TaxTMI 
TaxTMI 
1980 (12) TMI 70
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....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 he not been given vacant possession of the property. The ITO, however, held that payment of compensation to the tenant to vacate the premises was not an expenditure strictly in connection with the transfer. He, therefore, rejected the assessee's claim. 3. On appeal, the CIT (A) allowed both the claims of the assessee during the first year i.e., he directed the ITO to adopt Rs. 50,000 as the price of the sold portion as on 1st Jan., 1954 and to further allow the deduction of Rs. 40,000 paid by the assessee for getting portion of the property vacated. For the second year, he directed the ITO to allow deduction of Rs. 40,000 in accordance with the reasons given for the first year but initially did not give any finding on the assessee's other contention to adopt a higher value as on 1st Jan., 1954. However,....
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.... her right, title and interest in certain firms. During the assessment proceedings, she came up with the break-up of the consideration and claimed a deduction of Rs. 41,517 stated to be the reimbursement of lawyer's fees, the penalty expenses and damages for wrongful detention of the property. The ITO disallowed the expenses and the disallowance was upheld right up to the Tribunal on the ground that there was no evidence that any sum was paid to the assessee in reimbursement of the lawyer's fee etc. The High Court merely held that 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 accoun....
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....he area of the land over which the gifted property was situated, the assessee had to pay a sum of Rs. 6,943 by way of compromise. In computing the capital gains, the assessee's contention was that this amount should be considered to be the cost of improvement to the property contemplated under s. 49(1) r/w s. 55(1)(b) of the IT Act. The Tribunal had held that by paying this amount, the assessee had perfected her title to the property by removing the cloud cast on it by rival claimant and this was both addition and improvement of the title to the capital asset and deductible as such. No doubt on a reference, the Hon'ble High Court reversed this conclusion but the reasoning for the same was that according to their Lordship s. 48 provided that deduction of the cost of succession of the capital asset and also cost of any improvement was subject to the terms of the other sections. In the present case, the property had come to the assessee by way of a gift. Therefore, the cost fo acquisition of the previous owner as increased by cost of improvements incurred or borne by the previous owner could be deducted for the purpose of computation of the capital gains. Since the previous owner had ....
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....yment of Rs. 80,000 having been made as early as 17th Nov., 1972, it could, at the 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 perfect his ownership right, he had to get the property vacated and, therefore, the amount spent for doing so could be considered to be cost of acquisition of the asset itself. In fact, in the case of Santhosh Kumar Reddy, decided by the Tribunal earlier, the claim was made by the assessee under s. 48(i) and/or (ii). Incidentally, it was allowed under s. 48(i) but it....