Premium And Rent

Premium and rent, when the interest of the lessor is parted with for a price paid is premium or salami. But the periodical payments made for the continuous enjoyment of the benefits under the lease are in the nature of rent. The former is a capital income and the latter a revenue receipt. There may be circumstances where the parties may camouflage the real nature of the transaction by using clever phraseology. In some cases, the so-called premium is in fact advance rent and in others rent is deferred price. It is not the form but the substance of the transaction that matters. The nomenclature used may not be decisive or con-clusive but it helps the Court, having regard to the other circumstances, to ascertain the intention of the parties, CIT v. Panbori Tea Co. Ltd., AIR 1965 SC 1871 (1873): (1965) 3 SCR 811. [T.P. Act, 1882, s. 105]