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| The Tax Publishers2021 TaxPub(DT) 0046 (Mad-HC) INCOME TAX ACT, 1961
Section 48
Where assessee continued to have title over the property along with her co-owners and brought the property to sale through Bank, further, there was no diversion of sale proceeds by virtue of overriding title, but on the contrary, there was only a mere application by the owners themselves of the profits realized on the sale of land towards the discharge of loan obligations of same firm, therefore, Revenue was justified in computing the capital gains.
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Capital gains - Cost of acquisition - Diversion of the sale proceeds towards redeeming the interest of the mortgagor -
Assessee along with two persons purchased a landed property and sold the same. Assessee's share was one-third of the total capital gain. Regarding capital gain the contention of assessee was that the entire sale consideration was directly paid towards loan amount with bank. This happened because company was unable to repay the loan and the co-owners including the assessee was asked by the bank to repay loan payable by the company and for that purpose the assessee sold the land. Assessee had not received any consideration and therefore, there was no capital gain arising out of the above sale. However, AO rejected the contention of the assessee and he computed the capital gain as per sections 48 and 49. Held: Assessee, in the present case, continued to have title over the property along with her co-owners. They brought the property to sale through Bank. There was no diversion of sale proceeds by virtue of overriding title, but on the contrary, there was only a mere application by the owners themselves of the profits realized on the sale of land towards the discharge of loan obligations of same firm. Assessee cannot claim any part of such application as cost of acquisition for the purpose of computing capital gains as per the provisions of section 48. Therefore, Revenue was justified in computing the capital gains.
Followed:V.S.M.R. Jagadishchandran (DECD.) v. CIT 1997 TaxPub(DT) 1309 (SC) RM. Arunachalam v. CIT (1997) 227 ITR 222 (SC) : 1997 TaxPub(DT) 1307 (SC) Tmt. D. Zeenath v. ITO 2019 TaxPub(DT) 2284 (Mad-HC) CIT v. N. Vajrapani Naidu (2000) 241 HR 560 (Mad) : 2000 TaxPub(DT) 0384 (Mad-HC) CIT v. Thressiamma Abraham (No. 1) (1997) 227 ITR 802 (Ker) : 1997 TaxPub(DT) 0739 (Ker-HC) S. Valliammai & Another v. CIT (1981) 127 ITR 713 (Mad) : 1981 TaxPub(DT) 0846 (Mad-HC) CIT v. V. Indira (1979) 119 ITR 837 (Mad) : 1979 TaxPub(DT) 0903 (Mad-HC) Ambat Echukutty Menon v. CIT (1978) 111 ITR 880 (Ker) : 1978 TaxPub(DT) 0551 (Ker-HC).
REFERRED :
FAVOUR : Against the assessee
A.Y. :
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