Income Tax Reference No. 123 of 1996

6th February, 2001

Petitioner Counsel: Mr. Y.P.TRIVEDI,F.B.ANDHYARUJINA , Ms. V.B. PATEL i
Respondent Counsel: Mr. R.V. DESAI, J.P.DEVDHAR , P.S. JETLY,H.D. RATHOD,Mr. M.N. MORJE, Mr. P.J. PARDIWALA,B.D. DAMODAR

Cases Cited:
CIT vs. Gulab Chand, 192 ITR 495 [Para 3,5,12]
Chandavarkar Sita Ratna Rao vs. Ashalata S. Guram, AIR 1987 SC 117 [Para 5]
Kalyanji Gangadhar Bhagat vs. Virji Bharmal, (1995) 3 SCC 725 [Para 5,11]
Anand Niwas Private Ltd. vs. Anandji Kalyanji's Pedhi, AIR 1965 SC 414 [Para 5,11]
B.G.Shah vs. CIT, 162 ITR 23 [Para 6]
Mehboob Production vs. CIT, 106 ITR 758 [Para 6]
Gian Devi Anand vs. Jeevan Kumar, (1985) 2 SCC 683 [Para 7]
CIT vs. B.C. Srinivasa Setty, 128 ITR 294 [Para 7]
Nalinikant Ambalal Mody vs. S.A.L. Narayan Row CIT, 61 ITR 428 [Para 7]
Emil Webber vs. CIT, 200 ITR 483 [Para 7]
CIT vs. J.V. Kolte, 235 ITR 239 [Para 8]
CIT vs. G.R. Karthikeyan, 201 ITR 866 [Para 9]
Karmachari Union vs. Union of India, 243 ITR 143 [Para 9,15]
168 ITR (Statutes) 105 [Para 9]
CIT vs. Sahney Steel and Press Works Ltd. [Para 9]
J.C. Chondiok vs. Deputy Commissioner of Income Tax, 238 ITR 89 [Para 11]
B.K. Roy Private Limited vs. CIT, 211 ITR 500 (Cal) [Para 12]
Gasper vs. CIT, 192 ITR 382 [Para 12]
208 ITR 32 (Statutes) [Para 12]
CIT vs. M/s Merchandisers (P) Ltd., 1990 Tax L.R. 125 [Para 12]
Bawa Shiv Charan Singh vs. CIT, Delhi, 149 ITR 29 [Para 12]
Withers vs. Netherselc, [1948] 1 All ER 400 [Para 13]
United Commercial Bank vs. CIT, 32 ITR 688 (SC) [Para 14]
CIT vs. Trikamlal Mancklal (HUF), 168 ITR 733 [Para 15]

JUDGMENT

S.H. KAPADIA, J.:- The following question of law was referred to the Special Bench of the Income Tax Appellate Tribunal (Bombay).

"Whether, the amount of Rs 1,40,00,000/- received by draft dated 5/12/1989 in consideration of surrendering the statutory tenancy rights and/or possessory rights in property situated at Cadell Road, Prabhadevi, Bombay can be construed to be a casual and non-recurring receipt within the meaning of Section 10(3) of the Income-tax Act, 1961 and as such is exigible to tax under Section 56 of the Act?"

2. The above question was answered against the assessee. Hence, the assessee - M/s. Cadell Weaving Mill Co. Pvt. Ltd. has come by way of Income Tax Reference No. 123 of 1996. The above question is also raised in conjoint matters. Hence, by this common Judgment, all the above matters are disposed of.

FACTS:

3. The assessee M/s Cadell Weaving Mill Co. P. Ltd. is engaged in the business of weaving and dyeing of cloth. The assessee filed its return of income for the Assessment Year 1990-91 declaring its income as Rupees nil. The AO noted that the assessee had receipts from sale of cloth, processing charges and compensation on surrender of tenancy rights. The AO found that the assessee had entered into four separate lease agreements on 26th September, 1963 with M/s Elphinston Dye Works Private Limited. Under the said agreements, the assessee became tenants/lessees of M/s Elphinston Dye Works Private Limited. The leases were for 15 years. They were monthly leases. They expired on 25th October, 1978. They were not renewed. The assessee continued to occupy the premises. In the meantime M/s Elphinston Dye Works Private Limited sold the property to M/s Prabhadevi Trading Company Private Limited with the assessee still remaining in possession of the property. M/s Prabhadevi Trading Company moved the Small Causes Court for eviction of the assessee. The suit was filed in 1986. The suit was settled on 11/12/1989. This was by an agreement of even date. Under the said agreement, the assessee was paid Rs.1.40 crores to vacate the premises. The AO treated receipt of Rs.1.40 crores as casual and non-recurring income chargeable to tax under the head "income from other sources". This was in view of the decision of Allahabad High Court in the case of CIT Vs. Gulab Chand reported in 192 ITR page 495. The AO accordingly applied section 10(3) of the Income Tax Act. He also referred to section 115-J of the Income Tax Act taking the profit as per the profit and loss account which included compensation from surrender of tenancy of Rs 1.40 crores. He accordingly assessed the income of the assessee at Rs 1,39,95,500/-. Being aggrieved, the assessee carried the matter in appeal to CIT (Appeals). The appeal was dismissed vide order dated 30th September, 1993. The reasons given by the AO were confirmed. Thereafter, the assessee carried the matter in appeal before the Tribunal. The Division Bench of the Tribunal made a reference under section 253 of the Act to the President of the Tribunal for formation of Special Bench for considering the above questions. By the impugned Judgment, the Special Bench of the tribunal held that the assessee was a statutory tenant under the Bombay Rent Act. That, the assessee had only the right to remain in possession. That, such a right was personal to the assessee. That, the assessee did not have any estate which could be transferred. That, such a right did not constitute a capital asset under the Income Tax Act. That, surrender of such rights did not constitute Transfer under section 2(47) of the Income Tax Act. That, Rs 1.40 crores received by the assessee as compensation for surrendering the tenancy rights constituted casual and non-recurring income under section 10(3) and was assessable as an "income from others sources". Accordingly, the matter has come before this Court.

4. To complete the chronology of events, the Department had also preferred Reference Application No. 503 of 1997 before the Tribunal along with Misc. Application which was rejected on 8/12/1997. The Department had filed the said Reference Application because, in the above Judgment, the Tribunal came to the conclusion that where the right to sublet was given to the lessee under the lease or where the landlord gave permission to the lessee to sublease the premises then in such cases compensation received by the tenant to surrender such rights would constitute capital receipt in the hands of the tenant even though the lessee is a statutory tenant under the Bombay Rent Act. This conclusion was not accepted by the Department. Hence, the Department moved Reference Application which was rejected by the Tribunal vide Order dated 8/12/1997. However, against the order of rejection of Reference Application No. 503 of 1997 filed by the Department, this Court was not moved within the limitation prescribed. Therefore, by an Order dated 8/12/1997, the Tribunal dismissed the Reference Application filed by the Department as beyond limitation. Hence, the Department filed the present Writ Petition No.1416 of 1998 in which, inter alia, they have raised the above two questions quoted hereinabove. Since important questions of law are involved, Mr. Trivedi, learned Senior Counsel appearing for the assessee fairly stated that the matter may be decided on merits. Hence, he did not press his contentions on the point of limitation. Both the learned Senior Advocates appearing on behalf of the Department and the assessee agreed to argue the above two matters on merits. Hence, this Court is not required to go into the question of maintainability of the Writ Petition.

ARGUMENTS:

5. Both sides submitted before us that in view of the Judgment of the Supreme Court in the case of Chandavarkar Sita Ratna Rao vs. Ashalata S. Guram reported in AIR 1987 Supreme Court, page 117, there was no difference between statutory and contractual tenancies. That, the statutory tenant was in the same position as a contractual tenant until the decree for eviction is passed. That, in view of the Judgment of the Supreme Court in the case of Kalyanji Gangadhar Bhagat Vs Virji Bharmal and another, reported in (1995) 3 SCC, page 725, the earlier Judgment of the Supreme Court in the case of Anand Niwas Private Ltd. Vs. Anandji Kalyanji's Pedhi and others, reported in AIR 1965 SC, page 414 stood overruled. This position is not disputed by the learned Counsel for the Department. On the said premise, it was argued on behalf of the assessee that statutory tenancy was a capital asset. That, when the tenant surrenders tenancy to the landlord it amounted to transfer of a capital asset. According to the learned Counsel for the assessee, even the Department has treated tenancy as a capital asset because the Department has intended to tax Rs 1.40 crores as capital gains. It was urged that surrender of tenancy amounted to transfer of capital asset. That, compensation received by a tenant on surrendering statutory tenancy was a capital receipt. That, capital receipts were not taxable under the Income Tax Act unless such receipts arose on transfer of a capital asset. It was, therefore, contended that capital gains which are not chargeable under section 45 of the Act fell outside the provisions of the Income Tax Act. That, the Tribunal erred in bringing to tax such capital receipts by applying section 10(3) of the Act which was not a charging section. Reliance was placed by the assessee on the Circular issued by the Department bearing No.158 dated 27/12/1974. As per the Circular, receipts which are of a casual and non-recurring nature are liable to tax only if such receipts could properly be characterised as income either in general connotation or within the extended meaning given to the term by the Income Tax Act. Therefore, gifts of personal nature will not be chargeable to Income Tax except when they can be regarded as additions to salary or when they arise from the exercise of profession. It was accordingly submitted that every receipt is not income. It was contended that receipt of money by such tenant was a capital receipt. Hence, it was not taxable. That, the Tribunal erred in bringing to tax such capital receipt by applying section 10(3). That, if the view of the Tribunal is accepted then it would apply to all capital receipts. It was contended that the receipt which is not income cannot be charged to capital gains otherwise gift of personal effects would also become taxable under section 10(3) of the Act. That, the above Circular shows that in order to tax receipts as casual income, such receipts should constitute income and if such receipts are capital receipts it is not income and, therefore, they cannot fall in section 10(3) of the Act. That, Rs 1.40 crores was only a capital receipt. That, it was not income. That, it accrued on transfer of tenancy which was a capital asset. That, payment of compensation was directly linked to the transfer of the capital asset and, therefore, such payment cannot constitute income. It was contended that capital receipts fell outside the Income Tax Act. That, the Income Tax Act brought to tax only revenue receipts. That, the exemption under section 10 was only in respect of certain types of income. That, the proviso to section 10(3) only removes the exemption in cases where the source of receipt is linked to business, salary, or capital gains chargeable under section 45 of the Act. It was contended that if all receipts were taxable as casual income at the rate of 35% then there was no point in the legislature bringing the amendment in section 55 with effect from 1/4/1995 under which the cost of acquisition of a capital asset could be regarded as nil because by bringing the said amendment the receipt is taxable at 20%. It was argued that, in fact, the amendment of section 55 shows that because the cost of acquisition could not be computed the legislature had to step in and make the cost of acquisition at nil rate so that the capital gains arising on transfer of capital asset could be taxed under section 45 of the Income Tax Act. It was contended that at one stage all casual incomes were exempted. Thereafter, the exemption for such incomes was withdrawn. That by virtue of the first proviso to section 10(3), if the source of the receipt could be linked to capital gains chargeable under section 45 then the assessee cannot claim exemption under section 10(3). In other words, it was contended that if the source of the receipt had nexus with salary, business income or capital gains chargeable under section 45 of the Act then the computation of such income would be governed by relevant sections of the Income Tax Act and section 10(3) would not apply. It was contended that merely because the legislature has withdrawn the exemption above Rs 5000/- it would not follow therefrom that all receipts would become taxable as casual income. It was contended that even section 10(3) applies to income, it does not apply to capital receipts. Our attention was also invited to the definition of the words "capital asset" in section 2(14); to the definition of the word "transfer" in section 2(47) and to the definition of the word "income" in section 2(24). It was contended that under section 45, chargeability is attached to profits and gains arising from transfer of capital assets. That, capital gains not chargeable under section 45 was not taxable under the Act because the capital receipt is not an income. It was contended that, in the present matter, the proviso to section 10(3) is not applicable because the proviso applies only to capital gains chargeable under section 45 and if the cost of acquisition cannot be computed before 1/4/1995 then there was no chargeability of capital gains under section 45 and in the absence of such chargeability what remains is the plain capital receipt which is not taxable under any provisions of the Income Tax Act. It was contended that if the cost of acquisition cannot be computed, capital gains are not chargeable to tax under section 45 but that does not mean that, automatically, the receipt would become casual and non-recurring receipt under section 10(3) of the Act. It was contended that section 10(3) deals with certain types of income. It does not deal with capital receipts which are not otherwise taxable under section 45 of the Act. In support of the said argument, various authorities were cited. Hence, it was contended that neither section 10(3) nor the proviso thereto were applicable to the facts of this case. That, every type of capital gain does not attract the proviso. Hence, it was submitted that receipt of Rs 1.40 crores was not taxable. It was not income. It was not casual income. The above arguments of Mr Trivedi, learned Senior Counsel for the assessee were also adopted by Mr. Patil learned Counsel for the assessee in Writ Petition No.2256 of 1993. He submitted that the Judgment of the Allahabad High Court in the case of CIT Vs Gulab Chand reported in 192 ITR, page 495, was erroneous because that Judgment proceeds on the basis that all receipts are incomes.

6. Mr. Pardiwala, learned Counsel appearing on behalf of Bombay Tenants Association (Interveners) contended that the definition of the word "income" in section 2(24) by a deeming fiction includes receipts on capital account which are brought to tax. He relies upon section 24(v) which states that income includes any amount chargeable to income tax under section 28 or section 41 or section 59. Mr Pardiwala points out that in general connotation receipts on capital account do not constitute income. However, reading section 2(24) with section 28 the legislature intended to include even receipts on capital account within the purview of the Income Tax Act. He contended that under the circumstances, the main question the Court is required to answer is: whether the receipt of Rs 1.40 crores constituted income? He contended that the proviso to section 10(3) only states that in cases where the receipt falls under any of the three parts of the proviso then such receipt would not be entitled to exemption under section 10(3). That, if the case falls within the proviso then the assessee was not entitled to claim exemption under section 10(3). He contended that the first question which the Court should answer is: whether the receipt was income? Secondly, if it is not income then the question whether the receipt was casual and non-recurring does not arise. However, if the receipt is income then only the Court is required to ascertain whether the receipt is casual and non-recurring. In other words, the Court has to decide whether the receipt is on income account. If it is so, then one has to go to section 10(3) but section 10(3) by itself cannot bring the receipt to tax as income. It is not the charging section. He, therefore, contends that the impugned decision of the Tribunal is erroneous. That, the Department has failed to prove that the receipt was income as defined under section 2(24). He contended that before enactment of section 45, capital gains did not constitute income. He contended that the effect of the proviso to section 10(3) was very limited viz. that the exemption under section 10(3) was not available. He contended that charging provisions under the Income Tax Act were section 4 and section 5 read with section 2(24). That if the income is business income or salary income or capital gains chargeable under section 45 of the Act then section 10(3) will not come into play. That, section 10(3) will only apply if the receipt constituted income. That, section 10(3) will only apply if the receipt is of a casual nature. He contended that, in the present matter, the Department has accepted that the tenancy is a capital asset. That, although it is a capital asset, the capital gains arising from transfer of tenancy was not chargeable under section 45 because the cost of computation cannot be computed but from that it does not follow that the receipt could be treated as income for the purposes of section 10(3). Mr. Pardiwala further submitted that once it is accepted that tenancy right is a property then even as per the impugned Judgment of the Tribunal, vide para 54, the consideration received for a transfer would not be chargeable as a revenue receipt. He contended that the Income Tax Act does not bring to charge on receipts and it is only revenue receipts which are chargeable. That, a capital receipt is not income as defined under section 2(24) unless it is chargeable as capital gains under section 45. It is for this reason that clause (vi) of section 2(24) includes capital gains chargeable under section 45 an income. That, such capital gains were not chargeable prior to 1946. That, such capital gains were not chargeable between 1948 and 1956. That, whenever an amount which is otherwise a capital receipt is to be charged to tax, section 2(24) specifically so provides. He contended that an amount received on the surrender of a tenancy is a receipt on capital account and the consideration thereof cannot be brought to tax. In this connection, he relied upon the Judgment of the Bombay High Court in the case of B.G. Shah Vs. CIT reported in 162 ITR, page 23. He contended that in order to decide whether the consideration is assessable as a revenue receipt or whether it is assessable as capital receipt, one would have to ascertain the nature of the asset. He contended that section 10(3) is applicable only if an item is of an income nature. In this connection, he relied upon the Judgment of the Bombay High Court in the case of Mehboob Production Vs CIT reported in 106 ITR, page 758 at page 771. He contended that if the view of the Tribunal is correct then the profits arising from the transfer of an asset which is not a capital asset as defined, would be chargeable as revenue income. For example, transfer of agricultural land in a town would give rise to capital gains and to revenue income if situated in a village. Profits arising from transfer of a motor car used for personal purposes would result in a revenue income. That, even after the Finance Act, 1994 consideration arising from transfer of tenancy in cases where tenant had no right to sublet, would be chargeable to tax as revenue income. He, therefore, contended that the impugned Judgment is erroneous.

7. Mr. S.N. Inamdar, learned Counsel appearing on behalf of the Department in ITA No. 262 of 2000 has contended that tenancy rights surrendered to the landlord were valuable rights. They command a price. That, such rights constitute property. That, such rights constitute capital asset. He relied upon the Judgment of the Supreme Court in the case of Gian Devi Anand Vs Jeevan Kumar & Ors. reported in (1985) 2 SCC, page 683. He contended that all gains made on transfer could only be charged as capital gains provided the computation provisions could be applied. In this connection, he placed reliance on the Judgment of the Supreme Court in the case of CIT vs B.C. Srinivasa Setty reported in 128 ITR, page 294. He contended that if for any reason the charge under the head "capital gains" fails then such receipts cannot be brought to tax under the residuary head viz. "income from other sources". In support of his contention, Mr. Inamdar placed reliance on the Judgment of the Supreme Court in the case of Nalinikant Ambalal Mody vs. S.A.L. Narayan Row, CIT reported in 61 ITR, page 428. Mr. Inamdar next contended that section 10(3) cannot apply to capital receipts as they are not of income nature. That, section 10(3) is not a charging section. That, the receipt must first fall under the one of the six heads of income before applying section 10(3). That, the interpretation placed on section 10(3) by the Allahabad High Court in Gulab Chand's case (supra) was erroneous. That, the proviso to section 10(3) was enacted to guard against unwarranted exemptions. That, section 10(3) was not enacted to create the charge. He contended that if income is to be charged then there is no dispute that it can be so charged only under capital gains. That, in the present case, although the receipt of Rs 1.40 crores had linkage to the proviso, capital gains could not be computed for want of cost of acquisition. He contended that, on facts of the present case, one need not go to any other section to decide chargeability. If a receipt is not taxable as income under section 45, the Department cannot fall back on section 10(3). He contended that section 10(3) does not say that if a gain is not chargeable under section 45 it is taxable under section 10(3). He contended that if in a given case a receipt fell under section 56 and if such receipt had linkage to any of the three categories mentioned in the proviso to section 10(3) then such receipt could fall under section 10(3). He contended that the object of the proviso to section 10(3) was to guard against unwarranted exemptions. That, the object of the proviso was not to charge. He contended that if capital gains in a given case fell u/s 45 then no exemption could be claimed under section 10(3). He contended that the object of the proviso was to prevent an assessee from claiming that there is a capital receipt but it is of a casual nature and therefore exempt. He contended that in cases where a capital receipt has a linkage with capital gains under section 45, an assessee could argue that although it is so, the receipt was of a causal nature and, therefore, exempt. In order to avoid such a controversy, the proviso has been enacted. He relied upon the Judgment of the Supreme Court in the case of Emil Webber vs. CIT reported in 200 ITR, page 483. In conclusion, summarising his arguments, he submitted that the receipt must be income. That, it must fall under any one of the six heads. That, if it falls under any one out of the six heads, but for any reason computation could not be effected then such receipt cannot be taxed under section 56. Therefore, he contended that section 10 must be read in that light.

8. Mr. Bhujle, learned Counsel appearing on behalf of assessee in conjoint Writ Petition, adopted the arguments of the learned counsel for the various assessees. He, however, added that even under the Finance Act, 1994 the object of declaring the cost of acquisition as nil after 1/4/1995 was to bring to tax such gains accrued on transfer of an asset. That, the object was not to give any concession. In this connection, he placed reliance on the CBDT Circular which clarified that in order to overcome the judicial interpretation the Finance Act 1987 had provided in section 55(2)(a) that cost of acquisition in case of goodwill will be taken as nil. He contended that the Circular specifically provides that for the purposes of bringing the capital gains arising from transfer of tenancy rights in the acquisition of which the assessee has not incurred any expenditure, the Finance Act has been amended to provide that the cost of acquisition of the tenancy rights should be taken at nil. This amendment came into force from 1st April 1995. He further relied upon the Judgment of the Division Bench of the Bombay High Court in CIT Vs J.V. Kolte reported in 235 ITR 239, in which the Division Bench of the High Court has laid down that section 10 sets out incomes which do not form part of the total income. In that matter, the question which arose for determination was: whether receipts from approved superannuation fund were taxable in the hands of the assessee except to the extent exempted under section 10(13) of the Act? The Division Bench of the High Court came to the conclusion that no tax can be imposed on such receipts by inference or by probing into the intention of the legislature vide section 10(13) of the Act. It was held that in view of section 17(3) payments from approved superannuation fund cannot be treated as income. It was held that if the case is not covered by the Act, no tax can be imposed by inference.

9. Mr. R.V. Desai, learned Senior Counsel for the Department invited our attention to the definition of the word "income" in section 2(24) of the Act. He contended that the word "income" is not exhaustively defined. It is an inclusive definition. He contended that casual receipts having character of income are chargeable to tax even though such receipts have not been specifically mentioned in section 2(24). He contended that the word "income" should be construed in the light of section 2(24), section 4 and section 10. He contended that the Bombay Rent Act prohibited at the relevant time the landlord from receiving any consideration for grant, continuance or renewal of tenancy. Similarly, Bombay Rent Act prohibited at the relevant time the tenant from receiving any amount as a condition of relinquishment or transfer or assignment of his tenancy. Thus, for acquisition of an asset, there cannot be any cost and when a tenancy right is surrendered, there cannot be any receipt in lieu thereof. Therefore, any amount, received on surrender, constitutes profit, gain or advantage to the assessee which was purely casual and non-recurring receipt received by the assessee and it represents income of the assessee chargeable to tax under the head "income from other sources". In this connection, he relied upon the Judgment of the Allahabad High Court in Gulab Chand's case (supra) as also on the Judgment of the Supreme Court in the case of CIT vs. G.R. Karthikeyan reported in 201 ITR page 866. He also relied upon the Judgment of the Supreme Court in the case of Karmachari Union vs. Union of India reported in 243 ITR, page 143. Mr. Desai heavily relied upon the Judgment of the Supreme Court in the case of B.C. Srinivasa Setty (Supra). The learned Counsel submitted that an asset without any cost of acquisition was not a capital asset under section 45. He, therefore, contended that the tenancy right was not a capital asset. He accordingly contended that the amount received on surrender of tenancy rights cannot be a capital asset. For this purpose, he has placed reliance on the Judgment of the Supreme Court in the case of B.C.Srinivasa Setty (Supra). He contended that there is no Judgment of the Supreme Court which lays down that the capital gains, not chargeable under section 45, are not taxable at all. He contended that even if capital gains are not chargeable under section 45, they can still be taxed under section 56 as "income from other sources". He contended that under the Act, consideration received by tenant on surrender, if not chargeable to tax as capital gains under section 45, was still liable to be taxed as income from other sources in section 56 because section 56 clearly states that income not chargeable to tax under section 14, item-E, was chargeable to tax under section 56. Mr. Desai placed reliance on the Judgment of the Supreme Court in the case of Emil Webber (Supra). He contended that amounts received on surrender were chargeable to tax under section 56 either as casual receipt with exemption of Rs 5000/- as provided under section 10(3) or as capital gains not chargeable to tax under section 45 with exemption as set out in the second proviso to section 10(3). Mr. Desai contended that in order to overcome the judicial view, the legislature had to amend the provisions of the Income Tax Act in order to take the cost of acquisition at nil so as to tax the amount under section 45 instead of section 56. He contended that merely because the amendments were made prospective, it cannot be said that upto the date of amendment i.e. 1/4/1995, the amounts received on surrender were not taxable at all. In this connection, he placed reliance on CBDT circulars reported in 168 ITR (Statutes) at page 105. Mr. Desai further pointed out that in the case of CIT Vs. Sahney Steel and Press Works Ltd., reported in 152 ITR page 39, the Andhra Pradesh High Court has held that the word "income" as defined under the Income Tax Act is not limited by the words "profits and gains" and any thing which can be described as income was taxable under the Act unless expressly exempted. That, the element of return was not an essential ingredient of income. Mr. Desai contended that the view of the Bombay High Court in the case of Mehboob Production (Supra) was not followed by the Andhra Pradesh High Court. That, the SLP from the decision of the Andhra Pradesh High Court was dismissed and, therefore, the Judgment of the Bombay High Court in Mehboob Production's case stood impliedly overruled. He further contended that if the definition of the word "income" in section 2(24) is restricted to capital gains chargeable to tax under section 45 then it would mean that no capital gains are chargeable to tax under section 56. That, such construction would render section 56 redundant because capital gains of certain types are assessable under section 56. That, since capital gains chargeable to tax under section 45 on an asset must have cost of acquisition, it is evident that capital gains under section 56 would be in respect of those assets which do not have the cost of acquisition. That, merely because an asset has a nil cost of acquisition, it cannot be said that there is no capital gains and that the entire amount is a capital receipt. It is further contended that to say that the amount received on surrender of tenancy rights does not have the character of income is farfetched because if the cost of acquisition is Rupee 1/- then, in the present case, the capital gain is Rs 1.40 crores chargeable under section 45 and if the cost of acquisition is nil then entire receipt is capital receipt and it does not have the character of income under section 56. It is submitted that the abovementioned second instance is not correct.

FINDINGS:

10. The short point which arises for determination is: whether the surrender value of a tenancy right, if not chargeable to tax as capital gains under section 45, is liable to be taxed as "income from other sources" under section 56 of the Act?

11. As stated above, while delivering the impugned Judgment, the Tribunal has followed the ratio of the Supreme Court in the case of Anand Niwas Private Ltd. Vs. Anandji Kalyanji's Pedhi & Ors. reported in AIR 1965 SC, page 414 which laid down that the statutory tenant had no right in the property. Even according to the Tribunal, vide para 54, if the surrender value was for property then the receipt could not fall under section 10(3). However, in view of the Judgment of the Supreme Court in Anand Niwas case (Supra), the Tribunal came to the conclusion that the receipt representing the surrender value was a casual and non-recurring receipt under section 10(3). The Tribunal also followed the Judgment of the Allahabad High Court in Gulab Chand's case (Supra) which took the view that all receipts constituting capital gains but being not chargeable under section 45 would, automatically, fall under section 10(3). However, the Judgment of Supreme Court in Anand Niwas case (Supra) stood subsequently overruled by the Judgment of the Supreme Court in the case of Kalyanji Gangadhar Bhagat Vs. Virji reported in (1995) 3 SCC, page 725. It is for this reason that subsequently the Special Bench of the Income Tax Appellate Tribunal, Delhi, took a contra view in the case of J.C. Chondiok Vs Deputy Commissioner of Income Tax, reported in 238 ITR, page 89. Therefore, on principle, even the impugned Judgment proceeds on the footing that if the surrender value received by the assessee was in respect of an interest in the property then the receipt would not be taxable under the Income Tax Act as it would represent capital receipt. In fact, in view of the Judgment of the Supreme Court in Kalyanji Gangadhar Bhagat's case (Supra), there is no difference between statutory and contractual tenancies. This is accepted position even by the Department. However, the Department submitted that if the cost of acquisition of a capital asset cannot be computed under the provisions of sections 45 to 55 then the capital gains which arise on transfer may not be chargeable under section 45 but they are chargeable under section 56 as income from other sources. For this purpose, the Department has placed reliance on section 2(24). We do not find any merit in the above contentions. It is true that section 2(24) defines the word "income". That, the definition is an inclusive definition. However, it is well settled that capital receipts do not come within the ambit of the Income Tax Act except to the extent of any capital receipt being expressly sought to be covered by the act of the Parliament as in the case of section 2(24)(vi). In fact, in the present matter, the surrender value received by the assessee has accrued on transfer of the capital asset but it is not chargeable under section 45 for want of cost of acquisition. However, from that, one cannot bring such a receipt under section 10(3) because section 10(3) refers to types of income which do not form part of total income. In other words, a receipt has to be income before it comes within the purview of section 10(3). Section 10(3) does not apply to a capital receipt.

12. We find merit in the submissions advanced on behalf of the assessee. Both the parties before us have proceeded on the basis that tenancy right is a capital asset. This is clear from the submissions advanced on both sides. Even the Tribunal has proceeded on the basis that if the tenancy right is a property then the consideration received for transfer thereof would not be chargeable as revenue receipt. It is well settled that all receipts are not taxable under the Income Tax Act. Section 2(24) defines income. It is no doubt an inclusive definition. However, a capital receipt is not income under section 2(24) unless it is chargeable to tax as capital gains under section 45. It is for this reason that under section 2(24)(vi) that the legislature has expressly stated, inter alia, that income shall include any capital gains chargeable under section 45. Under section 2(24)(vi), the legislature has not included all capital gains as income. It is only capital gains chargeable under section 45 which has been treated as income under section 2(24). If the argument of the Department is accepted then all capital gains whether chargeable under section 45 or not, would come within the definition of the word "income" under section 2(24). Further, under section 2(24)(vi), the legislature has not stopped with the words "any capital gains". On the contrary, the legislature has advisedly stated that only capital gains which are chargeable under section 45 could be treated as income. In other words, capital gains not chargeable to tax under section 45 falls outside the definition of the word "income" in section 2(24). It is true that section 2(24) is an inclusive definition. However, in this case, we are required to ascertain the scope of section 2(24)(vi) and for that purpose we have to read the sub-section strictly. We cannot widen the scope of sub-section by saying that the definition as a whole is inclusive and not exhaustive. In the present case, the words "chargeable under section 45" are very important. They are not being read by the Department. These words cannot be omitted. In fact, the prior history shows that capital gains were not chargeable before 1946. They were not chargeable between 1948 and 1956. Therefore, whenever an amount which is otherwise a capital receipt is to be charged to tax, section 2(24) specifically so provides. In the case of CIT Vs. Gulab Chand reported in 192 ITR page 495 the assessee received Rs 15000/- as surrender value for surrendering the tenancy of a godown occupied by the assessee as a tenant. In the return filed by him, the amount was shown as capital gains. The assessee claimed that the amount was non taxable. The ITO held that the amount was taxable as casual and non-recurring receipt under section 10(3) of the Act. The Tribunal held that the amount received was a capital gain. On reference, it was held by the High Court that section 10(3) applied to capital receipts. That, if the amount received for surrender of tenancy right was a capital gain but was not chargeable under section 45 then the receipt would fell under section 10(3). With respect, we do not agree with the said Judgment. The Allahabad High Court has failed to read section 2(24)(vi) in its entirety. Reading section 2(24)(vi) in its entirety, it is only capital gains which are chargeable under section 45 which are included in the definition of the word "income". That the capital gains not chargeable for any reason under section 45 cannot be brought to tax as income by applying general connotation under section 2(24). It is for this reason that proviso (i) to section 10(3) also refers to capital gains chargeable under section 45. The said proviso uses the same phraseology as is used by section 2(24)(vi). In other words, capital gains chargeable under section 45 alone constitute income. Further, such capital gains are required to be charged and computed under the Scheme of section 45 to section 55 and it is for this reason that such capital gains do not fall under section 10(3). In other words, business income, salary income, and capital gains chargeable under section 45 stand outside section 10(3) because salary income, business income and such capital gains are chargeable and computable under a different set of sections. Therefore, when the source of a receipt has a link with business income or salary income or capital gains chargeable under section 45 then section 10(3) will not apply. Hence, we respectfully do not agree with the view taken by Allahabad High Court in Gulab Chand's case. In the case of B.K. Roy Private Limited Vs CIT and Ors., reported in 211 ITR page 500 (Cal), the Petitioner received Rs 21 lakhs from M/s. Shaw Wallace and Company as compensation on surrender of monthly tenancy. The tenancy was a capital asset and no cost of acquisition was incurred for its acquisition. In the assessment proceedings, the Assessing Officer accepted that the said sum could not be assessed to tax since there was no cost of acquisition of the monthly tenancy. The Commissioner, however, took the view that although the said amount was not assessable as capital gains it was assessable as casual receipts under section 10(3) by placing reliance on the Judgment of the Allahabad High Court in Gulab Chand's case. Ultimately, the matter came to the Calcutta High Court which took the view that the amount received as capital gains cannot be taxed as casual and non-recurring income. That, the Judgment of the Allahabad High Court in Gulab Chand's case was contrary to the Judgment of the Supreme Court in the case of Gasper vs. CIT reported in 192 ITR page 382. That, if the contention of the Department was taken to its logical conclusion, it would mean that everything which is exempted from capital gains by the Statute would become taxable as casual and non-recurring receipt. That, capital gains have been specifically dealt with under sections 45 to 55 of the Act. That, any amount received on transfer of a capital asset is liable to be taxed in accordance with the specific provisions of section 45 to section 55 of the Act and if any amount of capital gain is not taxable as capital gain for any reason then that amount cannot be treated as a casual and non-recurring receipt under section 10(3) of the Act. That, section 10(3) does not apply to capital receipts. That, proviso (i) to section 10(3) recognises that capital gains chargeable under section 45 will not come within its ambit. That, section 10 lays down that certain categories of income will not be included in the computation of total income of a person. That, a casual receipt not exceeding Rs 5000/- will not be taxed. However, from this it does not follow that any capital receipt above Rs 5000/- will have to be taxed. That, if a person receives Rs 10,000/- by way of legacy, the amount cannot be brought to tax on the ground that it is a casual and non-recurring receipt above Rs 5000/-. That, section 10 is not a charging section. That, section 10 merely excludes certain types of income from the ambit of the total income as defined under the Act. Hence, the Calcutta High Court dissented from the view taken by the Allahabad High Court in Gulab Chand's case. With respect, we are in agreement with the Judgment of the Calcutta High Court in the case of B.K. Roy Private Limited vs CIT reported in 211 ITR page 500. Mr. Desai, learned counsel for the revenue, however, emphasised the Judgment of the Supreme Court in the case of CIT Vs. B.C. Srinivasa Setty (Supra). He submitted that like goodwill, statutory tenancy denotes a benefit. He contended that statutory tenancy cannot be described as an asset if there is no cost of acquisition. Therefore, he relied upon the above Judgment. In the case of Srinivasa Setty (Supra), the Supreme Curt has held that goodwill generated in a newly commenced business cannot be described as an asset within section 45 of the Act and the transfer of the goodwill generated in a business does not give rise to a capital gain for the purposes of income tax. That, goodwill denotes the benefit arising from connection and reputation. That, the charging sections and the computation provisions together constitute an integrated code and when there is a case to which the computation provisions do not apply, it is evident that such a case was not intended to fall within the charging section. Accordingly, learned counsel for the Department argued that in the case of transfer of a capital asset like tenancy where computation provisions do not apply, the Supreme Court has laid down that such a case was not intended to fall within section 45. Hence, it was contended that if, for want of cost of acquisition, the case cannot fall under section 45 then it could still fall under section 56. According to the learned Counsel, therefore, amounts received on surrender of tenancy rights if not chargeable to tax as capital gains under section 45, they are still liable to be taxed as income from other sources. According to the learned Counsel, capital gains of an asset which do not have the cost of acquisition and which do not fall under section 45 can fall under section 56 of the Act. That, merely because an asset has no cost it cannot be said that there is no capital gains and that the entire receipt represents capital receipt. It is further contended that section 14 of the Income Tax Act shows that all capital gains constitute income. That, under section 14 the expression "capital gains" is not restricted to chargeability under section 45. We do not find any merit in this contention. The point which arises for determination in this case did not arise in the case of B.C. Srinivasa Setty (Supra). Secondly, as stated above, capital gains chargeable under section 45 alone are treated as income by the legislature. Thirdly, statutory tenancy is held to be the property by the Supreme Court. It is a real asset. It is not a self generated asset as in the case of a goodwill. Lastly, the amendments made to the Income Tax Act with effect from 1/4/1995 under which cost of acquisition is to be calculated as nil clearly shows that the Act applies only to capital gains chargeable under section 45. If such gains fell under section 56 as is not sought to be contended then one fails to understand why the legislature should have opted for a lesser incidence of tax. If capital gains fell under section 56 as is contended by the Department then such receipt would be liable to tax at the rate of 35% whereas, by the above legislative change, the receipts are made taxable at 20% under section 45. In this connection, the Circular issued by CBDT as reported in 208 ITR page 32 (Statutes) also indicates that the legislative change was brought about to overcome the judicial interpretation of section 55(2)(a) dealing with the cost of acquisition. That Circular does not refer to capital gains under section 56 as is sought to be contended. The Circular clearly shows that the Income Tax Act defines income to include capital gains chargeable under section 45. That, the judicial interpretation clearly laid down that only if an asset did cost something to the assessee in terms of money that the provisions relating to levy of tax under section 45 read with section 48 would apply. It is for this reason that the Finance Bill proposed to amend the provisions relating to capital gains and provide that the cost of acquisition of the tenancy rights to be taken at nil. In the case of CIT Vs. M/s. Merchandisers (P) Ltd. reported in 1990 Tax L.R., page 125, the Division Bench of the Kerala High Court has considered the entire case law covering all Judgments cited before us and has come to the conclusion that no tax on capital gains could be levied in respect of transfer of the tenancy right. The Kerala High Court agreed with the view of the Delhi High Court in the case of Bawa Shiv Charan Singh Vs. CIT, Delhi, reported in 149 ITR, page 29 in which it has been held that if the computation provisions cannot apply to a given case then such a case could not be intended by the legislature to fall within the charging section. That, if the whole of the value of the capital asset transferred is brought to tax then what would be charged is the capital value of the asset and not any profit and gain as contemplated in section 45. We agree with the view expressed by the Division Bench of the Kerala High Court in the case of M/s Merchandisers (P) Ltd. (Supra). Applying the ratio of the Judgment of the Kerala High Court in the above case, we reject the contention of the Department that receipt of the surrender value on relinquishing of tenancy rights for consideration would constitute capital gains chargeable under section 56. As stated above, the Department has argued before us that since the asset surrendered had no cost of acquisition, the capital gains arising on transfer of such an asset would fall under section 56. We do not find merit in this argument. A cost to the assessee in the acquisition of the asset is contemplated. If the whole of the value of the capital asset transferred is brought to tax under section 56 then what would be charged is the capital value of the asset and not any profit and gain as is contemplated only in section 45. The term 'capital asset' means property of any kind held by an assessee whether or not connected with his business or profession [see Section 2(14)]. On the other hand, 'capital gains' means any profit or gain arising from transfer of a capital asset. Under Section 2(47), the word 'transfer' in relation to a capital asset is defined to include sale, exchange or relinquishment of the asset or extinguishment of any rights therein. In the present matter, the department has not disputed that tenancy right is a property. It has not disputed that tenancy right is a capital asset. It has not disputed that surrender of the tenancy rights constituted transfer. Section 48 provides that from the full value of consideration received or accruing as a result of the transfer of capital asset, the following amounts should be deducted to arrive at capital gains viz. cost of acquisition; expenditure on improvement; expenditure wholly and exclusively connected with transfer of the capital asset, such as stamp duty, registration charges, legal fees, brokerage etc. Therefore, capital gains basically constitutes computation. According to the department, the entire value of the capital asset transferred is taxable as the cost of acquisition in the case of tenancy cannot be ascertained. We do not find any merit in this argument. If the full value of the consideration received as a result of the transfer of tenancy is made taxable, then the tax is not levied on the capital gains, but in substance, it is being levied on the capital value of the asset. This is not permissible under Section 56. Full consideration minus the cost of acquisition results in capital gains. However, the department seeks to tax the full consideration on the ground that cost of acquisition is not ascertainable. If this contention is accepted, then the tax is not levied on capital gains, but it is being levied on the capital value of the asset which is not permissible under Section 56 of the Act. This is also the ratio of the judgment of the Kerala High Court in the case of M/s. Merchandisers Pvt. Ltd. (supra). Hence, the above argument is rejected.

13. The intent of levying capital gains tax goes to the nature and character of the asset. It is an asset which possesses the inherent quality of being available on expenditure of money to a person seeking to acquire it. The Courts have repeatedly held that none of the provisions pertaining to the head "capital gains" suggests that "capital assets" include an asset in the acquisition of which no cost at all can be conceived. This is the clear ratio of the Judgment of the Supreme Court in the case of CIT Vs. B.C. Srinivasa Setty (Supra). As long as the Judgment of the Supreme Curt in Anand Niwas Case (supra) held the field, the statutory tenancy remained a personal right. However, later on, in view of the Judgment of the Supreme Court in the case of Kalyanji Gangadhar Bhagat Vs. Virji (Supra), tenancy rights clearly constitute capital assets. Under section 2(14) of the Income Tax Act, capital asset has been defined to mean property of any kind held by an assessee. Hence, tenancy right is a property. It falls under section 2(14) of the Income Tax Act. As stated above, both sides have agreed on the footing that tenancy right is a property right. Both sides have argued on the footing that it is a capital asset. The only difference in the arguments of two side is that, according to Department, Income Tax Act seeks to tax capital gains arising from transfer of an asset which has no cost of acquisition under section 56 of the Act (See the written propositions). As stated above, we do not find any merit in the above arguments. Even section 14 can only apply provided the receipt accrues on revenue account, either in the general sense or under the extended meaning given under the Income Tax Act. Even if the Department seeks to bring such receipts under the residuary head, the onus is on the Department in the first instance to show as to how such a receipt would constitute income item. The Department has failed to discharge this burden. In the case of CIT Vs Kolte (Supra) the Division Bench of this Court laid down that in construing fiscal statutes and in determining the liability of a subject to tax, one must have regard to the strict letter of the law. That, the onus was on the revenue to satisfy the Court that the case falls within the provisions of the law. That, if the case is not covered within four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy. That, if a section in a taxing statute is of doubtful and ambiguous meaning, it is not possible to extract out of that ambiguity a new obligation not formerly cast upon the tax payer. The observations of the above Judgment applies to the facts of the present case. In the case of Withers Vs. Nethersole reported in [1948] 1 All ER page 400, the House of Lords held that in cases involving sale of property with a limited life by a person not engaged in trade or profession of dealing in such property, the proceeds of such a sale were in the nature of capital and, therefore, not taxable. The Department, in that matter, came to the conclusion that the tax payer was assessable to Income Tax in respect of her share in the proceeds of the assignment of the exclusive motion picture rights in the novel and the play. It was not disputed before the House of Lords that the matter concerned assignment of the proprietary rights. The tax payer under the relevant agreement made a partial assignment of her copy right and she ceased to be the owner of that portion which was assigned for which she received a sum of money in exchange. The Court held that this amounts to sale of property by a person who was not engaged in the trade of dealing in such property. Therefore, the amount received by tax payer was a capital receipt. It was untaxable and not in the nature of taxable revenue. If the argument of the Department is accepted, it would mean that all receipts would become taxable. It is well settled that all receipts are not taxable. Hence, we find merit in the case of the assessee.

14. It is essential also to bear in mind that income which falls under one specified head could not be brought to tax under any other head. In the present matter, the Department did apply section 45. They did apply the head viz. "capital gains". However, when it came to computation, the Department found that cost of acquisition cannot be computed. Hence, it is now sought to be argued that such capital gains would constitute "income from other sources" under section 56. In the case of United Commercial Bank Vs. CIT reported in 32 ITR page 688 (SC), it has been held, that income which falls under one specific head could not be brought to tax under any other head. If for any reason, the computation machinery fails, it is not open to the Department to apply the residuary clause.

15. Heavy reliance was placed by the Department on the Judgment of the Bombay High Court in CIT Vs. Trikamlal Mancklal (HUF) reported in 168 ITR page 733. In that Judgment, it has been laid down that if the actual cost of acquisition is nil, it is the nil figure that must be taken into account. This has been done by the legislature after 1/4/1995. In that matter, on facts, the Court found that it was possible to calculate the cost of acquisition may be at a nil rate. In the present case, the Department has proceeded on the footing that capital gains were not chargeable under section 45 because the cost of acquisition was not ascertainable. Hence, the Judgment of the Bombay High Court in the above case has no application. Similarly, the Judgment of the Supreme Court in Karmachari Union Vs. Union of India reported in 243 ITR, page 143 has no application. By Direct Tax Law Amendment Act, 1989 clauses (iiia) and (iiib) were added to section 2(24) of the Income Tax Act. The Supreme Curt held that in view of the said amendment of the word "income", any special allowance granted to the assessee to meet expenses exclusively for the purposes of the duties would form part of income. As stated hereinabove, under section 2(24)(vi), the legislature has covered capital gains as income provided such gains were chargeable under section 45. Hence, the Judgment of the Supreme Court in Karmachari Union's case (Supra) has no application.

SUMMARY OF OUR FINDINGS:

16. Whenever there is a receipt, one has to ascertain its source. If it is a business income or salary income or capital gains chargeable under section 45 and, if so, it is taxable under that head then no further inquiry has to be made viz. whether the receipt is casual and non-recurring. Since capital gains are brought within the tax net under section 45, it cannot fall in section 10(3). If any amount of capital gains is non-taxable for any reason as capital gains, that amount cannot be treated, automatically, as a casual and non- recurring receipt under section 10(3). In order to attract section 10(3), two conditions are required to be satisfied viz. that the receipt should be casual and non- recurring and that it should not arise by way of business income, salary income or capital gains chargeable under section 45. Therefore, the aforestated three types of incomes constitute exceptions to section 10(3). That capital receipts do not fall under section 10(3). That, if the whole of the value of the capital asset transferred is brought to tax, then what would be charged is the capital value of the asset and not profit on gain as contemplated in section 45. Hence, section 56 has no application. It, therefore, follows that the amount receivable on surrender of tenancy rights would not fall within the purview of section 10(3). That, in view of section 2(24) which defines the word "income", it is clear that only capital gains chargeable under section 45 would fall within the definition of section 2(24)(vi). Therefore, there is no merit in the contention of the Department that capital gains which arise in cases of transfer of assets whose cost of acquisition cannot be computed would fall under section 56 of the Income Tax Act.

17. Before concluding, we would like to mention that, in this matter, Department has argued the matter on the basis that tenancy is a property and a capital asset.

18. Accordingly, our answer to the above question is in the negative i.e. in favour of assessee and against the Department.

19. Although the entire matter is covered by the above question and answer, the Tribunal has forwarded to this Court a list of questions to be answered. The said questions are quoted hereinbelow and answered accordingly.

QUESTIONS			ANSWERES
(a)	Whether on the facts and the circumstances of the case and in law, was the Tribunal justified in holding that the receipt of Rs. 1,40,00,000/- by the applicant on the surrender/termination of the tenancy rights/ possessory rights was casual and non-recurring receipt within the meaning of section 10(3) of the Income-tax Act ?		In the Negative i.e. in favour of assessee and against the Department.
(b)	Whether on the facts and in the circumstances of the case and in law, was the Tribunal justified in holding that the compensation received by the statutory tenant towards the surrender of statutory tenancy rights/ possessory rights was casual and non-recurring within the meaning of section 10(3) of the I.T. Act ?		In the Negative i.e. in favour of assessee and against the Department.
(c)	Whether on the facts and in the circumstances of the case and in law, was the Tribunal justified in holding that the surrender of the tenancy rights /possessory rights by the statutory tenant to the landlord did not amount to “transfer” within the meaning of section 2(47) of the I.T. Act ?		In the Negative i.e. in favour of assessee and against the Department.
(d)	Whether on the facts and in the circumstances of the case and in law, was the Tribunal justified in holding that the applicant, a statutory tenant had no right or interest, which could be considered as property for computing capital gains ?		In the Negative i.e. in favour of assessee and against the Department.
(e)	Whether on the facts and in the circumstances of the case and in law, the Tribunal while determining the taxability of the compensation received on the surrender of tenancy rights was justified in making a distinction between the rights of a contractual tenant and that of a statutory tenant ?		In the Negative i.e. in favour of assessee and against the Department.
(f)	Whether on the facts and in the circumstances of the case and in law, was the Tribunal justified in ignoring the decisions of the Bombay High Court in the case of -		In the Negative i.e.in favour of assessee and against the Department.
(i)	C.I.T. V/s. Shrinbai P. Pundole (129 I.T.R. at page 448)
(ii)	C.I.T. V/s. Gehmi Jal Cooper (ITA No. 59 of 1977)
(iii)	Nila Products Ltd. V/s. C.I.T.A. reported in 148 ITR at page 95
	which are directly on the issue before the Special Bench ?
(g)	Whether on the facts and in the circumstances of the case and in law, was the Tribunal justified in neither following nor even referring to the aforesaid decisions of the Bombay High Court in the cases which werecited and the copies of the same were filed in the course of the hearing before the Special Bench, dealing with the identical issue about taxability of compensation received on the surrender of the tenancy rights by the statutory tenants ?		In the Negative i.e. in favour of assessee and against the Department.
(h)	Whether on the facts and in the circumstances of the case and in law, was the Tribunal justified in ignoring the following decisions cited at the time of hearing of the appeal, which directly supports the case of the applicant :		In the Negative i.e. in favour and against the of assessee Department.
(i)	CIT V/s. Mrs. Shirnbai P. Pundole (129 ITR at page 448).
(ii)	CIT V/s. Gehmi Jal Cooper (ITA No. 59 of 1977).
(iii)	Nila Products Ltd. V/s. CIT (ITR 148 at page 93).
(iv)	B.R. Roy Pvt. Ltd. V/s. CIT (Cal), ITR 211 at Page 500
(v)	Bawa Shivcharan Singh V/s. CIT 149 ITR at Page 29.
(vi)	Rajab Ali Nazar Ali & Sons V/s. CIT 163 ITR at page 7.
(vii)	Merchandisers (P) Ltd. 182 ITR at page 107.
(viii)	Marka Pakula Agamma V/s. CIT 165 ITR at page 386.
(ix)	Joy Ice Cream (P) Ltd. V/s. CIT 112 ITR page 1.
(x)	Associated Pharmaceutical Ind. (P) Ltd. (ITAT (Mad.) Bench ‘A’ IID Vol. 47-656.
(i)	Whether on the facts and in the circumstances of the case and in law, was the Tribunal justified in holding that the receipt of Rs.1,40,00,000/- by the applicant on surrender of tenancy rights/possessory rights was not a capital receipt ?		In the Negative i.e. in favour of assessee and against the Department.
(j)	Whether on the facts and in the circumstances of the case and in law, was the Tribunal justified in holding that the receipt of Rs.1,40,00,000/- by the applicant on the surrender of the tenancy rights/possessory rights is income within the meaning of section 2(24) of the I.T.Act?		In the Negative i.e. in favour of assessee and against the Department.
(k)	Whether on the facts and in the circumstances of the case and in law, has the Tribunal misdirected itself basing its conclusion by ignoring the Bombay High Court Judgments in the cases of -		In the Affirmative i.e. in favour of assessee and against the Department.
(i)	Smt. Shrinbai P. Pandole 129 ITR page 448.
(ii)	Gehmi Jal Cooper ITA No. 59 of 1977.
(iii)	Nila Products Ltd. 148 ITR at page 99.
Which has direct bearing on the issue involved before the Special Bench ?
(1)	Whether on the facts and in the circumstances of the case and in law, was the Tribunal justified in deciding the question, which was not the one that was referred to the Special Bench for its consideration ?		Does not arise for consideration in view of the statements made across the bar by the learned Advocates on both sides.
(m)	Whether on the facts and in the circumstances of the case and in law, was the Tribunal justified in holding that the capital gains which do not fall under the ambit of section 45 of the I.T. Act, the same would be considered as income exigible to tax under section 10(3) of the I.T. Act ?		In the Negative i.e. in favour of assessee and against the Department.
(n)	Whether on the facts and in the circumstances of the case and in law was the Tribunal justified in not referring to the CBDT Circular No.158 dated 27.12.1974, which was submitted in the course of hearing of the appeal, stating that under the provisions of section 10(3), only receipts in the nature of income would be brought to tax and not the capital receipts, which circular was binding on the Assessing Officer ?		In the Negative i.e. in favour of assessee and against the Department.
(o)	Whether on the facts and in the circumstances of the case and in law, was the Tribunal justified in holding that for the purpose of section 10, no distinction exists between the revenue receipts and the capital receipts and that both would be covered under section 10 of the I.T. Act ?”		In the Negative i.e. in favour of assessee and against the Department.
(p)	Whether on the facts and in the circumstances of the case and in law, was the Tribunal justified in not dealing with the ground relating to the determination of Book profit under section 115 J of the Act?		In the light of our judgment, the Tribunal is directed to decide the ground relating to the determination of the Book Profit under section 115 J of the Income Tax Act.

20. Accordingly, the above References/Appeal/Writ Petitions are disposed of. No order as to costs.

C.C. expedited.

Order accordingly.