Capital gain tenant

A tenant occupying a residential flat for many years. The tenant passes away leaving behind legal heirs. The owner of the flat now intends to sell the flat. The legal heirs enter into a litigation amongst themselves over tenancy rights and drags the owner in it as well. The owner agreed to pay a portion of sale consideration to the legal heirs and in return the legal heirs will issue NOC for sale of flat as well as surrender their tenancy rights. How to treat this amount recd by the legal heirs from the owner of the flat?

Thanks.

Replies (3)

The amount received by the legal heirs is subject to tax as income from other sources in their hands.

Any other views?

Liable for caiptal gain, cost of acquistion would be nil in respect of tenancy right.

What all deductions can the tenant avail?

Legal expenses toward litigation.

Rent paid for these many years

Rent payable if any between the period of litigation and settlement

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