CIT vs. NARAIN JEWELS INTERNATIONAL LTD

K.K. ENTERPRISES Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for theRespondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 380/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus GARIMA AGGRAWAL Respondent Tlirough Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 381/2007 MUNICIPAL CORPORATION OF DELHI ..... Appellant Through: Mr.H.S. Phoolka, SeniorAdvocate Mr. Sanjeev Sabharwal and Ml". Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy andMr. Ajay Kumar, Advocates forthe Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 382/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabhai-wal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, LPA No.319/2007 Page 3 of25

Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCtD. LPAiNo. 383/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: IVIr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 384/2007 MUNICIPAL CORPORATION OF DELHI y\ppellant Through: Mr.H.S; Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. IramMajidandMs. ZubedaBegum, Advocates for Respondent GNCTD. LPA No. 385/2007 MUNICIPAL COm^OllATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus HARI SINGH BUILDER &PROMOTRS Respondent Thi'ough Mr. Sanjay Goswamy and Mr. Ajay Kumar, LPA No.319/2007 Page 4of25

Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPANo. 386/2007 MUNICIPAL CORPORATION OP DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mi-. Alok Singh, Advocates versus ICAMAL laSHOREAGGIUWAL Respondent Through Mr. Sanjay Goswamy andMr. Ajay Kumar, Advocates forthe Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPANo. 387/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPANo. 388/2007 MUNICIPAL COI^ORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal ^id Mr. Alok Singh, Advocates versus BASANT PROJECTS LTD Respondent ThroughMr. SanjayGoswamy and Mr. AjayKumar,' LPANo.319/2007 Page 5 of25

Advocates for the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 389/2007 MUNICIPAL CORPORATION OF DELFII Appellant Through: Mi-.FI.S. Phoolka, Senior Advocate Ml". Sanjeev Sabharwal and Ml-. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswaniy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 391/2007 MUNICIPAL COl^ORATIONOF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy andMr. Ajay Kumar, Advocates for the Respondents. Ms. IraniMajidandMs. ZubedaBegum, Advocates for Respondent GNCTD. LPA No. 394/2007 MUNICIPAL CORPORATION OF DFXHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus LPANo.319/2007 Page6 of 25

VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Irarh Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 395/2007 MUNICIPAL CORPORATIONOF DELHI Appellant Through: Vlr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Tlirough Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram iVIajid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 396/2007 MUNICIPAL CORPORATION OFDELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus MANISH AGGRAWAL Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 400/2007 MUNICIPAL CORPOR^mON OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus LMNo.319/2007 Page 7 of 25

XX VARDHMAN PROPERTIES Respondent Tlirough Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 401/2007 MUNICIPAL CORPORATIONOF DELHI Appellant Through: Mr.H.S. Phoolka, SeniorAdvocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 402/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDliMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 403/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates LPA No.319/2007 Page8of25

rp versus VARDHMAN PROPERTIES Respondent ThroughMr. SanjayGoswamy and Mi*. AjayKumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPANo. 405/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus UNITY PROJECTS LIMTED Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Vis. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 406/2007 MUNICIPAL CORPOR^VTION OF DELHI Appellant Through: VIr.H.S. Phoolka, SeniorAdvocate Ml". Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus KEYPOINT Respondent Through Mr. Sanjay Goswamy and Mi*. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 407/2007 MUNICIPAL CORPORATION OF DELPn ...., Appellant Through: Mr.H.S. Phoolka, SeniorAdvocate Mr. Sanjeev Sabharwal and Ml-. Alok Singh, Advocates LPA No.319/2007 Page 9 of 25

versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy andMr. Ajay Kumar, Advocates for the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 408/2007 MUNICIPAL CORPORATION OFDELHI ..... Appellant Through: VIr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus M.M. DEVELOPERS .... .Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the ResiDondents. Ms, Irani Majid and Ms. Zubeda Begum,Advocates for Respondent GNCTD. LPA No. 1051/2007 MUNICIPAL COI^ORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 1057/2007 MUMCIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates LPA No.319/2007 Page 10 of 25

versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mi-. Ajay Kumar, Advocates for the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. No. 1058/2007 MUNICIPAL CORPOIUTION OFDELHI Appellant Tlii*ough: Mi\H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES .....Respondent Tlirough Mr. Sanjay Goswamy andMi'. Ajay Kumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPA No. 1059/2007 MUNICIPAL CORPORATION OF DELHI Appellant Tlirough: Mr.H.S. Phoolka, Senior Advocate Ml-. Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus SUNDER CONSTRUCTIONCO. Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. Irani Majid andMs. Zubeda Begum,Advocates for Respondent GNCTD. LPA No. 1060/2007 MUNICIPAL CORPORATION OF DELHI Appellant Through: Mr.H.S. Phoolka, Senior Advocate Mr. Sanjeev Sabharwal and LPA No.319/2007 Page 11 of 25

Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES .....Respondent Through Mr. Sanjay Gosvvamy andMr. Ajay Kumar, Advocates for the Respondents. Ms. Irani Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. LPANo. 1061/2007 MUNICIPAL CORPORATION OF DELHI ..... Appellant Through: Mr.H.S. Phoolka, SeniorAdvocate Mr. Sanjeev Sabharvval and Mr. Alok Singh, Advocates versus VARDHMAN PROPERTIES Respondent Through Mr. Sanjay Goswamy and Mr. Ajay Kumar, Advocates for the Respondents. Ms. IraniMajidandMs. ZubedaBegum, Advocates for Respondent GNCTD. AND LPA No. 1285/2007 MUNICIPAL CORPORATION OFDELHI Appellant Through: Mi'.H.S. Phoolka, Senior Advocate Mi". Sanjeev Sabharwal and Mr. Alok Singh, Advocates versus SURYA BUILDWELL LIMITED Respondent ThroughMr. SanjayGosvvamy and Mr. AjayKumar, Advocates for the Respondents. Ms. Iram Majid and Ms. Zubeda Begum, Advocates for Respondent GNCTD. Coram: HON'BLE THE CHIEF JUSTICE LPA No.319/2007 Page 12 of 25

HON'BLE DR. JUSTICE S. MURALIDHAR 1. Whether Reporters of local papers may be /{y allowed to see the judgraent? ^ , 2. To be referred to the Reporter Or not? 3. Whether the judgment should be reported .u, in Digest? JUDGMENT Dr. S. Muralidhar, J. 1. These appeals are directed against the common judgment dated 13"^ March, 2007 passed by the learned Single Judge of this Court in Writ Petition (Civil) No. 8161 of 2005 and Batch. The writ petitions challenged the validity of the notices issued by the Collector of Stamps under Section 40 of the Indian Stamp Act, 1899 ('Stamp Act') demanding transfer duty as well as deficient stamp duty and penalty equal to ten times ofthe deficient duty. 2. The demand for transfer duty was made in respect of the conveyance of plots of land in favour of the appellants who successfully bid for them in auctions held by the Delhi Development Authority ('DDA')/ Municipal Corporation of Delhi ('MCD'). Consequently, perpetual lease deeds were executed and registered in their favour. The writ petitioners had also paid the appropriate stamp duty and transfer duty in terms of the certificate issued by the Collector of Stamps in each of the cases. 3. On 29'^^ August 2004 a general order was issued by the Divisional LPA No.319/2007 Page 13 of 25

Commissioner, Delhi stating that the Collectors of Stamp ,of different districts had adoptedvarying methods of calculationof duty in respect of perpetual leases which had resulted in the duty being short levied and collected. This conclusion was reached on an interpretation of Article 35 of Schedule 1 (A) to the Stamp Act as applicable to Delhi and Section 147 to the Delhi Municipal Corporation Act, 1957 ('DMC Act'). Consequently, the impugned notices were issued in February 2005 to each ofthe appellants calling upon them to pay the deficient duty as well as the penalty equaling ten times of the deficient duty. In respect of Vardhman Properties, for instance, the auction purchaser had paid Rs.12,42,215 as stamp duty. This was now recomputed as Rs.13,30,604 being the aggregate of Rs.10,79,772 as stamp duty and Rs.2,00,832 as transfer duty. In re-working the duty, the total consideration for the perpetual lease was taken as the aggregate of the premium amount of Rs.1,91,11,000 and the annual rent calculated as a percentage of the premium amount. In addition a penalty of Rs.8,88,389 (being ten times ofthe deficient duty) was also demanded. 4. Before the learned Single Judge the respondents contended that they were not challenging the re-working of the stamp duty since the question of interpretation of Ailicle 35 of Schedule 1(A) of the Stamp Act was debatable. Their challenge was, therefore, confined to the penalty imposed under the Stamp Act as well as the DMC Act with regard to the stamp duty and transfer duty respectively as well as the LPANo.319/2007 Page 14of 25

dues in the transfer duty as demanded in the impugned notices. 5. On the question of penalty, the learned Single Judge came to the conclusion that in terms of Section 40 of the Stamp Act, the power to impose a penalty was consequential upon the Collector of Stamps impounding an instrument. Since no instmment had yet been impounded by the Collector, the question of imposition of any penalty did not arise. To the extent, therefore, that the impugned notices sought to levy penalty, they were held to be unsustainable in law. 6. The next question before the learned Single Judge concerned the interpretation of the relevant entry in Section 147 (2) (b) (v) DMC Act. After referring to the decision of the learned Single Judge of this Court Niagara Hotels &Builders (P) Ltd. v. Union ofIndia 65 (1997) DLt 826, the learned Single Judge concluded that the words 'amount' and 'value' in Section 147 (2) (b) (v) DMC Act did not refer to the premium collected for the grant ofthe lease. The learned Single Judge rejected the contention of the MCD that the word 'amount' referred to premium and the word 'value' referred to the rent. It was held that they referred to the quantum of the rent for the first fifty years of the lease. Consequently, transfer duty would be leviable on one-sixth ofthe rent for the first fifty years of the lease. Although the lease referred to only the first thirty years, the learned Single Judge held that "the transfer duty has to be computed on the basis of1/6^'' ofthe rent payable at present for the first LPA No.319/2007 Page 15 of 25

30 year periodbut computed forthe first fifty years". 7. The petitions were accordingly partly allowed holding that no penalty could be imposed in respect ofthe transfer duty under the DMC Act since that was a debatable issue. A direction was issued to re-work the transfer duty in terms of the judgment of the learned Single Judge. It was further held that no further stamp duty in addition to the amounts already paidwaspayable norwas any penalty chargeable. 8. Aggrieved by the judgment of the learned Single Judge, the MCD has filed the present appeals. 9. It is contended by Mr. H.S. Phoolka, the learned senior counsel appearing for the MCD that in the sense and in the context in which the word 'rent' is used in Section 147 (2) (b) (v) DMC Act, it had to connote the total consideration payable under the lease deed. His submission was that unless the total'consideration as shown on the lease deed was paid by the lessee, the execution of the perpetual lease deed could not have takenplace. Therefore, the word 'rent' would include the premium paid by the auction purchaser for obtaining the lease. In other words, the expression 'rent' meant 'rent + premium' and not the rent alone. Reference was made to the definition of the word 'premium' in Black's Law Dictionaiy, 6^^ Edition (page 1181). Mi-. Phoolka then submitted that every word occurring in Section 147 (2) (b) (v) DMC Act had to be LPA No.319/2007 Page 16 of25

given fill! effect to keeping in view tlie context in wliich the word occurs. Therefore the disjunctive 'or' had to be read as a conjunctive 'and'. Since the lease could not have been executed without the premium being paid, the legislative intent was to levy transfer duty on the amount equal to one-sixth of the entire consideration payable in respect of the lease which, in any event, has been set forth in the instrument. Mr.Phoolka contended that since the annual rent payable is calculated as ^ percentage of the premium paid, it is a measure of the premium itself. Consequently, there it was logical to include the premium amount as part ofthe rent for the purposes of computing the transfer duty. 10. In support of his contention that all words in the statute have to be given fiill effect Mr.Phoolka referred to the judgments of the Supreme Court in Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. (2005) 7 see 234, Manohar Lai v/ Vinesh Anand (2001) 5 SCC 407, Noorie Manure Mill v. Commissioner Trade Tax (2007) 10 SCC 478, Associated Cement Co. Ltd. v. State of MP (2004) 9 SCC 727 and Indcon Structiirals (P) Ltd. v. Commissioner of Central Excise (2006) 6 SCC 786.. 11. Mr.Sanjay Goswamy, learned counsel appearing on behalf of the respondents submitted that a taxing statute admits of only strict interpretation. If the intention of the legislature was to tax the premium paid for the obtaining of a peipetual lease, then certainly the wording of LPANo.319/2007 Page 17 of 25

the provision should expressly indicate it. Reliance is placed on Section 105 of the transfer of Property Act, 1882 ('TP Act') where the words 'premium' and 'rent' have been separately defined. Relying on the judgment of the Supreme Court in Commissioner of Income Tax v. Panbari Tea Company AIR 1965 SC 1871, it is submitted that the expression 'premium' and 'rent' have to be separately understood and one cannot include the other in the context in which it is used in the deed of perpetual lease in the instant case. The word 'rent' can only refer to the actual rent indicated in the lease deed and not the premium. Reference is Mso made to the decisions in Govind Ram v. Rajphiil Singh AIR 1973, Punjab & Haryana 94 and S. Venkataraman Swami V. S. Abdul Wahab AIR 1969 Madras 473. 12. In order to appreciate the respective contentions, a reference may be made first to Section 147(2) (b) (v) of the DMC Act which reads: "147. Duty on transfer of property and method of assessment thereto.- (1) Save as otherwise provided in this Act, the Corporation shall levy a duty on transfers of immovable property situated within the limits of Delhi in accordance with the provisions hereafter in this section contained. (2) The said duty shall be levied- (a) in the fonn of a surcharge on the duty imposed by the Indian Stamp Act, 1899 (2 of 1899) as in force for the time being in the Union Territoiy of Delhi, on eveiy instrument of the description specified below, and (b) at such rate as may be determined by the Corporation not exceeding five per cent, on the amount specified below against such instmments - LPANo.319/2007 Page 18 of 25

Description of instrument Amount on which duty should levied (i) Sale ofimmovable property The amount or value of consideration for the sale, as set forth in instrument. (ii) Exchange of immovable property The value ofthe property of the greate value, as set forth in the instmment. (iii) Gift of immovable property The value of the property, as set forth the instrument. (iv) Mortgage with possession immovable property The amount secured by the mortgage ; set forth in the instrument. (v) Lease in perpetuity immovable property The amount equal to one-sixthof the whole amount or value of the rent which would be paid or delivered in respect ofthe first fifty years of the lei as set forth in the instrument, (emphasis supplied) (v) Contract for transfer of immovable property Ninety per cent of the value of the consideration for the transfer as set out in the contract." 13. In Niagara Hotels & Builders (P) Limited a learned Single Judge of this Court held that the word 'or' in Section 147 (2) (b) (v) DMC Act could not be read in a manner so as to enable MCD to levy the transfer duty on an aggregate both the premium amount as well as the rent. In the impugned order in the instant cases, the learned Single Judge has held that the expression "amount' or 'value' both qualified "rent and rent alone" and, therefore, the rent (and not the premium) could alone form the basis for calculating the transfer duty. 14. Depending on the context, the word 'premium' can have both a broad as well as a narrow meaning. The definition of premium in the Law Lexicon byP.Ramanatha Aiyar, Second Edition reads as under: LPANo.319/2007 Page 19 of 25

I means a sum of money paid as consideration forgrant of lease. It represents "capitialized rent which in fact is the difference, between the actual rent and the fierit'which mi^t otherwise be obtained by the lessor. '"Premium Or other Like Sums", "are sums paid in excess of the agreed rent in consideration of grant, continuance or renewalofthe tenancy" In Black's Law Dictionary^ Sixth Edition, premium is defined as capitalized rent "paidinlump sum at the tune oflease is granted." 15. The question whether the 'rent' payable under the deeds of perpetual lease in the instant cases includes the 'premium' paid will depend on the context in which the word is used. This distinction is adolowledged in the definitions of the terms 'premium' and 'rent' in Section 105 ofthe TP Act as well. 16. The decision of the Supreme Court in Panbari Tea Company supports the contention of the respondent that, given the context, the word 'rent' in Section 147 (2) (b) (v) DMC Act has to have a narrow meaning. The question that arose in the said case was "whether the premium collected as a lump sum (although payable in instalments) could also be considered to be a revenue receipt in the same mamier as the rent collected"? In the said case a registered lease deed had been executed by the Assessee Company by which two tea estates were leased out to a firm. The consideration for the lease was a combination of LPA No.319/2007 Page 20 of25 y

3 premium in the sum of Rs.2,25,000 of the annual rent of Rs.54,000. The premium was to be paid in the following manner: Rs.45,000 as lump sum at the time of execution of the lease deed and the balance of Rs.1,18,000 in sixteen half yearly instalments of Rs.l 1,250 before the 31^' January and 31^' July of each year. The annual rent of Rs.54,000 was payable in the following manner:Rs.1,000 per month to be paid on or before last date of each month, thus, making in all Rs.12,000 per year and the balance of Rs.42,000 to be paid on or before 31®^ December of each year. In the assessment year for 1952-53, the income tax officer treated the instalment of Rs. 11,250 paid towards premium as a revenue receipt. This assessment was upheld by the Appellant Assistant Commissioner as well as the Tribunal. The High Court reversed the Tribunal and held that the sum ofRs.l 1,250 was a capital receipt and not a revenue receipt. The Department then appealed the Supreme Court. The Supreme Court refeiTed to the decisions in Kamakshya Narain Singh V. Commissioner ofIncome Tax (1943) IIITR 513, Memberfor the Board ofAgriculture v= Commissioner of Income Tax (1957) 32 ITR 169 and Chintamani Saran Nath Sah v. Commissioner ofIncome Tax AIR 1961 SC 732 to underscore the distinction between the premium and rent. It pointed out that a one-time payment of premium for the grant ofa lease was laiown as 'salami' which is in the nature ofa capital receipt in the hands of the lessor. The Supreme Court then referred to Section 105 TP Act and observed as under: "The section, therefore, brings out the distinction LPANo.31^/2007 Page 21 of25 V

between a price paid for a transfer of a right to enjoy the property and the rent to be paid periodically to the lessor. When the interest of the lessor is parted with for a price, the price paid is preniiuni or salami. But the periodical payments made for the continuous enjoyment of the benefits under the lease are in the nature of rent. The former is a capital income and the latter a revenue receipt. There may be circumstances where the parties may camouflage the real nature of the transaction by using clever phraseology. In some cases, the so-called premium is in fact advance rent and in others rent is defeired price. It is not the form but the substance of the transaction that matters. The nomenclature used may not be decisive or conclusive but it helps the Court, having regard to the Other circumstances, to ascertain the intention ofthe parties." On an analysis of the relevant clauses in the lease deed, it was held that the amount paid as premium could not be construed as rent and, such premiumwas a capital receipt in the hands of the lessor. 17. In Hotel Kings v. Sara Farhan Lukmani (2007) 1 SCC 202, the Supreme Court emphasized the importance of ^ contextual interpretation and held that while the permitted increase in rent can serve as a yardstick for the landlord to increase the rents it did not make such permitted increase "a part ofthe rent though it may be a consideration for the grant of lease." 18. The lease deed in the instant cases a makes reference to the annual rentthat would be payable in future. This is not a pre-determined figure but is to be worked out as a percentage of the premium amount. This is set out in the lease deed. For instance in the lease deed dated 1®' LPANo.319/2007 Page 22 of 25

December, 2003 in favour of M/s N.K. Gupta, the fourth paragraph of the preamble reads: "NOW THIS INDENTURE WITNESSETH that, in consideration of the amount of Rs. 1,31,04,000/- (Rupees One Crore Thirty One lacs and Four thousand only) paid towards premium before the execution of these presents (the receipt where of the Lessor hereby aclmowledges) and of the rent hereinafter reserved and of the covenants on the part of the lessee hereinafter contained, the Lessor doth hereby demise unto the Lessee, all that plot of land being the Commercial Plot No. 09 Block No. X in the lay out plan of New Friends Colony District Centre" 19. In the later portion of the same paragraph of the lease deed, the annual rent is stated as being two and a half per cent of Rs.1,31,04,000 and the first amiual rent instalment is to be paid on 15"" January, 2008. The relevant portion reads as under: "To HOLD the premises unto the lessee in perpetuity from 24"' day of January two thousand and tliree YIELDING AND PAYING therefore yearly rent payable in advance of.Rs. 5/- (Rupees Five only) up to the 23'^'' day of January two thousand and Eight and thereafter at the rate of two and a half per cent of the premium (the sums already paid and such other sum or sums hereafter to be paid towards premium under the covenants and conditions hereinafter contained) or such other enlianced rent as may hereafter be assessed under the covenants and conditions hereinafter contained clear of all deductions by equal half yearly payments on the IS"' day of January and 15"' day of July in each year at the Reserve Bank of India, New Delhi." LPANo.319/2007 Page23 of 25

a interpretation. The principle enunciated iii the decisions relied upon by the appellants that every word in a statute must be given its full meaning is unexceptionable. However, the meaning so given must be in the context of the statute in general and the provision in particular. In the context ofthe lease deeds in question in the instant cases, the word 'rent' cannot possibly be interpreted to include the premium paid for the grant of the lease. As rightly contended by the respondents, if the legislature intended to make the premium paid for the lease as includible for the purposes of determining transfer duty then the statute should have been expressly worded to reflect that intention. 23. Accordingly, this Court concurs with the conclusion arrived at by the by the learned Single Judge. The appeals are dismissed with no orders as to costs. July 02,2008 sb S. MURALIDHAR, J. CHIEF JUSTICE LPA No.319/2007 Page 25 of 25