PRADEEP PARIKH, A.M. : - (1.) IN this appeal by the assessee for asst. yr. 1985-86, two grounds have been raised against the order of the learned CIT(A), dt. 20th June, 1991. The two grounds are as under : "1. That Hon'ble CIT(A) erred on the facts and circumstances and in law in upholding the reassessment proceedings under s. 148 of the IT Act.
(2.) That Hon'ble CIT(A) erred on the facts and circumstances of the case and in law in upholding that Rs. 2,90,000 received by the appellant is a receipt liable to tax. 2. The Government of Rajasthan had granted leasehold rights to the assessee in 1975 vide lease deed dt. 17th December, 1975, on a piece of land at Alwar. The salient features of the lease deed, in brief, were as follows : (1) The lease was to be for ninety nine years. (2) The lease rent was to be Rs. 55.35 per year exclusive of local taxes which were to be borne by the lessee. (3) The lessee was to pay Rs. 26,114.80 towards development charges along with the rent for the first year. (4) The lessee was under an obligation to put up a shoddy yarn plant within a period of two years from the date of taking the possession. (5) The lessee had no right to sublet, underlet or sell its leasehold rights under the lease deed without the written consent of the lessor. (6) The lessee, however, could assign or mortgage its leasehold rights in favour of any financial or other institution for the purposes of availing financial assistance for the industry to be put up on the said land. (7) The financing institution was at liberty to enforce its rights as mortgagees under the law and convey a good title. (8) In case of any default by the lessee in respect of any terms and conditions of the lease deed, the land was to revert to the lessor.
(3.) THE assessee then put up a shoddy yarn plant on the said land as per the terms of the lease deed. For this financial assistance of around Rs. 8 lacs was availed from the Rajasthan Finance Corporation (RFC) for which the leasehold rights in the land in question were assigned in favour of RFC. THE assessee, subsequently ran into financial crises and defaulted in the repayment of loan to RFC. THE assessee, therefore, surrendered a part of the land to RFC during the accounting year under consideration. RFC, in turn, sold the said land and realised Rs. 2,90,000 which was adjusted in the loan account of the assessee.;