TMI Blog1981 (1) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... for a consideration of Rs. 35 lakhs in the assessment year in question which is 1973-74. The property admittedly stood in the name of the co-owners, who were the owners and no sale deed was executed in that year in favour of the purchasers. On January 1, 1973, the co-owners received Rs. 21 lakhs as part of the sale price and it was further agreed between the purchasers and the co-owners that pending the registration of the sale deed, the coowners would pay Rs. 30,000 per month by way of compensation out of the rental income of the said property to the trust. This arrangement is contained in a letter dated 29th December, 1972, addressed by the solicitors of the purchasers to the solicitors of the co-owners. During the accounting year in que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ITO was, therefore, deleted. The department took the matter to the Tribunal in appeal. The Tribunal upheld the view of the AAC that the assessee was entitled to claim the deduction of Rs. 7,200 as there was a diversion of income on account of an enforceable legal obligation created by an agreement. The Tribunal further observed that the ITO was not justified in not considering the claim of the assessee against her income from other sources, merely because such a claim was not made before him, and that the ITO had taken too technical a view of the matter. The Tribunal observed that if a claim for deduction was made before the ITO and if he held that that claim could not be considered by way of deduction from the income from property, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24 of the Act, and according to the learned counsel, the only provision which could be relevant for the purposes of the nature of the deduction sought by the assessee was the one contained in cl. (iv) of s. 24(1) which provided for a deduction of the amount of the charge, where the property was subject to an annual charge (not being a charge created by the assessee voluntarily) or a capital charge, The learned counsel, therefore, contended that the amount of Rs. 7,200 which is now claimed by way of a deduction is not an annual charge, on which there is no dispute, and, therefore, apart from the provisions of s. 24 of the Act, no further deductions would be permissible. It was also argued that since ss. 22 to 27 constitute a self-contained c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within s. 9 of the Indian I.T. Act, 1922, and the Division Bench had observed as follows (p. 743 of 31 ITR): " ' But, in my opinion, the answer to the learned Commissioner's view is to be found in the decision of the Privy Council in Bejoy Singh Dudhuria v. Commissioner of Income-tax [1933] 1 ITR 135. Their Lordships there were dealing with a very similar case, in which the assessee's income, derivable in part from immovable property, was subject to charge in favour of a widow, and their Lordships held that although those charges could not be deducted under section 9, the question really was whether the income of the assessee was the whole income of the immovable property, or the income of the immovable property less the deduction, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e owners and the intending purchasers, the payment was to be made because of retention of certain monies by the co-owners. The mere fact that that amount was paid out of the rent did not mean that there was any overriding title created in favour of the purchasers in respect of the amount of rent which was legally recoverable from the tenants exclusively by the co-owners. As a matter of fact, the co-owners could have paid this amount out of their other income also. So far as their liability was concerned, the liability was only to pay this amount. From where they paid this amount was wholly irrelevant. The important fact which has some impact on the nature of the liability is that it is by way of compensation for the retention of a sum of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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