TaxTMI 
TaxTMI 
2016 (4) TMI 647
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....orrowed loan of Rs. 3.25 crores from M/s Kenilworth Investments Limited. The above said company M/s Kenilworth Investments Limited had taken loan from another company named as M/s Dhanraj Mills Limited. Consequent upon the Stock Scam, M/s Dhanraj Mills Limited was declared as a „notified party‟ by the Special Court set up under Trial of Offences Relating to Transactions in Securities Act, 1992. In the course of realizing the dues due to be received by M/s Dhanraj Mills Limited, the assessee was declared as Judgment debtor and accordingly a property belonging to the assessee was taken control by the custodian and it was decreed to be sold in settlement of amount due from M/s Kenilworth Investments Limited to M/s Dhanraj Mills Lim....
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....of section 50 of the Act. In this regard, the assessee placed reliance on the decision rendered by the Mumbai Bench of the Tribunal in the case of J K Chemicals V/s ACIT (ITA No.8206 and 8648 (Bom) of 1989. 5. The AO explained that the assessee has actually derived benefit from transfer of assets by way of satisfaction of the loan payable by it to M/s Kenilworth Investments Limited and accordingly held the assessee has derived income from sale of the asset. He further held that the loan amount taken from M/s Kenilworth Investments Limited cannot be considered as cost of transfer. With regard to the decision in the case of J K Chemicals (supra) relied upon by the assessee, the AO took the view that the business loss to the extent of depreci....
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....ld be considered as encumbrance attached to the property. In this regard, he placed reliance on the decision rendered by the Hon‟ble Calcutta High Court in the case of Gopee Nath Paul and Sons V/s DCIT (2005) 278 ITR 240 (Calcutta). 9. On the contrary, the ld D.R submitted that the amount borrowed by the assessee has got no relation with the title of the property and hence the same cannot be considered as Cost of transfer. 10. We heard the parties on this issue and perused the record as well as the decisions relied upon by the assessee. The decision rendered by the Hon‟ble Calcutta High Court in the case of Gopee Nath Paul and Sons (supra) relates to the expenditure incurred for removing encumbrances. In the instant case, the ....
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....Act. In this regard, he placed reliance on the following case law:- (a) Lavish Apartment (P) Ltd Vs. ACIT (2012)(210 Taxmann 9) (b) Sri Padmavathi Srinivasa Cotton Ginning & Pressing Factory Vs. DCIT (125 TTJ (Visakha) 411). (c) Digital Electronics Ltd Vs. Addl. CIT (2011)(135 TTJ (Mum) 419). 13. We have carefully considered the above said decisions. In the case of Lavish Apartments, the issue was relating to set off brought forward business loss against the income assessed under the heads Income from House property and income from other sources. In the other two cases, the question of setting off of brought forward loss against the STCG computed u/s 50 of the Act has been considered. 14. We have earlier noticed that the cost of pre....