TMI Blog1997 (7) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - Dated:- 9-7-1997 - D. P. WADHWA. and S. C. AGRAWAL. JUDGMENT The judgment of the court was delivered by S. C. AGRAWAL J. --- Special leave granted. This appeal by the assessee is directed against the order dated July 25, 1984, passed by the Madras High Court in T. C. No. 145 of 1983 wherein the High Court on an application filed under section 256(2) of the Act declined to direct the Tribunal to state a case and refer the following questions of law to the High Court : " 1. Whether the Tribunal was right in holding that the levy of the capital gains of Rs. 68,400 is proper under the facts and circumstances of the case ? 2. Whether the Tribunal was right in holding that mortgage debts does not constitute diversion at s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Kerala High Court in Ambat Echukutty Menon v. CIT [1978] 111 ITR 880, and the decision of the Madras High Court in CIT v. V. Indira [1979] 119 ITR 837, held that clearing of the mortgage debt could neither be treated as " cost of acquisition " nor as " cost of improvement " made by the assessee. The Tribunal, therefore, held that the deduction of the capital gains was not justified. Since the Tribunal declined to refer to the High Court the questions referred to above, the assessee filed an application under section 256(2) of the Act before the High Court which has been rejected by the impugned order. The High Court has relied upon the decision of the Full Bench of the High Court in S. Valliammai (Smt.) v. CIT [1981] 127 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 48 of the Act. In the present case, we find that the mortgage was created by the assessee himself. It is not a case where the property had been mortgaged by the previous owner and the assessee had acquired only the mortgagor's interest in the property mortgaged and by clearing the same he had acquired the interest of the mortgagee in the said property. The questions raised by the assessee in the application submitted under section 256(2) of the Act do not, therefore, raise any arguable question of law and the said application was rightly rejected by the High Court. In the circumstances, even though we are unable to agree with the reasons given in the impugned order, we are in agreement with the order of the High Court dismissing the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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