Shri. Late. T.D. Ram, Bangalore v. ITO, Bangalore

ITA 74/BANG/2009 | 1996-1997
Pronouncement Date: 01-01-2011 | Result: Dismissed

Appeal Details

RSA Number 7421114 RSA 2009
Bench Bangalore
Appeal Number ITA 74/BANG/2009
Duration Of Justice 1 year(s) 11 month(s) 4 day(s)
Appellant Shri. Late. T.D. Ram, Bangalore
Respondent ITO, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 01-01-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 01-01-2011
Date Of Final Hearing 01-02-2011
Next Hearing Date 01-02-2011
Assessment Year 1996-1997
Appeal Filed On 27-01-2009
Judgment Text
ITA.454/B/08 & 74/B/09 PAG E - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B' BANGALORE BEFORE DR. O. K. NARAYANAN VICE PRESIDENT AND SMT. P. MADHAVI DEVI JUDICIAL MEMBER I.T.A NO.454/BANG/2008 (ASSESSMENT YEAR : 1996-97) INCOME TAX OFFICER WARD 5(4) BANGALORE .. APPELLANT V. DR. S. S. JAYARAM NO.68 MARGOSA ROAD BANGALORE .. RESPONDENT I.T.A NO.74/BANG/2009 (ASSESSMENT YEAR : 1996-97) (BY THE ASSESSEE LATE DR. T. D. RAM) ASSESSEE BY : SHRI. BALARAM ADVOCATE RESPONDENT BY : SHRI. PRAKASH REDDY ADDL.CIT O R D E R PER DR. O. K. NARAYANAN VICE PRESIDENT : ONE APPEAL IS FILED BY THE REVENUE AND THE OTHER A PPEAL IS FILED BY THE ASSESSEE. THE ASSESSMENT YEAR IS 1996-97. THESE APPEALS ARISE OUT OF THE SAME TRANSACTION OF SALE OF A PROPERTY A T BANGALORE. 02. IN THE CASE OF THE APPEAL FILED BY THE REVENUE DR. S. S. JAYARAM THE ASSESSEE SOLD HIS PROPERTY AT MALLESW ARAM BANGALORE ITA.454/B/08 & 74/B/09 PAG E - 2 ON THE BASIS OF AN AGREEMENT AND RETURNED THE CAPIT AL GAINS FOR TAXATION. IN COMPUTING THE CAPITAL GAINS THE ASSE SSEE CLAIMED DEDUCTION OF ` 37 22 222/- AND ` 2 50 000/- PAID AS COMPENSATION TO DR. T. D. RAM AND DR. N. S. M. MURTHY RESPECTIVELY . THE ASSESSING AUTHORITY DID NOT ALLOW THE DEDUCTION OF THE ABOVE TWO AMOUNTS. IN FIRST APPEAL THE COMMISSIONER OF INCOME-TAX(A) HELD THAT THE CLAIM MADE BY THE ASSESSEE WAS LEGITIMATE AND THEREFORE T HE SAID TWO AMOUNTS NEED TO BE ALLOWED AS A DEDUCTION IN WORKIN G OUT THE CAPITAL GAINS. THE REVENUE IS AGGRIEVED ON THIS DIRECTION AND THEREFORE THE APPEALS BEFORE US. 03. IN THE ASSESSEE'S APPEAL IT IS CONTENDED THAT THE AMOUNT OF ` 37 22 222/- PAID TO DR. T. D. RAM AS COMPENSATION A T THE TIME OF SALE OF THE PROPERTY STATED ABOVE WAS CAPITAL IN NATURE AND THEREFORE CANNOT BE ASSESSED TO INCOME-TAX. THE ASSESSING OF FICER DECLINED TO ACCEPT THE ABOVE CONTENTION AND BROUGHT THE AMOUNT TO TAXATION WHICH IS CONFIRMED IN FIRST APPEAL. THE ASSESSEE IS AGGR IEVED AND THEREFORE THE SECOND APPEAL BEFORE THE TRIBUNAL. 04. AS FAR AS THE APPEAL FILED BY THE REVENUE IS CO NCERNED WE FIND THAT THE ASSESSEE HAD MADE PAYMENT TO TWO DOCTORS T O FACILITATE THE TRANSFER OF THE PROPERTY WITHOUT ANY TENANTS AS AGR EED FOR. AS RIGHTLY ITA.454/B/08 & 74/B/09 PAG E - 3 RELIED ON BY THE COMMISSIONER OF INCOME-TAX(A) IN T HE CASE OF NAAZAR CHENOY V. COMMISSIONER OF INCOME-TAX (1998) 234 ITR 95 (AP) THE HON'BLE HIGH COURT HAS HELD THAT SUCH OBLIGATORY PA YMENTS HAVE TO BE TREATED AS EXPENSES INCURRED IN RELATION TO THE TRA NSFER OF THE PROPERTY SOLD. THERE IS NO DOUBT REGARDING THE PAYMENTS OF THOSE AMOUNTS. THESE AMOUNTS WERE PAID ON THE BASIS OF THE AGREEME NTS ENTERED INTO BETWEEN THE ASSESSEE AND THE BUYER OF THE PROPERTY. THE TWO DOCTORS WHO HAVE RECEIVED THE ABOVE AMOUNTS WERE CARRYING O N THE PRACTICE IN THE HOSPITAL HOUSED IN THE BUILDING SITUATED IN THE PROPERTY SOLD. THEREFORE GETTING THE PROPERTY CLEARED OF ALL TENA NTS IS A PRIMARY CONDITION TO EXECUTE THE FINAL DEED OF SALE. IN TH ESE CIRCUMSTANCES THE COMMISSIONER OF INCOME-TAX(A) HAS RIGHTLY HELD THAT THE PAYMENTS WERE INCURRED IN CONNECTION WITH THE SALE OF THE PR OPERTY AND THEREFORE THESE PAYMENTS ARE ENTITLED TO BE DEDUCTED IN COMPU TING THE TAXABLE GAINS. THE REVENUE FAILS IN ITS APPEAL. 05. AS FAR AS THE APPEAL OF THE ASSESSEE IS CONCERN ED THE ASSESSEE WAS CARRYING MEDICAL PROFESSION IN A HOSPITAL HOUSE D IN THE BUILDING SITUATED IN THE PROPERTY WHICH WAS SOLD. THE PAYME NT WAS NOT MADE AGAINST THE TRANSFER OF ANY CAPITAL INTEREST HELD B Y THE ASSESSEE. HE WAS ONLY PRACTICING AS A DOCTOR IN THE HOSPITAL AND HE WAS NOT OWNING ANY INTEREST IN THE PROPERTY AS FAR AS THE SAID LAN D AND BUILDINGS WERE ITA.454/B/08 & 74/B/09 PAG E - 4 CONCERNED. THEREFORE THE EXACT NATURE OF THE AMOU NT RECEIVED BY THE ASSESSEE WAS THE COMPENSATION FOR LOSS OF PRACTICE WHICH IS IN THE NATURE OF PROFESSIONAL INCOME. THEREFORE THE SAID AMOUNT HAS RIGHTLY BEEN BROUGHT TO TAX. THE ASSESSEE FAILS IN HIS APP EAL. 06. IN RESULT THE APPEAL FILED BY THE REVENUE AS W ELL AS THE APPEAL FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON TUESDAY THE 1ST FEBRUARY 2011 AT BANGALORE. SD/- SD/- (P. MADHAVI DEVI) (DR. O. K. NARAYANAN) JUDICIAL MEMBER VICE PRESIDENT