TaxTMI 
TaxTMI 
2018 (5) TMI 36
X X X X Extracts X X X X
X X X X Extracts X X X X
....e ground that the Assessing Officer has not considered the cost of construction of improvements made by the assessee on his property while computing capital gains on sale of said property and (ii) the ld. CIT(A) erred in disallowing the capital loss of Rs..77,27,840/- resulting out of sale of shares of M/s. Min Bimbingal Productions Pvt. Ltd. [MBPPL] by the assessee. 2. Brief facts of the case are that the assessee has filed his return of income on 31.10.2006 admitting total income of Rs..1,07,448/-. The return filed by the assessee was selected for scrutiny and notices under section 143 (2) and 142(1) of the Income Tax Act, 1961 ["Act" in short] were served on the assessee on 31.0-8.2007. 2.1 With regard to the issue of income from long term capital gain, the Assessing Officer noticed that the assessee sold the property at 17A, Karpagambal Nagar, Mylapore for a consideration of Rs..1,75,00,000/-, which was not admitted by the assessee in the return of income. When the details were called for, it was the submission of the assessee that the assessee has mortgaged the property owned by him at Karpagambal Nagar, Chennai for the loan granted by Indian Overseas Bank (IOB) to Min Bimba....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gaging assessee's own property and MBPPL (partly owned by the assessee) failed to repay the loan, the bank sold the property and the entire consideration was recovered by the bank. Thus, it cannot be held that the assessee has not received any consideration directly or indirectly, which were liable to tax. 5.1 We have gone through the judgement in the case of CIT v. Attilli N. Rao (supra), which was relied upon by the Assessing Officer, wherein, the Hon'ble Supreme Court has observed and held as under: "4. The assessment year with which we are concerned is the assessment year 1982-83. The assessee carried on abkari business. In the course of the financial year 1970-71 he mortgaged to the Excise Department of the State of Andhra Pradesh immovable property belonging to him at Waltair. He did so to provide security for the amounts of "kist" which were due by him to the State. The State, in the assessment year with which we are concerned, sold the immovable property by public auction, without the intervention of the court, to realise its dues. A sum of Rs. 5,62,980 was realised at the auction. Thereout, the State deducted the amount of Rs. 1,29,020 due to it towards "kist" and inter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. 9. In these premises, the first question is answered in the negative and in favour of the Revenue. The other questions do not arise for consideration." From the above judgement, it is clear that the mortgaged property sold, in discharge of the mortgage created by the assessee himself, belonging to the assessee and the price realized there-form belonged to the assessee and capital gain is very much warranted on the full price [less admissible deduction]. The ld. CIT(A) has not distinguished the above judgement of the Hon'ble Supreme Court, which was relied upon by the Assessing Officer in his assessment order, while taking a different view. When the law laid down by the Hon'ble Supreme Court and relied on by the Assessing Officer is very much available on the identical facts, the ld. CIT(A) should have distinguished it before taking a different view by following a different decision, which is not directly on the point. Otherwise also, availing loan itself is consideration and in this case, constructive benefit was very well accrued to the assessee when the loan was availed by MBPPL, which was owned partly by the assessee. Accordingly, we set aside the order of the ld. CIT(A) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... count also the assessee's arguments are to be accepted as the building of 7,745 sq.ft. could not be ignored nor it can come without spending monies. It is seen that the AO has done no such exercise, but has simply chosen to reject the materials and claim. However, since the provisions of Ss.45 and 48 are held not applicable this argument is considered only for academic purpose. Thus the addition is directed to be deleted." 6.2 From the observations of the ld. CIT(A), it is not disputed that as per sale deed dated 20.02.2006, the assessee has executed the property of land of 3,759 sq.ft. and building measuring 7,745 sq.ft., whereas, the assessee has received only a vacant land of about 4,000 sq.ft. through settlement in the year 1979 through a settlement deed registered with SRO, Mylapore. Further, the ld. CIT(A) observed that the assessee must have spent monies for bringing the 7,745 sq.ft. of building from 1990 onwards and the fact and date of construction have been noted from the details of the plan approval. Since the assessee could not file any evidence for the claim of expenditure towards cost of improvement of Rs..24,11,842/-, the Assessing Officer rejected the claim. T....