Sabyasachi Mukharji, J. - (1.) In this reference under Section 256(1) of the I.T. Act, 1961, we are concerned with four assessment years, namely, assessment years 1966-67 to 1969-70 and the relevent accounting years are Diwali years 2022 to 2025 respectively.
(2.) The assessee is a private limited company. By a lease dated the 21st September, 1954, entered into between the assessee and one Maharaja Probirendra Mohau Tagore, the latter gave on lease, "all these messuages, lands, hereditaments and premises No. 26, Prosanna Kumar Tagore Street, commonly known as ' Tagore Castle' in the town of Calcutta" to the assessee for a period of 84 years with an option of renewal for a further period of 7 years. In order to appreciate the contentions urged in this case, it would be necessary to set out in extenso the relevant clauses of the said lease dated the 21st September, 1954. In the recital clause it was stated, inter alia, as follows : "And Whereas the Lessee has agreed to take a lease for the said period of 84 years of the said messuages, tenements or dwelling houses, land, hereditaments and premises No. 26, Prosonno Coomar Tagore Street, commonly known as 'Tagore Castle' together with the land thereto belonging, particularly described in Schedule ' A' hereunder written and delineated in the Map or Plan hereunto annexed and therein enclosed by Red lines including the additions and alterations thereto upon rent hereby reserved and upon terms and conditions hereinafter appearing. Now This Indenture Witnesseth that in consideration of the rent hereby reserved and of the covenants herein contained and on the part of the Lessee to be observed and performed the Lessor doth hereby grant a lease unto the Lessee to commence immediately on the execution of these presents all those messuages, lands, hereditaments and premises No. 26, Prosonno Coomar Tagore Street, commonly known as ' Tagore Castle' in the town of Calcutta particularly described in Schedule 'A' hereunder written and delineated in the Map and Plan hereto annexed and therein enclosed by Red lines (hereinafter for the sake of brevity called the demised premises) together with all buildings, structures and appurtenances whatsoever belonging to the Lessor or in any way appertaining thereto provided however during the subsistence of the Lease hereby granted the Lessor shall have the free use of four garages and three small rooms forming part of the stables standing on part of and comprised in the demised premises and more particularly shown and delineated in the Map or Plan hereunto annexed and therein marked with hatched lines and also subject to the free right of ingress and egress thereto and therefrom through the Southern gate of the demised premises from and into Prosonno Coomar Tagore Street which would also include the demised premises as may be altered or added to by the Lessee. To Hold the same unto the Lessee as from the date of execution of these presents for the term of 84 years yielding and paying therefor during the terms hereby created the monthly sum of Rs. 3,000 (Rupees Three thousand) only without any abatement or deduction whatsoever on the 7th (seventh) of each and every Bengali calendar month following the month for which the same shall become due and payable......"
(3.) The lessee took upon himself the obligations to pay the rent reserved on the day and in the manner mentioned in the recital irrespective of the fact that the demised premises or the buildings to be erected thereon, as hereinafter mentioned, or any part thereof, might be destroyed or damaged by fire or other irresistible force or act of God. The other clauses of the lessee's obligations to the lessor were as follows : 1. To pay the rent reserved on the days and in the manner aforesaid and that notwithstanding that any time or times the demised premises or the buildings to be erected thereon as hereinafter mentioned or any part thereof may be destroyed or damaged by fire or other irresistible force or act of God. 2. To pay and discharge all existing and future municipal rates and taxes, impositions and all outgoings of whatsoever nature which are to be or shall be assessed, charged or imposed on the demised premises (including in such expression throughout these presents whenever appropriate the buildings and structures to be erected and alterations to be made by the Lessee) and payable by either owner or occupier in respect thereof. The present Municipal Tax in respect of the owners share is Rs. 4,281-2-0 (Rupees Four thousand two hundred eighty-one and annas two) and in respect of the occupier's share Rs. 4,281-2.0 (Rupees Four thousand two hundred eighty-one and annas two only) per annum. 3. The Lessee shall have the optipn to erect from time to time during the term of these presents at its own cost upon the demised premises in a substantial and workmanlike manner with good materials of the several kinds in accordance with the plans, elevations, sections and specifications according to the choice of the Lessee and sanctioned by the Corporation of Calcutta and under the inspection of a competent supervisor to be selected mutually buildings with all necessary out offices, out buildings, boundary walls, sewers, drains and to spend upon such work such sums as the Lessee may in its absolute discretion think proper but such sum or sums to be expended by the Lessee shall not be less than the sum of Rupees Five Lakhs only in the aggregate and to allow the Lessor's Surveyor to verify such expenditure if required to his satisfaction. 4. If the Lessee constructs any new structures and/or building as mentioned in the preceding Clause 3 hereof the said structures and/or buildings or erections together with all alterations thereto shall belong absolutely to the Lessor on the expiration or sooner determination of the terms hereby granted....... 7. At the expiration of the term hereby granted or earlier determination thereof to peaceably and quietly yield up the demised premises together with the buildings to be erected thereon as aforesaid and all additions and alterations thereto and all other buildings at any time erected or standing on the demised premises together with all fixtures in such repair or such condition as aforesaid by delivering vacant possession of such portion as will at the time remain vacant and by attornment of tenancy of such portions as will be in occupation of tenants. 8. That the Lessee shall at its own expense comply with, carry out, observe and perform all notices, requirements and requisitions that may from time to time be issued or made by the Government, Municipality or any other authority for the time being vested with such power in respect of the demised premises of the buildings or structures to be erected by the Lessee as aforesaid and shall always keep the Lessor indemnified saved and harmless against any damages, costs and consequences of non-compliance, non-performance or non-observance of any such notice, requirement or requisition.... 10. Not to keep or store or permit to be kept or stored in or upon any part of the demised premises or in the buildings standing and/or to be erected by the Lessee as aforesaid any explosive, inflammable, combustible or dangerous articles or things except in such quantities as may be allowed by the Government or Police under licence granted to the occupants for purpose of business. 11. Not to carry on or permit to be carried on upon the demised land or any part thereof of any building that may during the said term be erected thereon any obnoxious or offensive or unlawful business whatsoever and not to cause, permit or suffer upon the same anything which may be or become a nuisance or annoyance to the neighbours. 12. That the Lessee shall not assign this Lease without first obtaining the permission in writing of the Lessor such permission however is not to be unreasonably withheld by the Lessor provided however that such assignment if permitted will not relieve the Lessee of its obligation and liabilities under these presents to the Lessor. The Lessee shall prior to any assignment of its lease give notice thereof to the Lessor in writing containing the name and address of the assignee and furnish other necessary particulars concerning such assignment notwithstanding anything hereinbefore contained the Lessee shall subject to the conditions and covenants herein contained be entitled to sublet or underlet the demised premises or any part thereof and/or grant sub-lease or sub-leases in respect of the demised premises or any portion or portions thereof for a certain term not exceeding or beyond the term hereby created. 13. And the Lessee will at all times during the said term insure and keep insured from loss or damages by fire or other accident the demised premises as aforesaid up to the amount of Rs. 3,00,000 (Rupees Three lakhs) in the joint names of the Lessor and the Lessee in Concord of India Insurance Co. Ltd. of 8, Clive Row, or any other company to be approved of mutually in Calcutta aforesaid and will from time to time whenever requested by the Lessor produce the premium receipt. 14. In case the demised premises shall be destroyed or damaged by fire or other accidents the Lessee shall immediately thereafter lay out and apply the money to be received by virtue of the said Insurance and also all such other sums of money as may be required for that purpose in well and substantially rebuilding, repairing and reinstating the damaged portion under the inspection and the satisfaction of the Surveyor to be appointed by mutual consent and the Lessor shall also continue in applying such money for such repairs and reinstatement......";