TaxTMI 
TaxTMI 
1987 (9) TMI 109
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....purchaser for Rs. 1,01,000 on certain terms as detailed in the said document. 2. A perusal of the document shows that one K. S. Raman had entered into an agreement with the vendor for the purchase of the property on 14-3-1975. Raman was the tenant of the vendor. He did not hand over possession of the property nor did he complete the sale within the period of six months as stipulated. He was, therefore, liable to pay Rs. 1,100 for damages for use and if he continued to occupy the property without delivery of possession he should be liable to pay Rs. 550 p.m. as damages for use and occupation. Further, the premises were mortgaged to one Rangachari for Rs. 25,000 under a registered mortgage deed dated 14-7-1969. The vendor had reason to bel....
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.... use and occupation of the premises paid in cash to the VENDOR at the time of the execution of these presents 4. Balance of consideration paid to the VENDOR at the time of the 21,000 execution of these presents making in all Rs. 1,01,000 (Rupees one lakh and one thousand only) the receipt of which the VENDOR both hereby admits and acknowledges, receipt of the same and in consideration thereof, the VENDOR hereby convey, transfer and assign unto the PURCHASER the property described in the Schedule hereunder and the right to recover damages for use and occupation of the premises from K. S. Rama....
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....er that the VENDOR and every person having or claiming any estate, right, title or interest in or to the said property through or in trust for the VENDOR will at all times at the request and cost of the PURCHASER, execute and register every such lawful assurance and thing for further or more perfectly assuring the said property to the use of the said PURCHASER as on all be reasonably required. THE VENDORE further conversant with the PURCHASER that there is not suit, attachment or proceedings relating to the property conveyed and the property is free from all encumbrances. THE VENDOR further covenants and assures the PURCHASER that there is no lispendens and that there is no will or other document affecting the VENDOR's title to the prope....
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.... 1,01,000 Less : Cost 46,050 Brokerage 5,000 ------ 51....
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.... Rs. 20,000. 7. We have considered the submissions of the parties. The property income is assessed on a notional basis. The property was let out to Raman and it was not vacant. Therefore, the annual assessment of property income does not preclude the assessment of capital gains separately on the sale of the property. Rents had not been received by the assessee but the assessee assigned to the purchaser the right to recover the rent which was of Rs. 20,000 and this was treated as part of the consideration of Rs. 1,01,000, according to the document. We are, therefore, unable to agree with the AAC that this amount of Rs. 20,000 was an admissible deduction. We restore the amount deleted. 8. Coming to the amount of Rs. 35,000, the learned ....
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....s part of the sale consideration. Therefore, as far as the assessee was considered notionally the amount of Rs. 35,000 which even if could be deemed to have received, was paid back to the purchaser to enter into litigation for getting vacant possession of the property, which was part of the contract of sale. No doubt, the fixation of Rs. 35,000 is not with reference to any exact amount of legal expenses incurred; but in a commercial transaction one has to make an evaluation on a commercial basis of probable expenditure necessary for completion of the transaction if the transaction were not to fall through. The point to be seen is whether Rs. 35,000 could be considered as reasonable expenditure for getting vacant possession of the property. ....