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Commissioner Of Income Tax, Bangalore ... vs B. C. Srinivasa Setty, Etc. Etc on 19 February, 1981

In cases coming in category No. A mentioned above, a statutory tenant will have no other right except to remain in possession of the tenanted premises so long as he goes on paying monthly rent and permitted increases. He has no estate as such and his right is personal to himself and he cannot transfer his right to any other person. Having regard to the above, we will have to hold that such a person will not have any interest in the property which he can convey to others. It is a trite law to state that no man can convey a better title than what he himself has. When a tenant had no interest and his right is only personal and cannot be transferred what can he surrender to his landlord ? When he does not possess any interest where is the question of any transfer of such interest and where is the question of such transfer being a transfer of a capital asset under s. 45 of the IT Act. Thus to our minds the pivotal argument advanced by the learned counsel for the assessee that the surrender of statutory tenancy amounts to surrender of tenancy right and the tenancy right is always considered to be a capital asset, that the transfer of such capital asset yields capital receipt and because such a statutory tenancy bears no purchase value, the ratio of the Honble Supreme Court decision in B. C. Srinivasa Setty (supra) comes to the aid of the assessee and for that reason, the surrender of tenancy right does not give rise to capital gains and, therefore, no part of Rs. 1.40 crores received by the assessee constitute capital gains, does not appear to be either acceptable or convincing argument. As already stated above, in the facts of this case, there is nothing for the statutory tenant to transfer. He can only relinquish what he had under law. But when there was no right at all to relinquish, there is no question of transfer or relinquishment or surrender of that right.
Supreme Court of India Cites 18 - Cited by 859 - R S Pathak - Full Document
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