Commissioner of Income Tax vs Madras Cricket Club

Beasley, C.J.—The question referred to us is:

Whether an assessee who takes on long lease a parcel of land from Government and erects buildings thereon with their permission and is entitled under the term of the said lease to remove the buildings within a stipulated period on the termination of the said lease is not assessable in respect of the annual value of the buildings u/s 9 of the Act.

The facts may be stated quite shortly. The Madras Cricket Club or rather its predecessor, because the present Madras Cricket Club has now become incorporated, came into occupation of its present ground by a Government order in 1865, and the title to remain there rested on that order until 1925 when they got themselves incorporated and at the same time took the land upon a long lease from Government. In the lease there is a provision for permitting the removal of the buildings erected upon the land by the assessees at the expiration or upon the termination of the lease. The assessees are assessed under two heads, viz., profits and gains and "property" u/s 9. In the former assessment they are assessed on the receipts from gate money collected from those who enter the ground in order to witness the cricket and tennis matches which take place there. No question arises with regard to that assessment. They are, secondly, as before stated, assessed as owners of property, that is to say, they are assessed on the annual value of the buildings which have been put upon the land by the assessees such as the Cricket Pavilion and the offices attached thereto. These buildings were erected while the assessees were in occupation under the Government order of 1865. The first contention put forward here by the assessee is that they are not the owners of the buildings which are now upon the land. The rule in India which is different from that in England, is that a person who builds a superstructure upon the land of another man remains the owner of the superstructure and can at the end of his term remove the superstructure from the land, whereas in England a person who erects a building on the land of another cannot do so as the building at the end of the leases becomes the property of the lessor.

It is contended that as the title of the Cricket Club to remain in occupation of that land ceased in 1925, when a long lease was taken from Government and as it did not on the cessation of that tenure remove the buildings from the land, it must be deemed that the Government became the owners of those buildings and that the assessees consented to that position. I see nothing to warrant any such supposition. All that happened was that the tenure became a different one. Instead of being one by the license of Government it became one under a letting and one of landlord and tenant, the Government being the landlord and the assessees being the tenants. I am quite satisfied that the assessees remain the owners of these buildings. I now come to the next question raised and that is that the Income Tax authorities are not entitled to assess the assessees as the owners of these buildings because it is argued that the section contemplates Only an assessment upon full owners of buildings. I am not at all clear as to what is meant by the description "full owners." So far as I understand it, what is contended for in connexion with this description is that in order to come within the provision of this section the person who owns the buildings must also be the owner of land upon which it stands and possibly the land surrounding it. I see nothing to warrant any such contention. Section 9(1) says that the tax shall be payable by an assessee under the head "property" in respect of the bona fide annual value of property consisting of any building or lands appurtenant thereto of which he is the owner; clearly the Madras Cricket Club, the assessees here, are the owners of these buildings and therefore they fall to be assessed u/s 9. The answer to the question referred to us must therefore be that the assessees are assessable in respect of the annual value of the buildings u/s 9 of the Act. Costs to the Commissioner of Income Tax, Rs. 250.

Ramesam, J.

I agree.

Sundaram Chatty, J.

I agree.