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2022 (3) TMI 1309 - AT - Income TaxCapital gain computation - Disallowing the deduction claimed as expenses while determined the capital gain - computation of income filed by the assessee that assessee has shown to have earned the compensation on acquisition of land for construction of NH-76 - assessee is a sick company under Sick Industrial Companies (Special Provisions) Act, 1985 - payment made directly to banks and financial institutions in pursuance of judicial order is still towards discharge of principle amount of loan and interest thereon - HELD THAT:- Assessee is a sick company under Sick Industrial Companies (Special Provisions) Act, 1985. We observe from the record that no doubt the land belongs to the company was transferred and assessee has received sale proceeds out of the above said sale proceeds and assessee has transferred being principal loan amount towards repayment to financial institutions from the compensation received from the NHAI based on the direction of Hon'ble High Court of Rajasthan. Observation of the Hon'ble Rajasthan High Court it is clear that there is a pre-existing overriding title and interest in the property of the company in favour of its secured creditors comprising of Financial Institutions and Banks on paripassu basis by virtue of joint equitable mortgage credit on 1st June 1994. Since assessee has defaulted and not able to service any of the loan to the financial institutions, by virtue of failure, the assets belong to the assessee with the overriding title and interest in the property is already passed to the secured creditors. Based on the direction of the Hon'ble Rajasthan High Court the financial institutions are directly secured the property and collected the sale proceeds. The sale proceeds were distributed among the financial institutions without there being any involvement of the assessee. Since the property transferred was with pre-existing lien with the overriding title and technically assessee is not the owner of the property which was duly transferred. Therefore, the assessee cannot be asked to pay the tax on the same. Accordingly, we are not in agreement with the finding of the Ld.CIT(A). See SITALDAS TIRATHDAS [1960 (11) TMI 17 - SUPREME COURT] - Decided in favour of assessee.
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