Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (6) TMI 150 - AT - Income TaxSTCG - Allowability of sum paid to Cosmos bank against the total sale consideration - deduction towards amount of principal and interest paid on the outstanding loan from M/s Cosmos cooperative Bank Ltd, which was paid directly by the purchaser to the bank, for the purpose of issuing NOC by the said bank and releasing the mortgaged properties with this bank - allowability of deduction from the sale consideration received on account of sale of factory premises, plant and machinery, furniture and fixture etc. on slump sale basis to M/s Sukriti Polymers - HELD THAT:- In our considered view, it is difficult to accept the argument of the assessee that this amount of ₹ 3.8 crores is a charge by overriding title and hence this sum never accrued to the assessee in the first instance. In a considered view, this charge on property was created by the assessee company itself since it took business loan from M/s Cosmos Bank Ltd by mortgaging the impugned property. Therefore, clearly this amount represents application of income and not diversion by overriding title and the assessee cannot claim deduction thereof from the sale consideration. In light of the above analysis and the case of CIT vs. Attili N. Rao [2001 (10) TMI 5 - SUPREME COURT] and CIT v. Roshanbabu Mohammed Hussein Merchant [2005 (1) TMI 53 - BOMBAY HIGH COURT], which are directly and squarely applicable to the assessee’s set of facts, we are of the considered view, that the said amount represents application of income and does not qualify as “diversion of income by overriding title” and the assessee is not entitled in the instant set of facts to claim deduction thereof from the sale consideration received on the impugned property in question. The cases relied upon by the assessee are not directly applicable to the assessee’s set of facts and are distinguishable in the instant set the facts. In the result, we hold that the Ld. CIT (Appeals) has not erred in facts and law in confirming the action of the AO in disallowing the sum of ₹ 3,80,00,000/-from the sale consideration. Estimation of net profit @ 2.5% as against business loss - HELD THAT:- It is seen that the books of account were never produced either before the AO or Ld. CIT(Appeals) for their consideration. Accordingly, in absence of production of books of account, in our considered view, the Ld. CIT(Appeals) has been quite reasonable in restricting the net profit @2.5% of the total turnover. Therefore, we are of the view that Ld. CIT(Appeals) has not erred in facts and law in restricting the net profit @2.5% of the total turnover in instant set of facts.
|