TaxTMI 
TaxTMI 
2020 (10) TMI 93
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....spite the settled position on the sanctity of SRO's guideline value for the understanding/for the determination of the fair market value? (ii) Whether the Appellate Tribunal is correct in law in sustaining the disallowance of the payments made to clear the loan liability as part of the cost of acquisition in the recomputation of long term capital gains while overlooking the pre-existing charge of the bank liability on the capital asset/property under consideration when it got vested by virtue of settlement deed dated 14.7.2004? (iii) Whether the Appellate Tribunal is correct in law in sustaining the disallowance of the payments made to clear the loan liability as part of the expenses incurred in connection with the transfer as prescribed in section 48 of the Act in the recomputation of long term capital gains which was claimed as alternative stand by the Appellant? (iv) Whether the Appellate Tribunal is correct in sustaining the recomputation of long term capital gains while overlooking the loss suffered consequent to the guarantee/mortgage of the property/capital asset in relation to the loan transaction with the bank entered into by the company which le....
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....both the parties and perused the material on record. The ld. A.R relied on the decision of Co-ordinate Bench of Chennai Tribunal in the case of M/s.Sivanandha Mills Ltd., in ITA Nos.1216 & 2016/Mds/2013 to the proposition that the payment of loan liability to the State 'Bank of India, settled through the Debt Recovery Tribunal is having a direct nexus with transfer of capital assets and it is to be deducted from the sale consideration of capital assets and accordingly capital gains to be computed. In our opinion, the decision cannot be applied to the facts of the present case. In this case, the property was given as a collateral security for the loan availed by other than the assessee, which is a M/s.S.Albert & (Co., as pointed out by the AO in his assessment order and neither the assessee nor the assessee's grandmother who settled the property in favour of the assessee, is borrower nor a party to the suit, the mortgage debt cannot be considered as a cost of acquisition of property so as to give deduction while computing the capital gains from the transfer of the property. If the consideration of sale of property apportioned towards the outstanding debt in bank, the assesse....
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....sessee and in favour of the Revenue. 6. However, on the issue of computation of Long Term Capital Gains in the hands of the Assessee, the facts in brief which has led to filing of the present Appeal as discussed by the learned Tribunal are thus:- The Assessee received 3 acres of land under a Settlement Deed dated 14.7.2004 out of the total land of 11.53 acres belonging to various family members out of which the Assessee's Grandmother Mrs.Susila Ammal settled 3 acres of land in favour of the Assessee Mr.N.Rajarajan. The said land entirely seems to have been mortgaged by the various joint owners of the property with State Bank of India and upon defaults in repayment, in the proceedings before the DRT by the Company M/s.Albert and Co. Ltd., which took over the Partnership Firm of M/s.Albert & Company, in which the said Settler Mrs.Susila Ammal was a Partner, settled the land, in an One Time Settlement (OTS) in O.A.No.2387 of 2001 before the DRT to square up the said settlement of 9.60 Crores in favour of M/s.ASREC India Limited, the Assignee of the debt by the State Bank of India, the land in question was required to be sold and payment made to the said ASREC India Limited o....
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.... 534B2 62134920.00 30358008.00 5118000.00 A.MADHUKUMARAN 2.00 Acres 534B 14568563.00 7117938.00 1200000.00 RAJA RAJAN 3.00 Acres 567B2 21852839.00 10676905.00 1800000.00 196486941.00 96000000.00 18762000.00 The said sum of Rs. 1,06,76,905/- is computed as under:- Proportionate to selling price of 3 Acres : 2,18,52,839 --------------- x 9,60,00,000 = Rs. 1,06,76,905/- 19,64,86,941 8. Thus, the Assesee claimed that a sum of Rs. 1,06,76,905/- was part of his contribution of the Settlement amount of Rs. 9,60,00,000/- being the amount agreed in OTS to clear up the dues SBI, through its Asset Reconstruction Company, ASREC (India) Ltd. and therefore, the said amount forms part of 'cost of acquisition or cost of improvement' under Section 48 read with Section 49 of the Income Tax Act and the same is liable to be deducted from the sale value of land to compute capital gains tax liability. However, the same was disallowed by the Authorities below for the reasons narrated in the order of the learned Tribunal. 9. During the....
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....ble Supreme Court, the Hon'ble Supreme Court held as under:- "13. The submission regarding diversion in relation to the amount paid by way of estate duty has been raised by the assessee for the first time before this Court. Before the Tribunal as well as before the High Court the contentions urged on behalf of the assessee were confined to a claim for deduction by way of cost of acquisition or cost of improvement under S.48 of the Act. The questions referred to by the Tribunal to the High Court have to be considered in the light of the said submissions. The submission regarding diversion involves the question whether apart from the deductions permissible under the express provision contained in S.48 of the Act, deduction on account of diversion is permissible in the matter of computation of capital gains under the Act. This is an entirely independent issue which has not been considered by the Tribunal or the High Court. It cannot be permitted to be raised for the first time at this stage. We, therefore, do not propose to go into this question. 14. While we are affirming the impugned judgment of the High Court, we are unable to endorse the view of the ....
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....nterest in the property by the mortgagor in favour of mortgagee and where the previous owner has mortgaged the property during his life-time, which is subsisting at the time of his death, then after his death his heir only inherits the mortgagors interest in the property. By discharging the mortgage debt his heir who has inherited the property acquires the interest of the mortgagee in the property. As a result of such payment made for the purpose of clearing off the mortgage the interest of the mortgagee in the property has been acquired by the heir. The said payment has, therefore, to be regarded as cost of acquisition under S.48 r/w S.55(2) of the Act. The position is, however, different where the mortgage is created by the owner after he has acquired the property. The clearing off the mortgage debt by him prior to transfer of the property would not entitle him to claim deduction under S.48 of the Act because in such a case he did not acquire any interest in the property subsequent to his acquiring the same. In CIT vs. Daksha Ramanlal (supra) the Gujarat High Court has rightly held that the payment made by a person for the purpose of clearing off the mortgage created by ....
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....or will; (iii) (a) by succession, inheritance or devolution, or (b) on any distribution of assets on the dissolution of a firm, BOI or other AOP, or; (c) on any distribution of assets on the liquidation of a company, or (d) under a transfer to a revocable or an irrevocable trust, or (e) under any such transfer as is referred to in cl. (iv) or cl. (v) or cl. (vi) of s. 47 the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. Explanation. - In this sub-section the expression "previous owner of the property" in relation to any capital asset owned by an assessee means the last previous owner of the capital asset who acquired it by a mode of acquisition other than that referred to in cl. (i) or cl. (ii) or cl. (iii) of this sub-section". The expressions "cost of improvement" and "cost of acquisition" for the purpose of ss. 48, 49 and 50 have been defined in S.55 of the Act. In cl. (b) of sub-s. (1) of S.55 "cost ....
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....Mrs.Susila Ammal in favour of the Assessee and to clear off that debt, the sale of the land in question alongwith other parts of the land had to be undertaken in the settlement of dues to the SBI under the OTS Settlement. 17. Therefore, while there is no doubt that the said contribution of the Assessee to the extent of the land settled in his favour would be part of cost of acquisition or cost of improvement of the asset acquired by him as per Section 48 and Section 55 of the Act, the computation of the same deserves to be gone by the Tribunal, being a fact finding body, to find out whether the said sum of Rs. 1,06,76,905/- vide the Table quoted above is correct amount or not and whether the advance of Rs. 4 Crores received from the Purchaser M/s.Martin Group on 19.8.2009 vide Demand Draft payable to ASREC (India) Limited is correct fact or not. 18. Obviously, the High Court cannot be expected to do such a computing exercise under Section 260-A of the Act. Therefore, a remand of the case to the Tribunal is necessary, since these aspects of facts do not seem to have been properly placed before the Tribunal, as they are sought to be argued before us now with the documents place....