TaxTMI 
TaxTMI 
2005 (11) TMI 437
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....red in law and on facts of the case, by holding that the capital gain of Rs. 1,28,12,543 on sale of properties at Vartej plant is taxable in the assessment year 1999-2000 and accordingly has erred in confirming the findings given by the Assessing Officer. 1.1 Your appellant submits that as per the provisions of section 2(47)(v) of the Income-tax Act, 1961, any transaction involving the allowing of possession of any immovable property to be taken or retain in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 is a 'transfer' in relation to capital asset and accordingly the provisions of section 45 of the Income-tax Act, 1961 shall apply. Thus, it is submitted that in view of....
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.... also allotment of NCDs and interest-free deferred payment facilities. Thereafter the assessee was paid Rs. 1,00,00,000 in March, 1998 and handed over the physical possession of the factory and its plant and machinery on March 31, 1998, to the vendee who undertook the job of renovating the factory. The assessee had mortgaged the land and building and other assets at the factory at Vartej to the Bank of Baroda for the cash credit facilities being availed of by the assessee from that bank. As per the one-time settlement between the assessee and the bank, the assessee was to pay Rs. 118 lakhs by March 30, 1998. However, it paid the amount on July 22, 1998, and the bank issued a no-lien letter on October 15, 1998, and the assessee executed the ....
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....roperty was mortgaged to the Bank of Baroda and payment was made only on July 22, 1998, and no lien letter was issued on October 15, 1998, the assessee cannot be said to have transferred the property to the vendee in the assessment year 1998-99, and the transfer has taken place only in the assessment year 1999-2000 as the sale deed was executed on October 30, 1998. She further submitted that the assessee had tried to take the benefit of business loss of over Rs. 1 crore during the year so as to set off the entire capital gains on the sale of assets this year since in the assessment year 1999-2000 the assessee has positive taxable income of Rs. 1,02,23,453 and the business loss would not be available to set off the capital gains. 6. Heard....
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.... transferee has, in part performance of the contract, taken possession of the property, or any part thereof ; or (c) The transferee already in possession in part performance of the contract, has done some act in furtherance of the contract; and (d) The transferee has performed or is willing to perform his part of the contract; then (e) The transferor or any person claiming under him is debarred from enforcing against the transferee any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract. 8. From the above, it is clear that to attract the provisions of the above section, there should be a contract for sa....
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....t which may give rise to a pecuniary liability." The purpose or object of mortgage is to secure a debt. In a sale, all the rights of ownership which the transferor has, pass to the transferee, whereas in a mortgage, some rights are transferred to the mortgagee and some remain vested in the mortgagor. The nature of the right of transfer depends upon the form of the mortgage. But, whatever be the form of mortgage, there is a transfer of some interest only and not a transfer of the whole interest of the mortgagor. The characteristic feature of mortgage is that the right in the property created by the transfer is accessory to the right to recover the debt. Therefore, it creates a pecuniary liability on the mortgagor and the mortgagee becomes a ....
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....essee is taxable in the assessment year 1999-2000. By offering this gains in this year the assessee has tried to take the benefit of the business loss of over Rs. 1 crore during the year so as to set off the entire capital gains on the sale of the assets. In the assessment year 1999-2000, however, the assessee has positive taxable income of Rs. 1,02,23,453, whereby the capital gain would become taxable in that year, as no set off against any business loss will be available. As the assessee has offered the capital gains in the year, i.e., 1998-99, it is being assessed on protective basis. The assessment for the assessment year 1999-2000 has to be reopened by way of notice under section 148 as it has not been picked up for scrutiny." 11.1 ....