Law: Income Tax Act, 1922

Section: 10(2)(iii)

Income-tax Act, 1922 -Sections 4(3)(vii), 10, 10(2)(iii), 12B(1) - Income -Casual receipt -Premium -Land acquired by assessee for trading estate -Land developed out plots auctioned on 99 years' lease -Premium received for grant of lease -Whether casual receipt of capital nature -Held yes -Transfer fees for transfer of leases, open space and change in trade at certain rates -Whether revenue receipt -Held yes - Interest -Capital borrowed for the purpose of business -Interest paid on capital borrowed -Whether allowable expenditure -Held yes - Assessee-company engaged in developing and leasing out land for 99 years for industrialization through public auction -Amounts received by assessee as premium for such leases -Held, capital receipt and hence not taxable -Fees charged for transfer of leases -Not capital but revenue receipts - Assessee borrowing money from Government for developing land for purpose of industrialization -Interest paid on such borrowed capital -Held, allowable deduction -- Corresponding Sections: Income-tax Ordinance, 1979 -Section 23(1)(v) - ORDER The order was passed by A. MANNAN, judicial Member.--These are two direct appeal arising out of two separate orders passed by Income-tax Officer and relate to assessment year 1959-60 and 1960-61. 2. The assessee is a limited company registered under the Companies Act of 1913. It was set up in pursuance of a resolution of the Government of Sind with a view to achieve rapid and regulated industrialisation in Karachi, Hyderabad and Sukkur. The company was to acquire lands for trading estates, layout and develop such lands by construction of roads and drainge and provision of light and power. It was further authorised to construct and rent out premises to traders in the developed areas. The company, however, was not to issue any shares to the public nor was the company authorised to make any profit or declare any dividend on its shares. In order to encourage rapid idustrialisation of Karachi, Government transferred some lands to the company free of cost and also waived its right to claim ground rent. In addition to the lands so received from the Government the assessee company acquired more lands through…

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