S.53A OF THE TRANSFER OF PROPERTY ACT, 1882. ALL THESE TYPES OF TRANSACTIONS HAVE THE EFFECT TO TRANSFERRING THE HOUSE PROPERTY IN FACT, THOUGH NOT IN LAW. WITH THE EXTENDED DEFINITION OF THE EXPRESSION 'OWNERSHIP', TRANSACTIONS COVERED BY S.269UA OF THE IT ACT. 1961 (INCLUDING TRANSFER O F PROPERTY BY POWER OF ATTORNEY), SHALL BE CONSIDERED AS HAVING THE EFFECT OF TRANSFER OF TITLE. THE AMENDING ACT BY INSERTION OF SUB-CLS, (III), (IIIA) AND (IIIB) IN S.27, COVERS ALL THE TRANSACTIONS REFERRED TO ABOVE FOR THE PURPOSE OF D ETERMINING THE OWNERSHIP OF THE PROPERTY FOR ASSESSING INCOME UNDER THE HEAD ' INCOME FROM HOUSE PROPERTY.' 6.4.9 FURTHER, IN THE MEMORANDUM EXPLAINING PROVISI ONS IN FINANCE BILL, 1987 CONCERNING S.27, IT WAS EXPLAINED AS FOLLOWS: SIMPLIFICATION AND RATIONALISATION OF PROVISIONS ENLARGING THE MEANING OF 'OWNER OF HOUSE PROPERTY'. 27. UNDER THE EXISTING PROVISIONS OF S. 22 OF THE I T ACT, ANY INCOME FROM HOUSE PROPERTY IS CHARGEABLE TO TAX ONLY IN THE HAN DS OF THE LEGAL OWNER. AS PER S.27 OF THE IT ACT, CERTAIN PERSONS WHO ARE NOT OTHERWISE LEGAL OWNERS ARE DEEMED TO BE THE OWNERS FOR THE PURPOSES OF THESE P ROVISIONS. UNDER THE TRANSFER OF PROPERTY ACT, THE TRANSFER OF OWNERSHIP CAN BE EFFECTED ONLY BY MEANS OF A REGISTERED INSTRUMENT. HOWEVER, IN THE RECENT TIMES VARIOUS OTHER DEVICES ARE SOUGHT TO BE EMPLOYED FOR TRANSFERRING ONE'S OWNERSHIP IN PROPERTY. AS A RESULT, THERE ARE SITUATIONS IN WHICH THE ACT UAL OWNER, SAY OF AN APARTMENT IN A MULTI-STOREYED BUIL DING, OR A HOLDER OF A POWER OF ATTORNEY IS NOT THE LEGAL OWNER OF A PROPE RTY. IN SOME CASES, PENDING RESOLUTION OF DISPUTES, THE LEGAL AS WELL A S THE BENEFICIAL OWNERS ARE ASSESSED TO TAX IN RESPECT OF THE SAME INCOME. AS A MEASURE OF RATIONALISATION, THE BILL SEEKS TO ENLARGE FURTHER THE MEANING OF THE EXPRESSION 'OWNER OF HOUSE PROPERTY', GIVEN IN CL. (III) OF S. 27 BY PROVIDING THAT A PERSON WHO COMES TO HAVE CONTROL O VER THE PROPERTY BY VIRTUE OF SUCH TRANSACTIONS AS ARE REFERRED TO IN CL. (F) OF S. 269UA WILL ALSO BE DEEMED TO BE THE OWNER OF THE PROPERTY. THE AMENDMENT ALSO SEEKS TO ENLARGE THE APPLICABILITY OF THIS CLAUSE TO A MEMBE R OF COMPANY OR OTHER AOP. CORRESPONDING AMENDMENTS HAVE ALSO BEEN PROPOSED IN REGARD TO THE DEFINITION OF 'TRANSFER' IN S.2(47) OF THE IT ACT, S.2(M) OF THE WT ACT DEFINING 'NET WEALTH' AND S. 2(XII) OF THE GT ACT DEFINING 'GIFT'. THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST APRIL, 1 988, AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASST. YR. 1988-89 AND SUBS EQUENT YEARS.' 6.4.10 A PLAIN READING OF THE OF THE ABOVE CIRCULAR AND THE MEMORANDUM MAKES IT CLEAR THAT THE MEANING OF THE EXPRESSION 'OWNER OF HOUSE PROPERTY', GIVEN IN CL. (III) OF S. 27 WAS ENLARGED FURTHER BY PROVIDING THAT A P ERSON WHO COMES TO HAVE CONTROL M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 16 OVER THE PROPERTY BY VIRTUE OF SUCH TRANSACTIONS AS ARE REFERRED TO IN CL. (F) OF S. 269UA WILL ALSO BE DEEMED TO BE THE OWNER OF THE PR OPERTY. HENCE, TO RESOLVE THE CONTROVERSY IT IS ALSO NECESSARY TO REFER TO RELEVA NT CL. (F) OF S. 269UA AS APPLICABLE TO THE YEAR UNDER APPEAL. THE RELEVANT CL. (F) OF S . 269UA OF THE ACT READS AS FOLLOWS: '269UA(F) 'TRANSFER, (I) IN RELATION TO ANY IMMOVABLE PROPERTY REFERRED TO IN SUB-CL. (I) OF CL. (D), MEANS TRANSFER OF SUCH PROPERTY BY WAY OF SALE OR E XCHANGE OR LEASE FOR A TERM OF NOT LESS THAN TWELVE YEARS, AND INCLUDES AL LOWING THE POSSESSION OF SUCH PROPERTY TO BE TAKEN OR RETAINED IN PART PERFO RMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN S. 53A OF THE TRANSFER OF PRO PERTY ACT, 1882 (4 OF 1882) EXPLANATION.FOR THE PURPOSES OF THIS SUB-CLAUSE, A LEASE WHICH PROVIDES FOR THE EXTENSION OF THE TERM THEREOF BY A FURTHER TERM OR TERMS SHALL BE DEEMED TO BE A LEASE FOR A TERM OF NOT LESS THAN TWELVE YEARS, IF THE AGGREGAT E OF THE TERM FOR WHICH SUCH LEASE IS TO BE GRANTED AND THE FURTHER TERM OR TERMS FOR WHICH IT CAN BE SO EXTENDED IS NOT LESS THAN TWELVE YEARS; 6.4.11 IN THE INSTANT CASE, RELYING ON THE LEASE AG REEMENTS WITH BANK OF BARODA AND THE CERTIFICATE DATED 7 TH JANUARY 1998, PURPORTEDLY ISSUED BY THE LANDLORD, THE AR HAS ARGUED THAT THE PRESENT TENANCY IS FROM MONTH T O MONTH, THEREFORE THE APPELLANT CANNOT BE CONSIDERED AS DEEMED OWNER U/S 22 OF THE ACT, SINCE THE LEASE FROM MONTH TO MONTH FOR A PERIOD NOT EXCEEDING ONE YEAR IS EXCLUDED FROM THE DEFINITION OF DEEMED OWNER IN SECTION 27 (IIIB) ITSELF. IT IS EVIDENT THAT THE ASSESSEE HAS ENTERED INTO LICENCE AGREEMENT WITH BANK OF BARODA FOR LETTING OUT THE GROUND FLOOR OF THE PROPERTY ADMEASURING 2,300 SQ. FT. FOR A TER M OF 12 YEARS COMMENCING FROM 1 ST APRIL; 1962 AND EXPIRING ON 31 S1 JULY 1974. IT IS FURTHER EVIDENT AFTER THE EXPIRY OF THE SAID AGREEMENT, THE ASSESSEE ENTERED INTO ANOTHER A GREEMENT WITH BANK OF BARODA ON 30 TH MARCH 1973, LEASING OUT NOT ONLY THE PART OF THE G ROUND FLOOR EARLIER LEASED OUT TO THEM BUT ALSO LEASED OUT ADDITIONAL SPACE AN D SUCH LEASE AGREEMENT WITH BANK OF BARODA CONTINUED FROM TIME TO TIME AS IS EV IDENT FROM LEASE AGREEMENT DATED 29 TH MARCH 1996. THE RELEVANT CLAUSES OF THE LEASE AGR EEMENT DATED 29 TH MARCH 1996 FOR GROUND FLOOR IS EXTRACTED HEREUNDER FOR CONVENIENCE: WHEREAS: (A) ONE MR. HIMATLAL KANTILAL (HEREINAFTER FO R CONVENIENCE AND BREVITY SAKE REFERRED TO AS 'THE OWNERS') IS THE SOLE AND A BSOLUTE OWNER AND WELL AND SUFFICIENTLY ENTITLED TO AND/OR OTHERWISE SEIZE D AND POSSESSED OF ALL THAT PLACE OR PARCEL OF LAND BEARING CA DASTRAL SURVEY N O.1496 OF GIRGAON DIVISION IN THE REGISTRATION DISTRICT AND SUB-DISTR ICT OF BOMBAY CITY AND BOMBAY SUBURBAN AND ASSESSED BY BOMBAY MUNICIPAL CO RPORATION (BMC) UNDER D-WARD, NO.515 STREET NO. 14 TOGETHER WITH TH E BUILDINGS STANDING THEREON ONE OF THEM KNOWN AS 'KANTILAL HOUSE' (HERE INAFTER FOR CONVENIENCE AND BREVITY SAKE REFERRED TO AS 'THE SAID BUILDING' ) LYING BEING AND SITUATED AT 14, MAMA PARMANAND MARG, OPERA HOUSE, BOMBAY 400004 (HEREINAFTER FOR THE SAKE OF CONVENIENCE AND BREVITY REFERRED TO AS 'THE SAID PROPERTY'); (B) THE LESSORS ARE THE LAWFUL TENANTS OF VAR IOUS PREMISES IN THE SAID BUILDING AT AND FOR THE MONTHLY RENT RESERVED AND O N THE TERMS AND CONDITIONS AGREED UPON BY AND BETWEEN THE SAID OWNER ON THE ON E HAND AND THE LESSORS ON THE OTHER HAND. M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 17 (C) FROM AND OUT OF THE SAID VARIOUS TENANTED PREMI SES BY AND UNDER AN AGREEMENT DATED 29 TH JANUARY,1964, DULY ENTERED INTO BY AND BETWEEN THE LESSORS HEREIN, THEREIN REFERRED TO AS 'THE LICENSOR' AND THE LESSEES HEREIN, THEREIN REFERRED TO AS 'THE LICENCEE', THE LESSORS GRANTED TO THE LESSEES A LICENCE OF PART OF THE GROUND FLOOR ADMEA SURING 2,300 SQ. FT. WHICH INCLUDES A STRONG ROOM (HEREINAFTER REFERRED TO AS 'THE OLD STRONG ROOM') FOR A TERM OF 12 YEARS COMMENCING FROM 1 ST AUGUST, 1962 AND EXPIRING BY EFFLUX OF TIME ON 31 ST JULY, 1974, AT AND FOR THE MONTHLY COMPENSATION AN D ON THE TERMS AND CONDITIONS AS MORE PARTICULARLY STATE D IN THE SAID AGREEMENT DATED 29 TH JANUARY, 1964; (D) AS THE LESSEES WERE SHORT OF SPACE, THE WI TH THE CONSENT AND CONCURRENCE OF THE LESSORS CONSTRUCTED A MEZZANINE FLOOR ADMEASURING 600 SQ. FT. APPROXIMATELY IN THE SAID LICENCED PREMISES AND BY AND UNDER AN AGREEMENT DATED 30 TH MARCH,1973, DULY ENTERED INTO BY AND BETWEEN THE LESSORS HEREIN, THEREIN REFERRED TO AS 'THE LICENSOR' AND THE LESEES HEREIN, THEREIN REFERRED TO AS 'THE LICENCEE', THE LESSORS GRANTED TO THE LESSEES A LICENCE OF SAID MAZZANINE FLOOR WITH EFFECT FROM 16 TH AUGUST,1972, AT AND FOR THE COMPENSATION AND ON THE TERMS AND CONDITIONS AS MORE PARTICULARLY STATED IN THE SAID AGREEMENT DATED 30 TH MARCH,1973. UNDER THE SAID AGREEMENT IT WAS, INTER ALIA, AGREED THAT THE SAID AGREEMENT SHALL BE COEXTENSIVE WITH THE SAID AGREEMENT DATED 20 TH AUGUST, 1964 AND THEREFORE LICENCE GRANTED UNDER THE SAID AGREEMENT DATED 30 TH MARCH 1973 OF THE MEZZANINE FLOOR WAS TO EXPIRE BY EFFLUX OF TIME SIMULTANEOUSLY WITH THE EXPIRY OF THE LICENCE GRANTED OF THE SAID GROUND FL OOR PREMISES UNDER THE SAID AGREEMENT DATED 29 LH JANUARY,1964. I.E. ON 31 ST JULY,1974 AS AFORESTATED; (E) THE LESSEES HOWEVER REMAINED IN OCCUPATIO N WITH THE SUBSEQUENT CONSENT OF THE LESSORS OF THE DEMISED PREMISES AFTE R THE EXPIRY OF THE SAID LICENCE PERIOD GRANTED UNDER THE LICENCE AGREEMENT DATED 29 TH JANUARY 1964 I.E. FROM 1 ST AUGUST 1974, TILL 31 ST JULY, 1976 AT AND FOR THE LICENCE FEE RESERVED AND ON THE SAME TERMS AND CONDITIONS AS WA S AGREED UPON IN THE SAID LICENCE AGREEMENT. (F) THE LESSORS HAVE BY AND UNDER AN INDENTURE OF SUB-LEASE DATED 20 TH NOVEMBER,1976 DULY ENTERED INTO BETWEEN THE LESSORS HEREIN, THEREIN REFERRED TO AS 'THE SUB-LESSORS' ON THE ONE HAND AND THE LESSEES HEREIN, THEREIN REFERRED TO AS 'THE BANK' ON THE OTHER HAND, THE LESSORS HAD GIVEN TO THE LESSEES PORTION OF THEIR PREMISES ON THE GRO UND FLOOR ADMEASURING ABOUT 2,578 SQ.FT. AND ON THE MEZZANINE FLOOR ADMEA SURING ABOUT 520 SQ. FT. AGGREGATING TO 3,098 SQ.FT. ON LEASE FOR A PERIOD OF 8 YEARS COMMENCING FROM 1 ST AUGUST,1976 AND EXPIRING BY EFFLUX OF TIME ON 31 ST JULY, 1984 AT AND FOR THE MONTHLY LEASE RENT RESERVED AND ON THE TERM S AND CONDITIONS AS MORE PARTICULARLY STATED THEREIN. (G) AS THERE WAS SOME DOUBT ABOUT THE AREA DE MISED TO THE LESSEES AND THEREFORE IT WAS MUTUALLY AGREED TO TAKE JOINT MEAS UREMENT BY THE REPRESENTATIVE OF THE LESSORS AND THE LESSEES, WHIC H WERE TAKEN ON 15 TH FEBRUARY, 1985 WHICH REVEALED THAT THE AREA OF THE GROUND FLOOR IS 2,557.23,SQ.FT. WHICH INCLUDES THE SAID OLD STRONG ROOM ADMEASURING 90.57SQ.FT. AND A MEZZANINE FLOOR ADMEASURING 530.8 3 SQ.FT. TOTALLY AGGREGATING TO RS.3,088.06. M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 18 (H) AS AFORESAID THE LEASE PERIOD OF 8 YEARS GRANTE D UNDER THE SAID INDENTURE OF SUB-LEASE DATED 20 TH NOVEMBER, 1976 EXPIRED BY EFFLUX OF TIME AND THEREFORE BY AND UNDER AN INDENTURE OF LEASE DA TED 4 TH APRIL, 1985 DULY ENTERED INTO BY AND BETWEEN THE LESSORS ON THE ONE HAND AND THE LESSEE ON THE OTHER HAND, THE SAID LEASE WAS RENEWED FOR A FU RTHER PERIOD OF 9 YEARS AND 9 MONTHS, COMMENCING FROM THE 1 ST AUGUST, 1984 AND EXPIRING ON 30 TFL APRIL, 1984 BY EFFLUX OF TIME. THE TOTAL AREA UNDER THE SAID INDENTURE OF LEASE WAS 3,088.06 SQ.FT. AT THE REVISED LEASE RENT OF RS .10/- PER SQUARE FEET PER MONTH AGGREGATING TO RS.30,880.60 PS PER MONTH UNTI L THE LESSEES HANDED OVER THE VACANT AND PEACEFUL POSSESSION OF THE SAID OLD STRONG ROOM OF 90.57 SQ.FT. TO THE LESSORS WHICH WAS TO BE HANDED OVER A FTER THE LESSORS CONSTRUCT NEW STRONG WITHIN THE DEMISED PREMISES 35 AGREED AN D AS MORE PARTICULARLY MENTIONED IN THE SAID INDENTURE OF LEASE DATED 4 TH APRIL, 1985 AFTER THE VACANT AND PEACEFUL POSSESSION OF THE SAID OLD STRO NG ROOM WAS HANDED OVER AS AFORESAID (WHICH WAS HANDED ON 26 TH DECEMBER,1990), THE AREA DEMISED AND THE LEASE RENT BOTH WERE REDUCED BY RS.90.57 SQ .FT. AND RS,905.70 RESPECTIVELY AND WERE THEREFORE REDUCED TO 2,997.40 SQ.FT. AND RS.29,974.90 RESPECTIVELY. THE ACCESS TO THE LESSORS TO THE SAID OLD STRONG ROOM REMAINED THE SAME FROM THE DEMISED PREMISES AS IT WAS BEFORE . (I) AS AFORESAID THE LEASE PERIOD GRANTED UN DER THE SAID INDENTURE OF LEASE DATED UNDER THE SAID INDENTURE OF LEASE DATED 4 TH APRIL, 1985 EXPIRED ON 30 TH APRIL, 1994 AND THE LESSORS HAVE NOW AGREED TO EXT END THE LEASE OF THE DEMISED PREMISES AT THE REVISED LEASE RENT FOR A PERIOD OF 10 YEARS COMMENCING FROM THE 1 ST MAY.1994, AND EXPIRING BY EFFLUX OF TIME ON 30 TH APRIL,2004 AT AND FOR THE LEASE RENT HEREUNDER RESE RVED AND UPON THE TERMS AND CONDITIONS AS HEREINAFTER APPEARING. 6.4.12 THE LEASE AGREEMENT DATED 29 TH MARCH 1996 FOR FIRST FLOOR IS SIMILAR TO THE ABOVE AGREEMENT FOR GROUND FLOOR HOWEVER IN PLACE O F CLAUSE (C) TO (I) REPRODUCED ABOVE, IT HAS ONLY TWO CLAUSES THE CLAUSE (C) & CLA USE (D) AS UNDER: (C) FROM AND OUT OF THE SAID VARIOUS TENANTED PREMISES THE LESSOR HAVE BY AND UNDER AN AGREEMENT DATED 1 ST JUNE, 1984,1964, DULY ENTERED INTO BETWEEN THE LESSORS HEREIN, THEREIN ALSO REFERRED T O AS 'THE LESSORS' ON THE ONE HAND AND THE LESSEES HEREIN, THEREIN ALSO REFER RED TO AS 'THE LESSEES', THE LESSORS HAD GRANTED TO THE LESSEES PORTION OF T HEIR PREMISES ON THE FIRST FLOOR OF THE SAID BUILDING ADMEASURING 1,795 SQ. FT . ON LEASE FOR A PERIOD OF 10 YEARS COMMENCING FROM 1 ST JUNE,1984 AND EXPIRING BY EFFLUX OF TIME ON 31 ST MAY,1994, AT AND FOR THE MONTHLY LEASE RENT RESERV ED AND ON THE TERMS AND CONDITIONS AS MORE PARTICULARLY STATED THEREIN; (D) AS AFORESAID THE LEASE PERIOD GRANTED UNDER THE SAID INDENTURE OF LEASE DATED UNDER THE SAID INDENTURE OF LEASE DATED 1 ST JUNE, 1984 EXPIRED ON 31 ST MAY,1994 AND THE LESSORS HAVE NOW AGREED TO EXTEND THE LEASE OF THE DEMISED PREMISES AT THE REVISED LEASE RENT FOR A PE RIOD OF 9 YEARS AND ALL MONTHS COMMENCING FROM THE 1 SL JUNE,1994, AND EXPIRING BY EFFLUX OF TIME ON 30 TH APRIL,2004 AT AND FOR THE LEASE RENT HEREUNDER RES ERVED AND UPON THE TERMS AND CONDITIONS AS HEREINAFTER APPEARING. 6.4.13 A CLOSE PERUSAL OF THE ABOVE INDENTURE OF L EASE DATED 29 TH MARCH 1996 WOULD SHOW THAT THE INITIAL AGREEMENT BETWEEN THE A PPELLANT AND THE BANK IS A LICENCE AGREEMENT ENTERED ON 29 TH JANUARY 1964, WHEREIN THE APPELLANT IS REFERRED AS 'THE LICENSOR' AND THE BANK AS 'THE LICENCEE'. ON EXPIRY OF THE SAID M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 19 AGREEMENT FOR A TERM OF 12 (TWELVE) YEARS ON 31 ST JULY 1974, THE BANK REMAINED IN OCCUPATION OF THE DEMISED PREMISES TILL JULY 1976 A T AND FOR THE LICENCE FEE ON THE SAME TERMS AND CONDITIONS AS AGREED UPON IN THE LIC ENCE AGREEMENT DATED 29 TH JANUARY 1964. THEREAFTER THE APPELLANT AND THE BANK ENTERED INTO AN 'INDENTURE OF SUB-LEASE' DATED 20 TH NOVEMBER 1976WHEREBY THE BANK WAS GRANTED LEASE FOR A PERIOD OF 8 (EIGHT) YEARS W.E.F. 1 ST AUGUST 1976 AND IN THIS INDENTURE THE APPELLANT IS REFERRED AS 'THE SUB-LESSORS' AND THE BANK OF BARODA AS 'THE BANK'. ON THE EXPIRY OF THE LEASE ON 31 ST JULY 1984,THE SAID LEASE WAS RENEWED FOR A FURTHER PERIOD OF 9 YEARS AND 9 MONTHS W.E.F. 1 ST AUGUST 1984 UNDER THE 'INDENTURE OF LEASE' DATED 4 TH APRIL 1985 AND AGAIN ON 29 TH MARCH 1996 FOR A PERIOD OF 10 YEARS W.E.F. 1 SI MAY 1994 BY AND UNDER THE'LNDENTURE OF LEASE' UNDE R CONSIDERATION. 6.4.14 IT IS APPARENT FROM THE ABOVE DISCUSSION TH AT THOUGH THE APPELLANT HAS INITIALLY GRANTED LICENCE TO THE BANK FOR PART OF G ROUND FLOOR OF THE DEMISED PREMISES VIDE LICENCE AGREEMENT 29 TH JANUARY 1964, WHEREIN THE APPELLANT IS REFERRED AS 'THE LICENSOR', AND ON EXPIRY OF THE SAID LICENCE AGREEMENT THE SAI D PORTION OF THE DEMISED PREMISES WAS LEASED BY AND UNDER 'INDENTURE OF SUB-LEASE' DATED 20 TH NOVEMBER 1976 WHEREIN THE APPELLANT IS REFERRED AS 'THE SUB-LESSORS'. THIS LEASE WAS RENEWED FROM TIME TO TIME TILL THE EXPIRY OF THE LEASE WHEN THE BANK VACATED THE DEMISED PREMISES IN APRIL 2004. CONSIDE RING THAT THE APPELLANT WAS REFERRED AS 'LICENSOR' INITIALLY, SUBSEQUENTLY AS ' SUB-LESSORS' AND LATER AS 'LESSOR' IN THE INDENTURES OF LEASE, WHICH POINT TO THE FACT THAT THE APPELLANT IS ALSO LESSEE OF THE DEMISED PREMISES, THE AR WAS CALLED UPON TO PRO DUCE THE LINCENCE AGREEMENT AND THE LEASE DEEDS TO ASCERTAIN THE NATURE OF APPE LLANT'S RIGHTS IN THE DEMISED PROPERTY. HOWEVER, THE AR EXPRESSED HIS INABILITY T O PRODUCE THE SAID AGREEMENT / INDENTURES ON THE GROUND THAT THESE DOCUMENTS ARE N ET TRACEABLE NOW. IT MAY BE RECALLED HERE THAT THE HON'BLE TRIBUNAL WHILE RESTO RING THE MATTER TO THE AO HAS CATEGORICALLY HELD THAT 'A HEAVY BURDEN IS CAST UPO N THE ASSESSEE TO PROVE THE FACT OF MONTHLY TENANCY BY PRODUCINQ CLINCHINQ EVIDENCE, CONSIDERING THE FACT THAT IT CONTINUES TO OCCUPATION OF THE PROPERTY SINCE THE Y EAR 1948.', THEREFORE IT WAS INCUMBENT ON THE APPELLANT TO PRODUCE THESE DOCUMEN TS TO PROVE THAT THERE WAS NO LONG TERM AGREEMENT WITH THE OWNER. HOWEVER, THE AP PELLANT COULD NOT PRODUCE THESE DOCUMENTS FOR VERIFICATION OF FACTS. WHEN THE FACTS LAY WITHIN THE SPECIAL KNOWLEDGE OF THE APPELLANT WHICH IT FAILED TO ESTAB LISH, A STATUTORY PRESUMPTION CAN BE DRAWN AGAINST IT IN VIEW OF S. 105 OF THE EVIDEN CE ACT. ALL THE EVIDENCE AND MATERIAL RELATING TO THE LEASE WERE WITHIN THE SPEC IAL KNOWLEDGE OF THE APPELLANT, THE ONUS TO PRODUCE THE SAME AS PER S. 106 THE EVIDENCE ACT WAS UPON THE APPELLANT THE LAW HAS CAST INITIAL ONUS ON THE APPELLANT AND THE APPELLANT HAS FAILED TO DISCHARGE ITS BURDEN. 6.4.15 NOW THAT THE APPELLANT HAS PLACED RELIANCE ON CLAUSE (B) OF THE LEASE AGREEMENT WITH BANK OF BARODA TO DEMONSTRATE THAT T HE ASSESSEE IS A TENANT OF THE SUBJECT PREMISES, IT IS MY VIEW THAT THE TENANCY CANNOT BE CONSIDER ED ON MONTH TO MONTH BASIS MERELY BECAUSE THE RENT HAS BEEN FIXED FOR EVERY MONTH. THIS IS SO BECAUSE THE NATURE OF THE TRANSACTION T DEPEND UPON THE MANNER IN WHICH IT IS DESCRIBED BY ANY PARTY TO THE TRANSACTION BUT WILL TO BE DETERMINED ON PRINCIPLES OF LAW APPLICABLE TO THE FACTS EXISTING AS HELD BY THE HON'BLE HIGH COURT OF CALCUTTA IN THE CASE OF HARI KRISHNA KANOI & ANR. VS. APPROPRIATE AUTHORITY & OR S. (1994) 207 ITR 0743. FURTHER, AS HELD BY THE HON'BLE SUPREME COURT OF IN DIA IN GOVIND IMPEX (P) LTD. & ORS. VS. APPROPRIATE AUTHORITY, IN COME TAX DEPARTMENT (2011) 330 ITR 0010 'ONE TERM OF THE LEASE CANNOT BE TAKEN INTO CONSIDERATION IN ISOLATION. M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 20 ENTIRE DOCUMENT IN TOTALITY HAS TO BE SEEN TO DECIP HER THE TERMS AND CONDITIONS OF LEASE.' 6.4.16 IT CAN BE SEEN THAT THE APPELLANT HAS BEEN D ESCRIBED AS SUB-LESSOR IN THE 'INDENTURE OF SUB-LEASE' DATED 20 TH NOVEMBER 1976, AS MENTIONED IN CLAUSE (F) OF THE LEASE DEED DATED 29 TH MARCH 1996. THE FACT THE APPELLANT IS REFERRED AS S UB- LESSORS IN THE AFORESAID INDENTURE NEGATES THE CLAI M OF THE APPELLANT THAT IT IS A MONTHLY TENANT, HAD IT BEEN THE CASE THE APPELLANT WAS A MONTHLY TENANT, THE APPELLANT WOULD HAVE NOT BEEN REFERRED AS SUB-LESSO R. A SUBLEASE IS THE LEASE OF ALL OR A PORTION OF PREMISES BY A TENANT WHO HAS LEASED THE PREMISES FROM THE OWNER AND SUBLESSOR IS A TENANT WHO LEASES A LEASED PROPE RTY TO ANOTHER TENANT. THUS, IT WAS INCUMBENT ON PART OF THE APPELLANT TO PRODUCE T HESE DOCUMENTS TO DEMONSTRATE THAT IT HAD NOT LEASED THE DEMISED PREMISES FROM TH E OWNER WHEN THE AFORESAID INDENTURE OF SUBLEASE WAS EXECUTED. THE SUB-LEASE A GREEMENT WOULD HAVE BEEN DEFINITELY ONE OF THE DETERMINATIVE FACTOR IN DETER MINING THE NATURE OF TENANCY. IT MAY BE ALSO BE RECALLED HERE THAT THE HON'BLE TRIBUNAL HAS CATEGORICALLY OBSERVED IN PARA 15 OF THE ORDER WHILE RESTORING THE MATTER TO THE F ILE OF THE AC THAT WHEN THE ASSESSEE ITSELF IS NOT SURE OF PERIOD OF TENANCY AS IT IS ON MONTHLY BASIS AND THE LANDLORD CAN TERMINATE IT AT ANY TIME ON 15 DAYS NO TICE IN TERMS OF SECTION 106 OF ACT, HOW THE ASSESSEE CAN ENTER INTO AN AGREEMENT W ITH A NATIONALIZED BANK TOR A LONG TERM LEASE FOR 12 OR MORE YEARS. IN VIEW OF THE AFORESAID THAT THERE CANNOT BE A SUBLEASE WITHOUT A LEASE, THE CLAIM OF THE APPELLAN T THAT IT WAS A MONTHLY TENANT FOR THE SAID PREMISES, CANNOT BE ACCEPTED. 6.4.17 AS REGARDS THE RELIANCE PLACED BY THE APPELL ANT ON UPON A PHOTOCOPY OF THE CERTIFICATE PURPORTEDLY ISSUED BY THE LANDLORD LATE SHRI HIMMATLAL KANTILAL ON 7 TH JANUARY 1998 CERTIFYING THAT THE APPELLANT IS OCCUP YING THE PREMISES ON MONTHLY BASIS, IT IS MY VIEW THAT SINCE SHRI HIMMATLAL KANT ILAL, IS NOW DECEASED, IT CAN NOT BE EXAMINED AND FOR VERIFICATION OF THE CERTIFICATE CO NTEMPORANEOUS SUPPORTING DOCUMENTS AND IN THE ABSENCE OF ANY SUPPORTING DOCU MENTS, THE CERTIFICATE SO ISSUED CAN NOT BE ACCEPTED ON ITS FACE VALUE. IN TH IS REGARD I PLACE ON THE DECISION OF THE HON'BLE SUPREME COURT OF INDIA IN THE CASE O F COMMISSIONER OF INCOME TAX VS. DURGA PRASAD MORE (1971): 82 ITR 0540 (SC) WHER EIN IT HAS BEEN HELD THAT 'IT IS TRUE THAT AN APPARENT MUST BE CONSIDERED REA L UNTIL IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS NOT THE REAL. IN A CASE OF *HE PRESENT KIND A PARTY WHO RELIES ON A RECITAL IN A D EED HAS TO ESTABLISH THE TRUTH OF THOSE RECITALS, OTHER-WISE IT WILL BE VERY EASY TO MAKE SELF-SERVING STATEMENTS IN DOCUMENTS EITHER EXECUTED OR TAKEN BY A PARTY AND RELY ON THOSE RECITALS. IF ALL THAT AN ASSESSEE WHO WANTS T O EVADE TAX IS TO HAVE SOME RECITALS MADE IN A DOCUMENT EITHER EXECUTED BY HIM OR EXECUTED IN HIS FAVOUR THEN THE DOOR WILL BE LEFT WIDE OPEN TO EVADE TAX. A LITTLE PROBING WAS SUFFICIENT IN THE PRESENT CASE TO SHOW THAT THE APPARENT WAS N OT THE REAL. THE TAXING AUTHORITIES WERE NOT REQUIRED TO PUT ON BLINKERS WH ILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM. THEY WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY O F THE RECITALS MADE IN THOSE DOCUMENTS,' 6.4.18 AS DISCUSSED IN EARLIER PART OF THIS ORDER, THE APPELLANT HAS FAILED TO PRODUCE ANY CONTEMPORANEOUS DOCUMENTS FOR VERIFICATION OF T HE CERTIFICATE. SHRI HIMMATLAL KANTILAL, WAS FATHER OF THE SH. MUKESH HIMATLAL, MA NAGING DIRECTOR OF THE APPELLANT COMPANY.THEREFORE, THE CLAIM OF THE APPELLANT COMPA NY THAT IT HAS ALWAYS BEEN A M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 21 TENANT ON MONTH TO MONTH BASIS CANNOT BE GIVEN MUCH CREDENCE CONSIDERING THE FACT THAT THE PROPERTY HAPPENS TO BE OWNED BY THE F ATHER OF THE MANAGING DIRECTOR OF THE APPELLANT COMPANY MORE PARTICULARLY BECAUSE THE CONTEMPORANEOUS, EVIDENCE WHATEVER EXIST, WERE NOT PRODUCED BY THE APPELLANT FOR EXAMINATION. 6.4.19 IN VIEW OF THE AFORESAID IT IS CONCLUDED THA T THE APPELLANT HAS LEASED THE DEMISED PREMISES FROM THE OWNER FROM 1 ST AUGUST, 1962 WHEN THE APPELLANT LICENCED A PART OF THE GROUND FLOOR OF THE DEMISED PREMISES FOR A TERM OF 12 YEARS TO BANK OF BARODA BY VIRTUE OF AGREEMENT DATED 29 TH JANUARY, 1964 AND BY VIRTUE OF PROVISIONS OF SECTION 27(IIIB), R.W. CLAUSE (F) OF SECTION 269UA, THE APPELLANT SHOULD BE TREATED AS DEEMED OWNER OF THE PROPERTY. ACCORDI NGLY, THE RENTAL INCOME FROM KANTILAL HOUSE PREMISES IS PROPERLY ASSESSABLE U/S 22 OF THE ACT AS 'INCOME FROM HOUSE PROPERTY'. 6.4.20 FURTHER, IT HAS ALSO EMERGED FROM THE INDENT URE OF LEASE DATED 29 TH MARCH 1996 THAT THE APPELLANT IS ENTITLED TO RECEIVE RENT FROM THE BANK IN ITS OWN RIGHT. AS PER SUB CLAUSE (II) OF CLAUSE 2 OF THE AFORESAID AG REEMENT, THE BANK IS UNDER OBLIGATION TO PAY ALL THE EXISTING GROUND RENTS AND RATES, TAXES, CESSES, ASSESSMENTS, DUES ETC. IMPOSED OR CHARGED BY THE MU NICIPALITY, GOVERNMENT OR ANY LOCAL OR OTHER AUTHORITY; AND AS PER SUBCLAUSE (III ) OF THE AFORESAID CLAUSE 2, THE BANK IS ALSO UNDER OBLIGATION TO PAY ANY AND ALL INCREAS ES IN MUNICIPAL TAXES, CESSES INCLUDING REPAIR CESSES OR ANY OTHER IMPOSITIONS OF WHATSOEVER NATURE, CHARGED OR LEVIED OR IMPOSED UPON THE LESSORS BY ON AND AFTER THE DATE OF EXECUTION OF THIS INDENTURE. HOWEVER, UNDER THE AFORESAID SUBCLAUSE ( III) OF THE AFORESAID CLAUSE 2 THE APPELLANT IS UNDER OBLIGATION TO 'SIGN AND AFFIRM S UCH APPEAL AND/OR REVISION AND SUCH OTHER APPLICATIONS AND OTHER PAPERS AS MAY BE REQUIRED BY THE LESSEES', 'IF THE LESSEES DECIDED TO PREFER APPEAL AND/OR REV IS ION AGAINST IMPOSITION OF MUNICIPAL TAXES, RATES ASSESSMENTS ON THE DEMISED PREMISES.' IT IS RELEVANT TO NOTE HERE THAT THE OWNER HAS NO ROLE TO PLAY IN THIS REGARD. THE R ELEVANT CLAUSES OF THE LEASE AGREEMENT DATED 29 TH MARCH 1996 ARE EXTRACTED HEREUNDER FOR CONVENIENCE : NOW THIS INDENTURE WITNESSETH AND IT IS HEREBY AGRE ED AND DECLARED BETWEEN THE PARTIES HERETO AS FOLLOWS:- 1. **** 2. THE LESSEES TO THE INTENT THAT THE OBLIGATIONS M AY CONTINUE THROUGH OUT THE TERM HEREBY CREATED BOTH HEREBY COVENANT WITH THE L ESSORS AS FOLLOWS. (I) *** (II) TO PAY AND DISCHARGE ALL THE EXISTING GROUND R ENTS AND RATES , TAXES, CESSES, ASSESSMENTS, DUES, OUTGOINGS, IMPOSITIONS O UTGOINGS AND BURDENS WHATSOEVER ON THE DEMISED PREMISES THEREON RATED, A SSESSED IMPOSED OR CHARGED WHETHER BY THE MUNICIPALITY, GOVERNMENT OR ANY LOCAL OR OTHER AUTHORITY IN RESPECT OF THE SAID BUILDING OR UPON T HE SAID OWNER IN RESPECT THEREOF OR WHETHER PAYABLE IN LAW BY THE OWNERS OR OCCUPIERS THEREOF WHICH ARE PRESENT RS. 7,629.81 (RUPEES SEVEN THOUSAND SIX HUNDRED TWENTY NINE AND PAISE EIGHTY ONE ONLY.) PER MONTH. (III) TO PAY ANY AND ALL INCREASES IN MUNICIP AL TAXES, CESSES INCLUDING REPAIR CESSES OR ANY OTHER IMPOSITIONS OF WHATSOEVE R NATURE HEREAFTER CHARGED OR LEVIED OR IMPOSED UPON THE LESSORS BY ON AND AFTER THE DATE OF EXECUTION OF THIS INDENTURE. HOWEVER, IT IS AGREED BY AND BETWEEN THE PARTIES THAT THE LESSORS SHALL IMMEDIATELY ON RECEIPT OF DE MAND IN RESPECT OF SUCH MUNICIPAL RATES, TAXES ASSESSMENTS, IMPOSITION AND OF THE LIABILITIES AND OUT M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 22 GOINGS IN RESPECT OF THE DEMISED PREMISES NOTIFY TH E SAME IN WRITING TO THE LESSEES PROVIDED HOWEVER THAT IF THE LESSEES DECIDE D TO PREFER APPEAL AND/ORREVISION AGAINST IMPOSITION OF MUNICIPAL TAXE S, RATES ASSESSMENTS ON THE DEMISED PREMISES THE LESSORS SHALL AT THE COST OF THE LESSEES SIGN AND AFFIRM SUCH APPEAL AND/OR REVISION AND SUCH OTHER A PPLICATIONS AND OTHER PAPERS AS MAY BE REQUIRED BY THE LESSEES AND THE LE SSORS SHALL ASSIST THE LESSEES IN SUCH PROCEEDINGS. 6.4.21 HENCE, CONSIDERING THAT THE APPELLANT IS CO MPETENT TO SIGN AND AFFIRM SUCH APPEAL, REVISION AND OTHER APPLICATIONS AND OT HER PAPERS AGAINST IMPOSITION OF MUNICIPAL TAXES, RATES ASSESSMENTS ON THE DEMISED P REMISES, IT CAN BE SAFELY CONCLUDED THAT THE APPELLANT IS OWNER OF THE PROPER TY IN ITS OWN RIGHT.THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. PODAR CEMENT P RIVATE LIMITED (1997) 226 ITR 625 (SC) HAS RULED THAT UNDER THE COMMON LAW, ' OWN ER IS A PERSON WHO HAS GOT VALID TITLE LEGALLY CONVEYED TO HIM AFTER COMPLYING WITH THE REQUIREMENTS OF LAW SUCH AS THE TRANSFER OF PROPERTY ACT, REGISTRATION ACT E TC. BUT, IN THE CONTEXT OF SECTION 22 OF THE INCOME TAX ACT, HAVING REGARD TO THE GROUND REALITIES AND FURTHER HAVING REGARD TO THE OBJECT OF THE INCOME TAX ACT, NAMELY, ' TO TAX THE INCOME,' OWNER' IS A PERSON WHO IS ENTITLED TO RECEIVE INCOME FROM THE P ROPERTY IN HIS OWN RIGHT. 6.4.22 ACCORDINGLY, EVEN ON THE PRINCIPLES LAID DO WN IN THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. PODAR CEMENT PRIVATE LIMITED (SUPRA), THE INCOME FROM THE ABOVE PROPERTIES IS TO BE ASSESSED UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' IN THE HANDS OF THE AP PELLANT. 6.4.23 AS REGARDS THE CONTENTION OF THE AR THAT RE NTAL INCOME IS NOT ASSESSABLE U/S 56 OF THE ACT AS INCOME FROM OTHER S OURCES IN VIEW OF THE JURISDICTIONAL HIGH COURT'S DECISION IN CIT VS. T.P. SIDHWA (133 ITR 840) (BOM), WHEREIN IT IS HELD THAT THE RENTAL INCOME FROM HOUS E PROPERTY CANNOT BE ASSESSED U/S 22 WHERE THE ASSESSEE IS NOT THE OWNER; NOR CAN IT BE ASSESSED UNDER THE RESIDUAL HEAD MERELY BECAUSE THE SAME COULD NOT BE BROUGHT T O TAX U/S 22 AS THE HEADS ARE MUTUALLY EXCLUSIVE, IT IS MY VIEW THAT THIS ISSUE I S ACADEMIC NOW IN VIEW OF MY CLEARING FINDING THAT BY VIRTUE OF PROVISIONS OF SE CTION 27(IIIB), R.W. CLAUSE (F) OF SECTION 269UA, THE APPELLANT SHOULD BE TREATED AS D EEMED OWNER OF THE PROPERTY AND THAT THE RENTAL INCOME FROM KANTILAL HOUSE PREM ISES IS PROPERLY ASSESSABLE U/S 22 OF THE ACT AS 'INCOME FROM HOUSE PROPERTY'. 6.4.24 IN VIEW OF THE AFORESAID, THESE GROUNDS OF A PPEAL ARE PARTLY ALLOWED. AS EVIDENT, LD. CIT(A) HAS INTER-ALIA, OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE ANY CONTEMPORANEOUS DOCUMENTS FOR VERIFI CATION OF CERTIFICATE ISSUED BY SHRI HIMATLAL KANTILAL . THE TERMS OF VARIOUS LEASE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH BANK OF BARODA WERE ALSO EXAMINED TO ARRIVE AT A CONCLUSION THAT IN THE CONTEXT OF SEC. 22, OWNER WOULD MEAN A PERSON WHO WAS ENTITLED TO RECEIVE INCOME FROM THE PROPERTY IN HIS OWN RIGHT. RELIANCE WAS PLACED ON THE DECISION OF HONB LE SUPREME COURT IN M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 23 CIT V/S PODAR CEMENT PVT LTD. (226 ITR 625) FOR THE SAID CONCLUSION. THEREFORE, THE INCOME WAS RIGHTLY HELD TO BE TAXABL E UNDER THE HEAD INCOME FROM HOUSE PROPERTY. CONSEQUENTLY, IT WAS OPINED THAT THE ISSUE WHETHER THE SAID INCOME COULD BE ASSESSED AS INCOME FROM OTHER SOURCES WOULD BE RENDERED ACADEMIC. AGGRIEVED AS AFORESAID, THE ASSESSEE IS UNDER FURTH ER APPEAL BEFORE US. 6. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS IN CLUDING WRITTEN SUBMISSIONS, PERUSED RELEVANT MATERIAL ON RECORD AN D DELIBERATED ON VARIOUS JUDICIAL PRONOUNCEMENTS AS CITED BEFORE US. OUR ADJUDICATION TO THE ISSUE WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPH S. 7. AS ALREADY NARRATED BY US IN PARA-3, THE COORDIN ATE BENCH HAD OBSERVED THE ASSESSEE WAS IN OCCUPATION OF KANTILAL HOUSE SINCE THE YEAR 1948 AND CONTINUES TO DO SO EVEN TODAY WHICH P RIMA-FACIE WOULD ESTABLISH THAT THE PREMISE WAS TAKEN UNDER LONG-TER M LEASE. IN THE ABSENCE OF ANY WRITTEN CONTRACT, THE SUBMISSIONS TH AT TENANCY WAS ON MONTH TO MONTH BASIS WOULD REQUIRE HIGHER DEGREE OF EVIDENCE. THE ENTIRE ONUS WAS PLACED ON ASSESSEE TO PROVE THE SAM E BY CLINCHING EVIDENCES IN THE BACKGROUND OF THE FACT THAT THE AS SESSEE ENTERED INTO LONG TERM LEASE AGREEMENT EXTENDING BEYOND A PERIOD OF 12 YEARS WITH BANK OF BARODA . IT WAS ALSO OBSERVED THAT WHEN THE ASSESSEE WAS N OT SURE OF THE PERIOD OF TENANCY, THEN HOW COULD IT EN TER INTO A LEASE AGREEMENT WITH A NATIONALIZED BANK FOR A PERIOD OF 12 OR MORE YEARS. THEREFORE, HEAVY ONUS WAS CASTED UPON ASSESSEE TO P ROVE THAT HE WAS TENANT ON MONTHLY BASIS AS COVERED BY EXCEPTION PRO VIDED U/S 27(IIIB) AND THE LEASE WAS NOT A PERIOD EXCEEDING 12 YEARS T O ATTRACT THE PROVISIONS OF SECTION 269UA(F). WE FIND THAT EXCEPT FOR LETTER FROM LEGAL M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 24 HEIRS OF THE DECEASED LANDLORD WHICH MERELY STATED THAT THE ASSESSEE HAS PAID MONTHLY RENTS, NO OTHER EVIDENCE COULD BE ADDUCED BY THE ASSESSEE TO SUBSTANTIATE THE FACT THAT TENANCY WAS ON MONTH TO MONTH BASIS DESPITE BEING SPECIFICALLY DIRECTED BY THE TR IBUNAL TO DO SO. IN SUCH EVENTUALITY, THE ONLY DOCUMENTS THAT WOULD BE AVAIL ABLE TO ADJUDGE THE ASSESSEES CLAIM WOULD BE IN THE SHAPE OF LEASE AGR EEMENTS ENTERED INTO BY THE ASSESSEE WITH BANK OF BARODA. FROM THE PERUSAL OF THE SAME, IT IS OBSERVED THAT DESPITE ASSERTIONS BY THE ASSES SEE THAT TENANCY WAS ON MONTH TO MONTH BASIS AND THE SAME COULD BE TER MINATED BY TENDERING 15 DAYS NOTICE, THE ASSESSEE CONVENIENTL Y ENTERED INTO LONG- TERM LEASE AGREEMENT FOR AGGREGATE PERIOD EXCEEDING 12 YEARS AND THAT TOO WITH A NATIONALIZED BANK, WHO REQUIRE APPROVAL OF REGULATORY AUTHORITIES TO OPEN /OPERATE THE BRANCHES. FURTHER, THE SETTING UP OF BRANCH WOULD ENTAIL HEAVY INFRASTRUCTURE COST FOR T HE BANK. IN THE SAID BACKGROUND, IT IS DIFFICULT TO ACQUIESCE TO THE FAC T THAT BANK WOULD AGREE TO ENTER INTO SUCH LONG-TERM LEASE AGREEMENT FOR AS MANY AS 12 YEARS DESPITE BEING FULLY AWARE OF THE FACT THAT THE TENA NCY WAS ON MONTH TO MONTH BASIS AND THE PREMISE COULD BE GOT VACATED B Y LANDLORD BY GIVING A VERY SHORT NOTICE. THE SAME WOULD NOT BE POSSIBLE UNLESS THERE IS ASSURANCE OF HIGH DEGREE OF SUCCESSFUL PERFORMANCE OF THE LEASE AGREEMENT. IN FACT, CLAUSE 8(A) OF LEASE AGREEMENT DATED 29/03/1996 ENTERED INTO BY THE ASSESSEE WITH BANK OF BARODA READ AS UNDER: - THE LESSORS DO HEREBY COVENANT WITH THE LESSEES AS FOLLOWS: - A) THAT ON THE LESSEES PAYING THE LEASE RENT HEREI NBEFORE RESERVED AND PERFORMING AND OBSERVING THE COVENANT, CONDITIONS A ND AGREEMENTS ON THE PART OF THE LESSEES HEREINBEFORE CONTAINED SHALL PEACEFU LLY AND QUIETLY HOLD AND ENJOY THE DEMISED PREMISES FOR THE TERM HEREBY GRAN TED WITHOUT ANY INTERRUPTION BY THE LESSORS OR ANYBODY LAWFULLY CLAIMING THROUGH UNDER OR IN TRUST FOR THEM. M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 25 THEREFORE, IT COULD SAFELY BE GATHERED THAT THE BAN K WAS ASSURED OF PEACEFUL ENJOYMENT OF THE SAID PREMISE FOR THE AGRE ED PERIOD OF LEASE WITHOUT ANY INTERRUPTIONS. HENCE, THE ENTIRE FACTS AND CIRCUMSTANCES DO NOT CONVINCE US TO ACCEPT THE ARGUMENT THAT THE TEN ANCY WAS ON MONTH TO MONTH BASIS AND THE ASSESSEE WAS COVERED IN THE EXCEPTIONS CONTAINED IN SEC. 27(IIIB). WE RELY ON THE DECISION OF HONBLE SUPREME COURT RENDERED IN CIT V/S DURGA PRASAD MORE (82 ITR 540) WHEREIN IT WAS OBSERVED THAT THE AUTHORITIES WERE ENTITLED TO TOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITIES OF THE RECITALS MADE IN THE DOCUMENTS. KEEPING IN VIEW THE ENTIRETY OF FACT S AND CIRCUMSTANCES, WE HOLD THAT THE TENANCY WAS NOT ON MONTH TO MONTH BASIS AS ASSERTED BY THE ASSESSEE BUT IT WAS FOR AGGREGATE PERIOD EXC EEDING 12 YEARS IN TERMS OF SEC. 269UA(F)(I). ACCORDINGLY, FOR THE PUR POSE OF SEC. 27(IIIB) R.W.S. 269UA(F)(I), THE ASSESSEE WAS DEEMED OWNER O F THE PROPERTY AND THEREFORE, THE STATED INCOME WAS RIGHTLY BROUGHT TO TAX BY REVENUE AUTHORITIES AS INCOME FROM HOUSE PROPERTY. IN VIEW OF THE SAME, THE QUESTIONS WHETHER THE INCOME COULD BE ASSESSED AS INCOME FROM OTHER SOURCES WOULD BE TENDERED ACADEMIC IN NATURE. FINALLY, BY C ONCURRING WITH THE STAND OF LOWER AUTHORITIES, WE DISMISS THE APPEAL. AS STATED IN OPENING PARAGRAPHS, THE AFORESAID ADJUDICATION WOUL D APPLY TO ALL THE OTHER APPEALS ALSO. 8. RESULTANTLY, ALL THE APPEALS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JANUARY, 2020. SD/- SD/- (MAHAVIR SINGH) (M ANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER M/S NAHALCHAND LALOOCHAND PRIVATE LIMITED 26 MUMBAI; DATED : 02/01/2020 SR.PS, JAISY VARGHESE !'! / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT 3. / ( ) / THE CIT(A) 4. / / CIT CONCERNED 5. 01'*2 , 2 , / DR, ITAT, MUMBAI 6. 1345 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.