Decided on May 13,1982



P.V.B. Rao, Judicial Member - (1.) THE appeal has been filed by the revenue on a short ground. THE assessee filed a cross-objection challenging the assessment regarding capital gains on a broader issue. Before we deal with the appeal, it may be necessary in this case to deal with the cross-objection in the first instance as we will presently show that the same has to be dismissed in Hmine.
(2.) The cross-objection has been filed 245 days late. The assessee came forward with an explanation for the long delay. We have heard the learned counsel for the assessee as also the learned departmental representative on the question of limitation, in filing the cross-objection. We are not satisfied with the explanation given by the assessee. The question whether the assessee is liable to tax on capital gains was the basic question involved in the assessment which was the subject-matter of appeal before the Commissioner (Appeals). On this question the Commissioner (Appeals) negatived the assessee's plea, though on another aspect the assessee got relief. The order of the Commissioner (Appeals) was served on the assessee through the secretary of the trust, which is the assessee before us. The immediate reaction of any assessee whether he or she is conversant with the tax laws or not will be to find out as to what happened in the appeal and what is the result. At any rate, the normal reaction is only to approach the tax lawyer and know the result and the future action to be taken. Nothing of that sort was done in this case. Even when the notice was sent calling upon the assessee to file cross-objections no action was taken. That notice was served on the assessee as early as on 30-5-1981. The cross-objection should have been filed within 30 days thereafter, but it has been filed on 1-3-1982. The only explanation of the assessee before us is that the legal heir, Mrs. I. Lawrence (the managing trustee), is not conversant with the tax matters and she came to know about the necessity of filing crosss-objection only after the hearing notice of the appeal was received by her. This explanation is not satisfactory. The entire conduct after the receipt of the appellate order till the date of filing of the cross-objection has not been fully explained. It is not understandable as to why the assessee kept quiet firstly after the receipt of the appellate order and secondly after the receipt of first notice from the Tribunal. There is non explanation nor any whisper about the receipt of the order of the Commissioner (Appeals) or the receipt of the first notice from the Tribunal. We, accordingly, refuse to condone the delay in filing the cross-objection. The cross-objection has, therefore, to be dismissed. Coming to the appeal, we need to notice a few facts. The assessee is the owner of a vacant land situated at Pali Hill, Bandra, bearing Survey No. 329 and measuring 2,299 sq. yards. This land was leased out for a period of 98 years to one Shri Tejumal Hemraj. The agreement to lease the property is dated 15-5-1973. The consideration stipulated therein is that the lessee shall pay rent of Rs. 900 per month commencing from the expiry of one year from the date of the execution of the lease deed. By a letter dated 16-5-1973 it was agreed that the lessee shall pay a sum of Rs. 2,82,500 to the assessee-lessor in addition to the monthly rent of Rs. 900. It was, however, mentioned therein that the aforesaid amount of Rs. 2,82,500, which is styled premium, shall be paid on the condition that the lessor would obtain an access to the leased property from the church authorities (perhaps because the access to the land is through the church premises). On 3-2-1974 the formal lease deed was executed incorporating various terms agreed to by the parties. The consideration for the lease was mentioned as : (1) Rs. 900 per month as rent, and (2) premium of Rs. 2,82,500. Upon the above facts the question arose before the ITO as to the levy of tax on capital gains by virtue of the transfer by way of lease. Objections were raised by the assessee that there was no transfer which resulted in capital gains. It has been negatived by the ITO. The first contention raised was that there was no transfer. This has been negatived. The ITO thereupon computed the capital gains by taking the premium stipulated in the lease deed plus the capitalisation of the monthly rent determined at Rs. 1,94.500. Thus, he fixed the consideration for the transfer at Rs. 4,76,900. Then he determined the cost of acquisition as on 1-1-1954 in accordance with Section 48(ii) of the Income-tax Act, 1961 ('the Act'), at Rs. 10,000. Thus, he determined the long-term capital gain at Rs. 4,76,900.
(3.) THE assessee carried the matter in appeal before the Commissioner (Appeals). It was contended by the assessee that there was no transfer which resulted in capital gains. Secondly, at any rate, the determination of the capitalised value of rent as consideration is erroneous. Thirdly, the cost of acquisition determined by the ITO is very low.;

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