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TMI Blog2011 (12) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... wed. The application stands disposed of. The Revenue by the present appeal under Section 260A of the Income Tax Act, 1961 (Act, for short) impugns order dated 31st January, 2011 passed by the Income Tax Appellate Tribunal (tribunal, for short) on three grounds. (i) Reduction of valuation of scrap from Rs.32,70,000/- to Rs.16,35,000/-. (ii) Inclusion of Rs.1.48 crores paid to the tenant/licensee for vacation for computation of long term capital gains. (iii) Direction of remit on the question of payment made to employees on closure of the cinema hall at Mumbai. 2. The respondent-assessee sold a cinema hall in Mumbai in the period relevant to the assessment year 2007-08 for Rs.27,70,00,000/-. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held that the salvage value should be taken at Rs.50/- per square feet and accordingly estimated the scrap value of the building/superstructure at Rs.16,35,000/-. 4. From the facts stated above, it is apparent that the Assessing Officer had treated the scrap or salvage value of the superstructure/building at Rs.100/- per square feet, without making any reference to material or justifying the basis of the said calculation. In these circumstances, the tribunal had no option but to apply a thumb rule but had accordingly treated the scrap/salvage value of the building/superstructure as Rs.16,35,000/-. It may be noted that the plant, machinery and furniture in the building have been separately valued at Rs.15,00,000/- and accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when a person proposes to sell some property, then, the intended buyer will prefer for unencumbered property. The property which is already occupied by tenants would not fetch market rate as there will always be a fear in the mind of the intended buyer that the tenant may or may not vacate the property. Before arriving at a settled price, it will be ensured by the intended buyer that he got the vacant and peaceful possession of the property. It cannot be disputed that Minerva Refreshments Stall were running stalls in the premises of the assessee. Though the Assessing Officer has disputed the date of commencement of the tenancy as copy of agreement dated 12-12-1971 has not been produced, but it has been brought on record by the assessee tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 76. The house which was sold was mortgaged by the assessee, which was repaid/discharged by the buyer out of the sale proceeds. Therefore, the amount payable by the buyer to the mortgagee was treated as a part of the sale consideration. The assessee claimed that the mortgage debt should be treated as cost of acquisition or cost of improvement. This contention was rejected. The mortgage was not for purchase or for making improvements in the said property. The mortgage was created after the house was purchased by the assessee himself and was for purposes unrelated and unconnected the utilization of the property. It was not for perfecting the title or improving the house. In RM. Arunachalam vs. Commissioner of Income Tax, (1997) 227 ITR 222, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land increases and, therefore, the expenditure incurred for having the land vacated would certainly amount to cost of improvement. Accordingly, the above question is answered in the affirmative, i.e., in favour of the assessee and against the Department. The reference accordingly stands disposed of with no order as to costs. Issuance of certified copy expedited." 9. Similarly, the Karnataka High Court in Mrs. June Perrett v. Income-tax Officer, (2008) 298 ITR 268(Kar), has held that payment to execute an order of eviction and to evict an unauthorized occupant can be treated as cost of improvement, inter alia, observing as under: "Then the last question to be considered by us is, whether the amount spent by the executors t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee." 10. In the present case, as per the facts found by the tribunal and the CIT (Appeals), there was a canteen/refreshment stall in the cinema hall which was in occupation of a tenant/licensee since 1971. The property was to be sold. In order to procure and get proper value and effectuate the sale, the respondent assessee paid Rs.1.48 crores to the tenant/licensee to vacate the property. These are the factual findings recorded by the tribunal and have been noticed above. We fail to understand why the said sum cannot be set of from the sale consideration as it was incurred solely and exclusively in connection with the transfer. We, therefore, need not examine and go into the question whether the amount paid was towards ..... X X X X Extracts X X X X X X X X Extracts X X X X
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