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TMI Blog1991 (1) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1972, in respect of the property at No. 24, Cunningham Road, Bangalore, Rs. 15,000 each towards purchase price of the properties sold by the assessee and Rs. 15,000 towards cost of improvement, stamp duty, legal expenses, etc., should be deducted from the sum of Rs. 85,000. Thus, according to the stand of the assessee, on the sale of the properties for Rs. 85,000, no amount could be assessed as income relatable to capital gains. However, the Income-tax Officer took the view that the sum of Rs. 40,000 paid by the assessee in respect of the property at No. 24, Cunningham Road, Bangalore, did not form part of the cost of acquisition of the properties sold by the assessee and hence not deductible. Further, out of a sum of Rs. 15,000 claimed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cree dated October 10, 1972, the Appellate Tribunal was right in law in holding that the payment of Rs. 40,000 did not form part of the cost of acquisition of the properties sold by the applicant during the relevant previous year and was, therefore, not deductible while computing the capital gains ? 3. Whether, on the facts and circumstances of the case, the Appellate Tribunal was justified in its conclusion that there was no overriding title obliging the applicant to pay Rs. 40,000 ?" Before proceeding to answer the questions so referred, it would be necessary to notice briefly the factual backdrop relating to the acquisition of the properties sold by the assessee, viz., door Nos. 52 and 53, Lalbagh Road, Bangalore. One V. Ramalingam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le matters stood thus, on May 17, 1966, Swaminathan who, under the will of his father, Ramalingam, became entitled to the property at No. 52, Lalbagh Road, Bangalore, sold it to Abdul Razack with an agreement for reconveyance within a period of three years from June 17, 1969. Likewise, Amarnath, who was entitled to the property at No. 53, Lalbagh Road, Bangalore, under the will of his father, Ramalingam, sold that property to one Mir Abdul Subhan with an agreement for reconveyance on the same terms as in the case of Swaminathan. The wife of the assessee, Sumathi, filed a suit in the Court of the City Civil Judge, Bangalore, in O. S. No. 109 of 1970 with reference to the property at No. 24, Cunningham Road, Bangalore, impleading Moosa Haji A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d into agreements to reconvey the properties to Swaminathan and Amarnath on or before June 17, 1972, on the latter paying him Rs. 15,000 each, which was the amount paid by the assessee to Abdul Razack and Mir Abdul Subhan, a sum of Rs. 1,000 towards arrears of corporation tax and a further sum of one-half of the amount that was to be paid by the assessee to Moosa Haji Ahmed for obtaining a reconveyance of the property at No. 24, Cunningham Road, Bangalore. With reference to the agreements for reconveyance of the properties so entered into by the assessee with Swaminathan and Amarnath, suits in O. S. Nos. 318 and 319 of 1972 respectively were instituted by them before the City Civil Judge, Bangalore, to enforce the terms of the agreements fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. S. Nos. 318 and 319 of 1972, the assessee became the owner of the properties at Nos. 52 and 53, Lalbagh Road, Bangalore, on payment of consideration of Rs. 30,000. In other words, in so far as the assessee was concerned, the cost of acquisition of the properties at Nos. 52 and 53, Lalbagh Road, Bangalore, sold by him was Rs. 30,000 (Rs. 15,000 + 15,000). In so far as the claim of the assessee for deducting the payment of Rs. 40,000 made to Moosa Haji Ahmed was concerned, that payment had absolutely no connection whatever with the properties acquired by the assessee, which were also later disposed of by him and which had led to the arising of the capital gains. It was not disputed that O. S. No. 109 of 1970 related to property at No. 24, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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