TMI Blog2011 (12) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... i Pratap Mall Mr. Prakash Yadav, Advocates. O R D E R CM No. 22762/2011 This is an application for condonation of delay of one day in filing the appeal. Learned counsel for the respondent-assessee, who is present on advance notice, states that he has no objection if the application is allowed and the delay is condoned. Accordingly the application is allowed. The application stands disposed of. The Revenue by the present appeal under Section 260A of the Income Tax Act, 1961 (Act, for short) impugns order dated 31st January, 2011 passed by the Income Tax Appellate Tribunal (tribunal, for short) on three grounds. (i) Reduction of valuation of scrap from Rs.32,70,000/- to Rs.16,35,000/-. (ii) Inclusion of Rs.1.48 crores paid to the tenant/licensee for vacation for computation of long term capital gains. (iii) Direction of remit on the question of payment made to employees on closure of the cinema hall at Mumbai. 2. The respondent-assessee sold a cinema hall in Mumbai in the period relevant to the assessment year 2007-08 for Rs.27,70,00,000/-. In the sale deed it was mentioned that Rs.15,00,000/- was attributable to furniture, fixture, equipment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined to interfere with the order passed by the tribunal. 5. The second question relates to payment of Rs.1.48 crores, which was paid by the assessee to the tenant/licensee, who was running a canteen/refreshment stall in the cinema hall. The CIT(Appeals) and the ITAT have given a categorical finding that payment of this Rs.1.48 crores to the stall owner under the agreement dated 25th April, 2006 is related to the subsequent sale transaction, which the respondent-assessee had entered into with the third party on 6th July, 2006. They have rejected the contention of the Assessing Officer that there was no link or connection between the same. With regard to the date of tenancy also, the CIT(Appeals) and the ITAT have recorded a finding that the stall owner was given rights way back in 1971. They have referred to the material on record including the balance sheet etc. to prove and establish the said factum. The Assessing Officer did not dispute the actual payment of Rs.1.48 crores by the respondent-assessee to the said stall owner. 6. The findings recorded by the tribunal, read as under: 13. We have carefully considered the rival submissions in the light of the material plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, the amount payable by the buyer to the mortgagee was treated as a part of the sale consideration. The assessee claimed that the mortgage debt should be treated as cost of acquisition or cost of improvement. This contention was rejected. The mortgage was not for purchase or for making improvements in the said property. The mortgage was created after the house was purchased by the assessee himself and was for purposes unrelated and unconnected the utilization of the property. It was not for perfecting the title or improving the house. In RM. Arunachalam vs. Commissioner of Income Tax, (1997) 227 ITR 222, it was held that the discharge of the mortgaged debt by payment which was created by previous owner is an expense or cost incurred for acquisition or perfecting an imperfect title. Thus when an assessee inherits/purchases a property which is already mortgaged and incurs an expense to redeem the mortgage and improves his title, which was incomplete and imperfect, the cost incurred is treated as cost of acquisition itself. 8. The Bombay High Court in Commissioner of Income-tax v. Miss Piroja C. Patel [2000] 242 ITR 582 (Bom) had examined the question whether payment ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a C. Patel reported in [2000] 242 ITR 582. In the aforesaid case, certain eviction proceedings were initiated to evict the unauthorised occupant from the land. Due to eviction of the unauthorised occupant from the house, the value of the property was increased and the expenditure incurred for vacating the land has been treated as cost of improvement. Similarly, in this case also, if the unauthorised occupant had not been evicted, the value of the property would have been decreased instead of increasing. Therefore, we have to treat the expenditure incurred by the executors to evict the unauthorised occupant as an amount spent towards cost of improvement of the property. In the circumstances, we have to answer the question of law framed in favour of the assessee. 10. In the present case, as per the facts found by the tribunal and the CIT (Appeals), there was a canteen/refreshment stall in the cinema hall which was in occupation of a tenant/licensee since 1971. The property was to be sold. In order to procure and get proper value and effectuate the sale, the respondent assessee paid Rs.1.48 crores to the tenant/licensee to vacate the property. These are the factual findings recor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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