Case: M/s. Aditya Mindrals Pvt. Ltd Vs. Commissioner of Income Tax, Andhra Pradesh

ee obtained a lease dated 8th march, 1972 from Aditya Minerals Private Limited. It was a term of the lease deed that "the Lessor will grant lease of the land more particularly described in Schedule `A attached to this lease deed and forming part of the same for a period of Fifteen years from first December, One thousand nine hundred and seventy one at a monthly rent of Rs. 35/(Rupees Thirty Five) only per acre." Clause 2 of the lease deed stated "that the Lessee shall deposit with the Lessor by way of the guarantee for due performance of this lease deed for fifteen years, the amount equal to the rent of lease of land for the full period of lease which will be adjustable against rent of every month. This entire guarantee deposit shall not cary any interest payable to the Lessee by the Lessor." The lease deed granted to the assessee the liberty "to use the land for excavation purposes and subsidiary purposes".3. for the assessment years in question, the assessee claimed the rent amounts worked out at Rs. 10,752/per annum as revenue expenditure. The claim of the assessee in this behalf was turned down by the authorities, the Income Tax Appellate Tribunal and, finally, by the High Court of Andhra Pradesh, against whose judgment the assessee is in appeal.

Reasoning: 5. In the case before us, as indicated by the lease deed, what was to be paid by the asessee was rent for the land that was leased. It was payable at the rate of Rs. 35/per acre per month. the assessee was required to pay in advance the rent calculated at this rate for the entire period of the lease, i.e., fifteen years, in the form of a "deposit". The deposit was "by way of the guarantee for due performance of this lease deed for fifteen years", that is, towards fifteen years rent. It was adjustable against the rent of each month and it carried no interest.