9911796707
TMI Blog1980 (12) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... during the two years. The assessee put the original value of the two portions on 1st Jan., 1954 at Rs. 50,000 and Rs. 60,000 respectively which the ITO estimated at Rs. 40,000 and Rs. 50,000. Besides that, before selling the property, the assessee, by an agreement dt. 17th Nov., 1972, got the property vacated from Young Men's Catholic Association, Bangalore which was a registered International Body and tenant of the same, in consideration whereof he paid a sum of Rs. 80,000 to the tenant. It was claimed by the assessee that Rs. 40,000 was the expenditure incurred wholly and exclusively in connection with the transfer of this property during each of the two years in question because no buyer would have ordinarily paid such a high price had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atives of the parties at length in these appeals. The CIT(A) relied upon a decision of this Bench in ITA No. 393 (Bang)/75-76 in the case of N. Santhosh Kumar Reddy vs. ITO decided on 21st June, 1976. In that case, the assessee had sold land at No. 17, Museum Road, Bangalore. While computing the capital gains thereof, the assessee had claimed a sum of Rs. 15,000 which he paid to the lessee for termination of the lease of the property before the sale. Both the ITO and the AAC had rejected this claim for deduction. However, the Tribunal held that the lease was an encumbrance on the property which the assessee intended to sell and unless the encumbrance was removed, no purchaser would be willing to purchase the property. It, therefore, allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat on the facts of the case, the disallowance of deduction on the finding that there was no evidence to support it was justified. Incidentally, their Lordships held that even assuming that what the assessee represented was correct, the deduction was not permissible in terms of s.48. What could be deducted under that section was expenses incurred wholly and exclusively in connection with the transfer of the properties. Damages for wrongful withholding of the properties could not be said to be expenses incurred wholly and exclusively for the transfer. Now, we may point out that these were damages which the assessee sought to claim from the transferee on account of lawyer's fees, travelling expenses and damages for her own mental worry and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge redeemed in order to perfect the title of the assessee. Since the assessee had received the property by way of inheritance, in law, the mortgage should be deemed to have been created by the assessee himself and, therefore, the amount paid for redeeming the mortgage could not be considered for the purpose of increasing the cost of the property to the assessee as that amount had already been received by the assessee's predecessor in interest at the time of creating the mortgage itself. Therefore, this case is absolutely of no help to the Department. 7. Yet another authority relied upon ws a decision of the Madras High Court in CIT vs. Indira (1979) 13 CTR (Mad) 6 : (1979) 119 ITR 837 (Mad). In this case, the assessee's father had gifted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emplates only the cost incurred by the previous owner. Again, here, the money was paid to a third party who claimed title over the gifted property. This means that the title of the donor of the gift itself was not complete. So, either the assessee could claim the amount which she had to pay to the party claiming an adverse title as being his own cost of acquisition because this was a gift by a person without any title, or the assessee could claim the benefit of s. 49 only, because she could not add her own expenses incurred for perfecting the title. No doubt, there are observations by their Lordships that improvement of title to an asset is different from improvement of asset itself but this observation has nothing to do with the facts in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... most, have been claimed as a deduction under s. 48(i) during the asst. yr. 1973-74 and in no case, could any part thereof be claimed in the asst. yr. 1974-75. Since this argument does not involve investigation of any fresh facts, we had permitted the Deptl. Rep. to take up the same at time of hearing of the appeals but, on merits, we feel that the argument has no substance. Truly speaking, the claim of Rs. 80,000 made by the assessee in the present case does not fall within cl. (i) of s. 48 but falls within cl. (ii) as being the cost of acquisition of the capital asset or improvement thereof. What the assessee held before getting the property vacated was ownership subject to the encumbrance to the lease-hold right. Therefore, in order to pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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