TMI Blog2005 (11) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... owners entered into an agreement with May Baker on9-11-1996to get the property vacated for a total consideration of Rs. 1,65,00,000. The said company accepted the payment of the aforesaid amount and surrendered its tenancy rights. In order to make the payment the assessee had borrowed monies from Karnataka Bank and Lord Krishna Bank in respect of which interest had to be paid. The interest was claimed as a deduction by the assessee while computing the income from the said building under the head "Income from house property". The claim was made under section 24(1)(vi) of the Act. It amounted to Rs. 24,25,310. The Assessing Officer held that the loan was not taken for acquiring the property and, therefore, the interest cannot be allowed. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in section 22 does not stand alone. It is followed by words descriptive of the property that is referred to in the section. Those words are "consisting of buildings or land appurtenant thereto". Thus the property referred to in the section is either a building or land appurtenant thereto. This does not admit of the wide interpretation which otherwise the word "property" is susceptible to under the general law or even for the purposes of the Wealth-tax Act, 1957 or section 2(14) of the Income-tax Act. Section 2(14) of the Income-tax Act defines a "capital asset" as "property of every kind". It was, therefore, possible to hold, in the authorities to which our attention was drawn, that any interest in property, including a tenancy right, was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty" in section 22, we cannot obviously ascribe any other meaning to the same word appearing in section 24(1)(vi). What is referred to in this section is "the property" and the use of the definite article ("the") clearly shows that the meaning of the word "property" in this section has to be the same as in section 22. Thus what is being meant in section 24(1)(vi) is the property in the physical form and shape of a building or land appurtenant thereto. It is, therefore, not possible to accept the claim of the assessee that he acquired the tenancy right from May and Baker and completed his bundle of rights of ownership by paying the amount of Rs. 1.65 crore. 6. Mr. Ganesan laid considerable emphasis on the word "owner" appearing in section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in accepting the assessee's claim. 8. Considerable reliance was placed on behalf of the assessee upon the judgment of the Hon'ble Delhi High Court in Bawa Shiv Charan Singh v. CIT [1984] 149 ITR 29. The question before the Hon'ble Court was whether tenancy rights could be considered as a "capital asset" within the meaning of section 2(14) of the Act and whether the amount received for surrender of the rights could be subject to capital gains tax where it is not possible to compute the "cost of acquisition" of such rights. It was held that tenancy rights constitute "capital asset", that when they are surrendered there is an extinguishment of the rights which would amount to a transfer and therefore the assessee would be liable to capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... num after the surrender of the tenancy rights by May Baker, which is one indication that the assessee acquired the complete ownership and control over the property. We do not see how this makes any difference to the legal position. Obviously May Baker were paying the old rent and the new tenant paid the rent at the rates prevalent when he occupied the property. This has nothing to do with the acquisition of the property and cannot have any impact upon the legal position that the assessee did not "acquire" the property on surrender of the tenancy rights by May Baker. 10. We therefore reverse the decision of the CIT(A) and restore the disallowance of the interest. The appeal filed by the Department is thus allowed. No costs. - - Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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