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TMI Blog1989 (9) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... ffected on 25th Sept., 1982 The tenant agreed to pay Rs. 75, 000 to the assessee towards mesne profits and cost of the suit. 4. In the assessment for 1983-84 for which the previous year terminated on 31st March, 1983 the question of capital gains arose. For the purpose of cost, the value of the property as on 1st Jan., 1964 had to be determined. The ITO made a reference to the departmental valuation officer who fixed the cost at Rs. 49,000 Since the sale was for Rs. 2 lakhs he brought to charge Rs. 1,51,000 as income by way of short term capital gains. We may remark here that according to the ITO the assessee acquired ownership on 19th June, 1982 when he obtained a conveyance from the Bangalore Development Authority He therefore treated it as a short term capital gain. 5. The sum of Rs. 75,000 received under the compromise reported to Court was the aggregate of following 1. Cost of suit Rs. 800 2. Stamp duty Rs. 6,000 3. Arrears or rent Rs. 31,000 4. Compensation for wrongful dispossession of property Rs. 36,400 Rs. 75,000 Rs.36,400 received as mesne profits was treated as income of the assessee under other source the assessee had appealed from the assessment and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 for improvement of the site. 12. The Commissioner (A) did not feel called upon to accept the report of the approved valuer. There were sale instances of plots in the same area which disclosed a price of Rs. 348,38 per sq. Mtr. In 1974 On the basis the commissioner (A) took the value of the plot at Rs. 125 per sq. Mtr. According to approved valuer the value of the land is Rs. 180. Per sq mtr. It is known on what basis the Commissioner (A) scaled down the value to Rs. 125 for 1964 depending upon the ruling rate of Rs. 348.38 per sq. mtr. in Jan., 1974. In a matter of this type one has to only hazard a rough estimate having due regard to the available material on record. We find no warrant for adopting the rate of Rs. 180 as proposed by the approved valuer. At the same time, as property value had been steadily increasing we feel that the rate of Rs. 125 is little on the lower side. In the circumstances of this case we find it reasonable to take the value of the land at Rs. 140 per sq. Mtr. The value of 359.33 sq. Mtr. Of land be accordingly computed for the purpose of capital gains. 13. The assessee had spent Rs. 63,000 in 1960-61 the commissioner (A) fixed the value at Rs. 60 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is liable to pay mesne profits till actual delivery of the premises is given to the landlord In other words mesne profits are recompense to the landlord for wrongful possession of the property even after the termination of the lease without yielding up possession in deference to the determination of the lease effected by the landlord, for a tenant loses his right to possession after the lease is determined. 18. Dr. Krishna, learned counsel for the assessee, pressed two points for consideration his first submission was that mesne profits being compensation granted to the landlord for an injury suffered by him on account of wrongful Act per treated by the tenant who had squatted on the property without right, the same is not taxable as income. His second submission was that rental income had been assessed annually on notional basis under the head income from property right from the time of lease upto the time the property was sold and, as such inclusion of Rs. 36,400 in this year merely because it was quantified in the suit would result in taxing twice over. One thing is certain The rent fixed was Rs. 600. p.m. and the tenant would have paid the same rent if the lease had not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty which the assessee should have realised but had not owing to recalcitrance of the tenant has been charged under the head income from house property every year it would be opposed to all principles of accessibility to bring to charge what the owner gets after fighting out a litigation. The first submission of Dr. Krishna Has, therefore, to be upheld and inclusion of Rs. 36,400 in the taxable income cannot be justified. On this reason alone the deletion of the same has to be ordered. 20. The other submission of Dr. Krishna is equally substantial His submission was that when a payment is made as compensation by the wrong doer for an injury caused to another the same does not constitute income of the recipient. He relied upon the decision of the Andhra Pradesh High Court in the case of CIT vs. J.D. ITALIA (1983) 32 CTR (AP) 124 : (1983) 141 ITR 948 (AP) and the decision of the Punjab & Harayana High Court in the case of CIT vs. CHIRANJI LAL MULTANI MAL RAI BAHADUR (P) LTD. (1989) 79 CTR (P&H) 133 (1989) 45 Taxman 156 (P&H) We were referred to the decision of the Supreme Court in the case of CIT vs. SHAMSHER PRINTING PRESS (1960) 39 ITR 90 (SC) and of the Madras High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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