TaxTMI 
TaxTMI 
2014 (12) TMI 468
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.... belonged to the assessee. It was further noticed by the Assessing Officer that the said shop was purchased by the assessee for Rs. 4 lac in 1999. According to the Assessing Officer, since the shop has been auctioned by Bank, the property has been transferred from the hands of the assessee and therefore, the assessee was required to offer capital gain arising out of the transfer of the shop. The Assessing Officer also noticed that the assessee had not shown Long Term Capital Gain arising from the transfer of the aforesaid shop and the submission of the assessee for not offering the amount as capital gain was that the assessee was guarantor for M/s. Tristar Electronics & Sneh Power System Pvt Ltd, who had taken loans from Rajkot Commercial Co-op. Bank. Since the parties to whom the loan was sanctioned had defaulted in the repayment of loan, the Bank attached the property of the assessee under Securitization Act and according to the assessee, he did not get any value and therefore, there was no capital gain on the transaction. The submission of the assessee was not found acceptable to the Assessing Officer for the reason that the capital asset which has been transferred belonged to t....
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....ver balance to assessee - Whether sum of Rs. 1,29,020 due by assessee to State on account of 'kist' was required to be deducted from amount of Rs. 5,57,980/- realized at auction while computing capital gain - Held, no. "5. We are of the view that the Tribunal and the High Court were in error. What was sold by the State at the auction was the immovable property that belonged to the assessee. The price that was realized therefrom belonged to the assessee. From out of that price, the State deducted its dues towards 'kist' and interest due from the assessee and paid over the balance to him. The capital gain that the assessee made was on the immovable property that belonged to him. Therefore, it is on the full price realized (less admitted deductions) that the capital gain and the tax thereon has to be computed." 4.2.2. In view of the above judgment of the Hon'ble Apex Court, there remains no confusion in holding that first, appellant being the legal owner has to be taxed for the capital gains arising from the sale of mortgaged shop No.2. In "Gold Coin Building" which was auctioned by Rajkot Commercial Co-operative Bank. Secondly, the gross sales consideration i.e.....
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.... is taken over. He further submitted that since the assessee did not get any money from the auctioned price, the transfer price of the assessee was nil and the assessee on the contrary had incurred a capital loss and not capital profit. The ld. AR also placed reliance on the decision of Hon'ble Kerala High Court in the case of CIT v. Smt. Thressiamma Abraham, reported in [1997] 227 ITR 802 (Ker). 6. The ld. DR, on the other hand, supported the order of the Assessing Officer and the CIT(A). He further submitted that for the purpose of calculation of capital gain, date of auction is relevant and not attachment; the attachment is protection of the bank's interest on property. He further placed reliance on the decision of Hon'ble Supreme Court in the case of Jagdishchandran, V. S. M. R Vs. CIT, reported in (1997) 227 ITR 240 (SC). 7. We have heard the rival submissions and perused the material on record. The issue in the present case about the taxability of capital gains on the asset which has been mortgaged by the assessee in discharge of the dues to which the assessee was the guarantor. It is an undisputed fact that a firm and a company in which the Assessee was a partn....
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....cted or dependent upon or flowing from the transfer of a share or shares of a company registered or incorporated outside India;." 8. "Transfer" has been defined in Section 2(47) specifically "in relation to a capital asset" and thus the definition can have application only for transfer of capital asset. Under Section 2(47) the term "transfer" in relation to capital asset has been defined to include the sale, exchange or relinquishment of the asset or the extinguishment of any rights therein or the compulsory acquisition of the asset under any law. Profits arising from the transfer of a capital asset are made, by section 45, chargeable to income tax under the head "capital gains". 9. Sec. 45 refers to capital gains. It reads as under : "Sec. 45 : Capital gains.-(1) Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in ss. 53, 54, 54B, 54C and 54D be chargeable to income-tax under the head "capital gains" and shall be deemed to be the income of the previous year in which the transfer took place." 10. A perusal of the s. 2(47) and s. 45 shows that any profits or gains arising from the transfer of capita....