Leave and Licence Agreement The word licence has been defined in section 523 of the Indian Easement

Act, 1882 "where one person grants to another, or to a definite number of other persons, a right do or continue to do in or upon the immovable property of the grantor, something which would, in the absence of such a right, be unlawful, and such right does not amount to an easement or interest in the property, the right is called a licence. In a leave and licence agreement the juridicial possession of the premises is deemed to remain with the licensor and the licensee is said to be in constructive possession of the said premises. Thus a leave and licence does not create any interest in the premises in favour of the licensee but gives the licensee the mere right to use and occupy the premises for a temporary period. Section 24 of the Maharashtra Rent Control Act, 1999, which has come into effect since March 31, 2000, provides for a body known as the Competent Authority which provides summary relief to the owner of residential premises as opposed to the existing Court System. Section 24 of the Maharashtra Rent Control Act, 1999 provides that the Competent Authority on being satisfied that the period of licence has expired shall pass an order for the eviction of the licensee. Section 24 also provides that the licensee shall be liable to pay damages at double the rate of the licence fee or charge fixed under the agreement of the license from the day of default till the date of disposition. Most owners prefer to give their premises on leave and license basis rather than tenancy or lease basis. A tenant is defined in section 7(13) of the Maharashtra Rent Control Act, 1999, and means any person by whom or on whose account rent is payable for any premises. A lease is defined in section 105 of the Transfer of Property Act, which provides that "A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time expressed or implied or in perpetuity in consideration of a price paid or promised, or of money, a share of crops, service or any other things of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms." The cardinal distinction between a lease and a licence is that in a lease there is a transfer of interest in the premises, whereas in the case of a licence there is no transfer of interest, although the licensee acquires a right to occupy the premises. When premises are given out on lease or tenancy basis the legal possession of the premises in these cases is also deemed to be transferred to the lessee and tenant respectively. In deciding whether to give out premises on leave & licence basis some of the factors to be considered are as follows: Possession: In a leave and licence agreement, the owner is deemed to be in legal or judicial possession of the premises and the licensee is in constructive possession of the premises. Income Tax: In a leave and license agreement the owner has to pay tax effectively at the rate of 33% on the license fee earned and gets a standard deduction amounting to 1/4th of the license fee for repairs. Municipal Tax: In a leave and license agreement the Municipal Authorities may charge taxes at the rate of up to 60% of the license fee and if there is a security deposit amount sometimes the Municipal Authorities may calculate a notional interest on the securities deposit amount and charge tax thereon.