TaxTMI 
TaxTMI 
2022 (6) TMI 150
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....vidence produced by the appellant. 2.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the following additions: a) Short term capital loss on sale of plan and machinery Rs.30,45,512/-(loss) b) STCG on sale of buildings Rs.3,54,44,519/- c) Business profit @2.5% Rs.5,55,186/- 2.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have made above said additions. 3.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the sale consideration of building and office at Rs.3,99,06,000/- without making allowance for the liability owed to Cosmos Cooperative Bank ltd. of Rs.380 lakhs. Therefore, the sale consideration accruing or arising to the appellant was only Rs.19,06,000/- and the STCG ought to have been worked out thereon. Thus, the Ld. CIT(A) has grievously erred in confirming STCG of Rs.3,54,44,519/- as against the loss of Rs.25,05,481/-. 3.2 That in the facts and circumstances of the case as well as in law, the ld. CIT(A) has grievously erred in not allowing the loan liability aggregating to Rs.380 lakhs owed to Cosmos Coop. Bank Ltd. ....
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....ssuing NOC by the said bank and releasing the mortgaged properties with this bank. Accordingly, after making the adjustments, the AO worked out the net short term capital gain of Rs. 3,23,99,007/- on sale of factory premises, plant and machinery, furniture and fixtures etc. to M/s Sukruti Polymers. Further, the AO rejected the book loss declared by the assessee and estimated the net profit @5% of the turnover, in absence of the assessee causing appearance before him during the course of assessment proceedings and producing books of accounts for verification. 3.1 In appeal, the counsel for the assessee submitted that the claim of the assessee for deduction of Rs. 3,80,00,000/- which was for clearing the dues of Cosmos Bank was an allowable deduction since the property was mortgaged with the bank for claiming credit facilities during the course of business, but since due to severe cash crunch, assessee could not repay the debt of the bank, it decided to sell the property in order to clear the bank dues. Accordingly, Cosmos Bank agreed to issue NOC for sale of this mortgaged property, provided the purchaser would repay the outstanding bank liability. Therefore, counsel for the asse....
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....ncome" which accrues to the assessee could be taxed in his hands. The counsel for the assessee reiterated the judgements on which reliance was placed before Ld. CIT(Appeals) in support of the above arguments. He also contended that Ld. CIT(Appeals) has erred in restricting the net profit to 2.5% of the turnover. The counsel for the assessee placed reliance on the case of Gopee Nath Paul & Sons 278 ITR 240 (Calcutta), wherein it was held that where in the instant case, without removing the liability of the bank, the title of the purchaser could not be perfected. Having regard to the facts and circumstances of the case, and the position in law, the meeting of the liability of the bank relating to the assets of 'GS' was an expenditure incurred wholly and exclusively in connection with the transfer. On the issue of taxability of "real income", the assessee placed reliance on the case of Balbir Singh Maini [2017] 86 taxmann.com 94 (SC) in which it was held that this income must have been received or have 'accrued' under section 48 as a result of the transfer of the capital asset. In response, the Ld. DR submitted that the argument of the counsel for the assessee that there is di....
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.... the immovable property by public auction to realize its dues. A sum of Rs. 5,62,980 was realized at the auction. Out of that, the State deducted the amount of Rs. 1,29,020, due to it towards 'kist' and interest and paid over the balance to the assessee. It was the assessee's contention that the amount due to the State Excise Department, i.e., Rs. 1,29,020, should be deducted while computing capital gains besides allowing other deductions. Neither ITO nor the appellate authority agreed with the assessee. The Tribunal upheld the assessee's claim. The High Court upheld the Tribunal's order. In appeal, the Supreme Court held that what was sold by the State at the auction was the immovable property that belonged to the assessee. The price that was realised, 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 was on the full price realised that the capital gain and the tax thereon had to be computed. Therefore, the High Court was not co....
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....ge debt. In such a case, the expenditure incurred by the assessee to discharge the mortgage debt created by the previous owner to acquire absolute interest in the property is treated as 'cost of acquisition' and is deductible from the full value of consideration received by the assessee on transfer of that property. However, where the assessee acquires property which is unencumbered, the assessee gets absolute interest in that property on acquisition. When the assessee transfers that property, the assessee is liable for capital gains tax on the full value realized, even if an encumbrance is created by the assessee himself on that property and the assessee is under an obligation to remove that encumbrance for effectively transferring the property. In other words, the expenditure incurred by the assessee to remove the encumbrance created by the assessee himself on the property which was acquired by the assessee without any encumbrance is not allowable deduction under section 48. [Para 14] It was not in dispute that the property on which the encumbrance was created by the assessee was acquired by the assessee free from encumbrances. Therefore, it must be said that the....