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Learn MoreINTRODUCTION
Section 105 of the Transfer of Property Act, 1882 defines a lease of immoveable property as a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specific occasions to the transferor by the transferee, who accepts the transfer on such terms.
It has been a common practice for Governments and instrumentalities acting on behalf of Governments to allot parcels of lands on long-term leases. Such typically entail a one-time upfront premium (which fairly approximates the value of the land) and a periodic nominal rent (which also in many cases is compounded and collected upfront). The lease agreements executed between the lessor and the lessee may contain restrictive covenants in terms of use of the property, however, only subject to such restrictive covenants, the lessee is entitled to free use and enjoyment of the property in his own right. Further, such lease agreements permit a free transfer of the property by the lessee to third parties subject to approvals and payment of fees.
When service tax was introduced on ‘Renting of Immoveable Property Services’, the Depar