TMI Blog2014 (12) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration' for computing capital gain in the hands of the owner of the property - thus, CIT(A) rightly held that asseessee being the legal owner has to be taxed for the capital gains arising from the sale of mortgaged shop – the order of the CIT(A) is upheld – Decided against assessee. - ITA No. 122/Rjt/2014 - - - Dated:- 31-10-2014 - G. C. Gupta, VP And Anil Chaturvedi, AM,JJ. For the Appellant : Shri R D Lalchandani, Adv. For the Respondent : Shri Yogesh Pande, DR ORDER Per Shri Anil Chaturvedi, Accountant Member: This appeal is preferred by the assessee against order of the learned Commissioner of Income-tax (Appeals)-IV, Ahmedabad dated 12.12.2013, passed u/s 143(3) of the Income-tax Act for the assessment year 2011-12. 2. The facts as culled out from the material on record are as under: 3. The assessee is an individual, stated to be having income from house property and other sources. A search action u/s 132 of the Act was carried out at the premises of the assessee on 24.06.2010. During the course of search, various materials were found and seized. On the basis of the documents seized, it was noticed that Smt Renu Anil Artwani had purchased f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances, following two questions arise- (i) Whether this sale consideration is to be treated as consideration received by the appellant for the purpose of computing capital gains? (ii) How much of the consideration is to be taken for computation of capital gains in the hands of the appellant? These questions have been answered by Hon'ble Apex Court in the case of CIT vs. Attili N. Rao [2001] 119 TAXMAN 1030 (SC) by holding that in a case where the property is mortgaged for securing the debt and subsequently, if the mortgagee sells the property and recovers the amount due to him and pays the balance of the sale price, if any, to the owner of the property, then, the 'gross amount' should be taken as the 'consideration' for computing capital gain in the hands of the owner of the property. Section 48 of the Income-tax Act, 1961 Capital gains Computation of Assessment Year 1982-83 Assessee, carrying on abkari business, had mortgaged certain property to State Excise Department to provide security for amounts of 'kist' which were due by him to State State sold immovable property by public auction to realise its dues A sum of ₹ 5,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer and the CIT(A). He further submitted that the assessee was a partner in the firm namely M/s. Tristar Electronics and Director in the company known as M/s. Sneh Power Systems Private Limited. The firm M/s. Tristar Electronics and company M/s. Sneh Power Systems Private Limited had taken a loan of ₹ 1.75 crores each from the Rajkot Commercial Co-operative Bank, for which the assessee was a guarantor. The assessee had given the shop (of which his share was 25%) as an equitable mortgage against the loans taken by the firm and the company. Since the firm and the company could not repay the loan, the shop which was mortgaged to the bank was taken over by the bank under the provisions of Co-operative Bank Act. The bank also filed a suit for recovery on 20.06.2008 and the matter was decided in favour of the bank on 01.08.2008. The bank thereafter proceeded for recovery of the assets on 15.10.2008 and on 22.10.2008 notice was issued for seizure of mortgaged properties and the shop was seized on 05.01.2009 and thereafter, after issuance of notice of auction, the shop was auctioned on 03.06.2010. The bank appropriated the sale proceed towards the outstanding loan of the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by him as, stock-in trade of a business carried on by him, such conversion or treatment ;][or] [(iva) the maturity or redemption of a zero coupon bond; or] [(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) ; or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. Explanation [1]: For the purposes of sub-clauses (v) and (vi), immovable property shall have the same meaning as in clause (d) of section 269UA]; [Explanation 2.- For the removal of doubts, it is hereby clarified that transfer includes and shall be deemed to have always included disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Pereira Ltd. vs. CIT (1964) 53 ITR 747 (Mad) where the Hon'ble High Court has held as under: Transfer is a word of the widest import and includes every means by which the property may be passed from one person to another. It includes transfer by operation of law in invitum. In the law of property, a transfer is where a right passes from one person to another, either (1) by virtue of an act done by the transferor with that intention, as in the case of conveyance or assignment by way of sale or gift, etc., or (2) by operation of law, as in the case of forfeiture, bankruptcy, descent or intestacy. Any divestiture of title would amount to a transfer. The transferor may not be a willing party. But nevertheless his title to the property is divested from him and the result is, the title is transferred. There is nothing in the context of s. 12B(1) to indicate that the word transfer should not be interpreted in a comprehensive meaning including both a transfer by act of parties and a transfer by operation of law. 13. In the case of Vadilal Soda Ice Factory Vs. CIT (1971) 80 ITR 711 (Guj), the Hon'ble Gujarat High Court has held as under: The word transfer is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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