TaxTMI 
TaxTMI 
TaxTMI 
2015 (8) TMI 270
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....tting loss of Rs. 7,42,240/-. During the assessment year in question, the appellant sold land along with building at Nageswaran Koil Street, Kumbakonam for Rs. 75 Lakhs. The appellant had taken mortgage loan on the said property with City Union Bank. For clearing the mortgage, the appellant made a one-time settlement with the bank in respect of the aforesaid loan and paid a sum of Rs. 22,51,220/- to the bank. While computing the capital gain, this amount of Rs. 22,51,220/- was claimed as expenses by the appellant under Section 48 (1) (i) of the Act. The Assessing Officer, in the course of assessment, however, held that the loan in question had been obtained by mortgaging the property long time after acquiring the same and, therefore, the same is not covered under Section 48 (1) (i) of the Act and, therefore, disallowed the assessee's claim for the purpose of computing the capital gains. 4. Aggrieved by the said disallowance, the assessee preferred appeal before the CIT (Appeals), who, relying upon the judgment of the Calcutta High Court in the case of Gopee Nath Paul & Sons - Vs - Dy. Commissioner of Income Tax (2005 (278) ITR 240) allowed the appeal and directed the assessing....
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....unal having considered the facts of the case in depth, by normal rule of precedence, followed the decision of the jurisdictional High Court in Vajrapani Naidu's case (supra), and allowed the appeal and, therefore, no interference is warranted with the well considered findings recorded by the Tribunal. 8. Heard the learned counsel for the appellant/assessee and the learned standing counsel appearing for the respondent/Department and perused the materials available on record as also the judgments relied on by the different authorities to arrive at their respective conclusions. 9. This Court has carefully considered the facts in the present case as also the judgment of this Court as well as the Calcutta High Court. We find, on facts, there is a sale by the present appellant/assessee of land and building for Rs. 75 Lakhs, which is not in dispute. Insofar as the one time settlement of Rs. 22,51,220/- paid to City Union Bank to satisfy the mortgage over the property, the assessee claimed the same as expenses incurred in connection with the transfer for the purpose of computing capital gains under Section 48 (1) (i) of the Act, which was rejected by the Department and upheld by the ....
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....ndor assessee, including mortgages on the property, which was the subject matter of sale. The Income Tax Officer and the Commissioner rejected the claim for deduction in terms of Section 48 (1). While the Tribunal reversed the view, this Court rejected the view of the Tribunal, in the following manner :- "That view of the Tribunal is wholly unsustainable. The burden had been created by the vendor on the property sold by him. As the burden had been created for his own benefit by offering the property as security to his lenders, the amounts spent for discharging that burden of the vendor whether prior to sale, or at the time of sale, by payment to such creditors including the mortgagees, directly by the vendee cannot be regarded as expenditure wholly and exclusively in connection with the transfer. When the mortgaged property is sold, if the consideration for the sale comprises the consideration for the sale of equity of redemption, and the amount required for the discharge of mortgage, it is the aggregate of both these sums that constitutes the consideration for the sale. The fact that the vendee makes the payment directly to the mortgagee, instead of the vendor doing so, after re....
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.... the amount spent for discharging that burden whether prior to sale, or at the time of sale, by way of one-time settlement to the Bank, cannot be regarded as expenditure wholly and exclusively in connection with the transfer. In the present case, the discharge was in the course of sale. We find that the payment of the outstanding amount in discharge of mortgage by the vendor, viz., appellant herein, cannot partake the character of an expenditure. It is not a case where the assessee had discharged the mortgage created at the time of acquisition of the property by the present appellant/assessee, to make a distinction otherwise. 14. The decision of the Calcutta High Court in Gopee Nath Paul's case (supra), on facts, is distinguishable and will not apply to the facts of the present case. In the said case, there were two firms and there were common partners. One of the firm was suffering a suit claim by Allahabad Bank. Simultaneously, another suit was filed between the partners of the two firms and based on arbitration agreement, the suit between the partners was concluded on the basis of compromise and the firms stood dissolved. A Receiver was appointed for the purpose of selling ....