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Charge on assignment of lease granted at undervalue.
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84.—(1) Where the terms subject to which a short lease was granted are such that the lessor having regard to values prevailing at the time it was granted, and on the assumption that the negotiations for the lease were at arm's length, could have required the payment of an additional sum (hereafter in this section referred to as the amount foregone) by way of premium, or additional premium, for the grant of the lease, then, on any assignment of the lease for a consideration—
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(a) where the lease has not previously been assigned, exceeding the premium, if any, for which it was granted, or
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(b) where the lease has been previously assigned, exceeding the consideration for which it was last assigned,
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the amount of the excess, in so far as it is not greater than the amount foregone reduced by the amount of any such excess arising on a previous assignment of the lease, shall, in the same proportion as the amount foregone would under section 83 (1), have fallen to be treated as rent if it had been a premium under a lease, be treated as profits or gains of the assignor chargeable to tax under Case IV of Schedule D.
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(2) In computing the profits or gains of a trade of dealing in land, any trading receipts falling within this section shall be treated as reduced by the amount on which tax is chargeable by virtue of this section.
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