TaxTMI 
TaxTMI 
2013 (5) TMI 554
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....ins." 3. Briefly stated facts are that during the year assessee transferred two flats at 3B & 3C, 5, Loudon St., Kolkata vide sub-lease deed dated 04.08.2006 to Mrs. Poonam Agarwal for a total consideration of Rs.2.20 cr. The assessee acquired sub-lease rights in the above stated two flats from Bhagya Lakshmi Commercial Pvt. Ltd. vide agreement dated 02.09.2004. During the Financial Year 2005-06 assessee entered into an agreement dated 05.05.2005 with Onkar Management Pvt. Ltd. for transfer of above stated property viz., two flats for a total consideration of Rs. 90 lakh. The assessee transferred the above stated property finally in favour of Mrs. Poonam Agarwal instead Onkar Management Pvt. Ltd. in September, 2006 at a total consideration of Rs.2.20 cr. as stated above. The assessee filed a claim petition before Arbitrator Mr. Supratim Laha, Advocate, Calcutta High Court in which judgment was delivered vide order dated 30.09.2007. Vide this order of Arbitrator appointed by Hon'ble Calcutta High Court, the assessee was directed to pay a sum of Rs.90 lakh vide his order as under: "Hence, after considering the facts and circumstances of the case and after perusing the records, evid....
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....be circulated to the parties concerned free of cost." 4. The assessee while computing capital gain on transfer of this property i. e. sub-lease rights, claimed deduction of damages and compensation paid at Rs.72 lakh. It was required by the AO to explain how this deduction is allowable. Assessee claimed that this expenditure is incurred wholly and exclusively in connection with the transfer of above two flats at 3B and 3C, 5, Loudon Street, Kolkata to Mrs. Poonam Agarwal vide sub-lease dated 04.08.2006. According to assessee, this claim is allowable u/s. 48(1) of the Act. The AO was of the view that this is not allowable claim as this is not damages or compensation rather this is penalty in nature and penalty cannot be allowed as deduction. While disallowing deduction, he observed as under: "Here the claimant is M/s. Onkar Management Pvt. Ltd. and respondent is Shri Satyabrata Dey. From the observation of the Ld. Arbitrator, it is clear that assessee has violated the agreement of transfer with M/s. Onkar Management Pvt. Ltd. for his own interests, i.e. the sale of the property at higher prices to Mrs. Poonam Agarwal and the agreement did not materialized for no fault of M/s. Onka....
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....rty to Mrs. Poonam Agarwal (for which the capital gain is being computed) vide sub-lease dated 04.08.2006. The arbitration award by which the appellant was ordered to pay the sum of Rs.72,00,000/- was passed by the Arbitrator on 30.09.2007. The liability to pay the sum of Rs.72,00,000/- which arose on 30.09.2007cannot be considered as expenditure incurred wholly and exclusively in connection with the transfer which had already taken place way back on 04.08.2006. It is also factually incorrect to argue that the payment was made to free the title of the property from all encumbrances. In view of the above, I am of the considered view that the sum of Rs.72,00,000/- is not allowable u/s. 48(i) as expenditure incurred wholly and exclusively in connection with the transfer of the property. The judicial decisions relied upon by the appellant are distinguishable on facts, and are not applicable in his case. The order of the AO is upheld. Ground no. 1 is dismissed." Aggrieved, now assessee is in appeal before us. 6. We have heard rival submissions and gone through facts and circumstances of the case. The facts are that the assessee received two flats i.e. 3B and 3C at 5, Loudon St., Kolka....
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....ut the use of unreasonable force. If the trespasser is in settled possession of the property belonging to the rightful owner, the rightful owner shall have to take recourse to law; he cannot take the law in his own hands and evict the trespasser or interfere with his possession. The law will come to the aid of a person in peaceful and settled possession by injuncting even a rightful owner from using force or taking law in his own hands, and also by restoring him in possession even from the rightful owner (of course subject to the law of limitation), if the latter has dispossessed the prior possessor by use of force. In the absence of proof of better title, possession or prior peaceful settled possession is itself evidence of title. Law presumes the possession to go with the title unless rebutted. The owner of any property may prevent even by using reasonable -force a trespasser from an attempted trespass, when it is in the process of being committed, or is of a flimsy character, or recurring, intermittent, stray or casual in nature, or has just been committed, while the rightful owner did not have enough time to have recourse to law. In the last of the cases, the possession of the ....
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.... SCR 224, has said (page 232): "It is apparent from the provisions of the above section that a charge does not amount to a mortgage though all the provisions which apply to a simple mortgage contained in the preceding provisions shall, so far as may be, apply to such charge. While a charge can be created either by act of parties or operation of law, a mortgage can only be created by act of parties. A charge is thus a wider term as it includes also a mortgage, in that every mortgage is a charge, but every charge is not a mortgage. The Legislature while defining a charge in section 100 indicated specifically that it does not amount to a mortgage. It may be incongruous and in terms even appear to be an antithesis to say on the one hand that a charge does not amount to a mortgage and yet apply the provisions applicable to a simple mortgage to it as if it has been equated to a simple mortgage both in respect of the nature and efficacy of the security. This misconception had given rise to certain decisions where it was held that a charge created by a decree was enforceable against a transferee for consideration without notice, because of the fact that a charge has been erroneously assum....
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....he said payment could be regarded as "cost of improvement" under section 48 read with section 55(1)(b) of the Act. In Winans v. Attorney-General (No. 2) [1910] AC 27 (HL), the question for consideration was whether foreign bonds and certificates payable to bearer passing by delivery and marketable on the London Stock Exchange, were, when physically situate in the United Kingdom at the death of the owner, liable to estate duty under the Finance Act, 1894, even though the deceased was domiciled abroad. It was urged that the principle of domicile which governs the liability to legacy and succession duties was also applicable to estate duty. The said contention was negatived by the House of Lords and a distinction was made between estate duty and legacy and succession duty. In that context, Lord Chancellor Loreburn said (page 30): "Legacy and succession duties fall upon the benefits received by survivors on their accession upon a death. Estate duty falls upon the property passing upon a death, apart from its destination." These observations of Lord Loreburn, on which reliance has been placed by Smt. Ramachandran, relate to chargeability of estate duty and have no bearing on the ques....
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....cost for which the previous owner acquired it, as increased by the cost of any improvement of the assets incurred or borne either by the previous owner or by the assessee. According to the High Court, having regard to the definition of the expression "cost of improvement" contained in section 55(1)(b) of the Act, in order to entitle the assessee to claim a deduction in respect of the cost of any improvement, the expenditure should have been incurred in making any additions or alterations to the capital asset that was originally acquired by the previous owner and if the previous owner had mortgaged the property and the assessee and his co-owners cleared off the mortgage so created, it could not be said that they incurred any expenditure by way of effecting any improvement to the capital asset that was originally purchased by the previous owner. This decision has been followed in subsequent decisions of the High Court in Salay Mohamad Ibrahim Sait v. ITO [1994] 210 ITR 700 (Ker) and K. V. Idiculla v. CIT [1995] 214 ITR 386. A contrary view has been taken by the Gujarat High Court in CIT v. Daksha Ramanlal [1992] 197 ITR 123. In taking the view that in a case where the property has be....