MUTHUKARUPPAN CHETTIAR PR AL M Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee carried on a money-lending business in Rangoon in partnership with the S.P.K.A. firm. THE firm composed of the assessee and the S.P.K.A. firm was known as the S.P.K.A.A.M. firm. On the March 14, 1929, the S.P.K.A.A.M. firm and another Chettiar firm carrying on business in Rangoon, styled the O.N.R.M.M. firm, entered into a lease of a building in Mogul Street, Rangoon, at a rent of Rs. 3,000 per month. Chettiars carrying on business in Rangoon all had their offices in Mogul Street. THE lessees did not require the whole of the premises for their respective business and their intention was to sub-let parts of the building to other Chettiars. This they did, but the sub-lessees did not pay in full what was due from them by way of rent. THE lessees themselves disputed the validity of the lease with their landlord and the case was carried to the Privy Council. THE Privy Council held that the lease was valid and therefore the lessees were responsible for the rent.

(2.) ON the January 2, 1935, after the Judicial Committee had given its decision, the lessees entered into a compromise with their landlord under which the remainder of the term of the lease was to be cancelled and the lessees were to pay to him the sum of Rs. 1,98,650 by way of rent, compensation and damages. Each of the sub-lessees had agreed to pay a proportion of the rent and to reimburse and indemnify the lessees in respect of any liability arising under the lease. The S.P.K.A.A.M. firm paid the landlord the Rs. 1,98,650 between January 1935 to June 1936 and then dissolved.