TMI Blog1994 (5) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... . 60 lakhs was due to the bank under the mortgage, at a time when the petitioners entered into an agreement to sell the property to ten persons, under different assignment deeds, for a total consideration of Rs. 10,33,966. The bank agreed to release the mortgage on the property, if an amount of Rs. 9 lakhs was paid towards the outstandings. The amount was accordingly deposited by the petitioners on June 21, 1985, through the purchasers, or with funds made available by them, and the bank released their mortgage right on the property. The deeds of assignment were thereafter executed and the property sold in accordance with the agreement to sell. The petitioners filed returns for the purposes of assessment under the Income-tax Act, 1961 ("th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the revision petitions by the order, exhibit P-6, which is under challenge in these writ petitions. The contention of counsel for the petitioners is a very ambitious one. He states that what is transferred is only the equity of redemption for which the consideration is Rs. 10,33,966 minus Rs. 9 lakhs, i.e., Rs. 1,33,966. According to him, the full value of the consideration for the purpose of section 48(1)(a) is only that which is actually received by the vendors, there being a diversion at source of the amount paid for discharging the mortgage. It is, therefore, contended that the consideration is only that amount that is left after the discharge of the mortgage. According to counsel, Ambat Echukutty Menon [1978] 111 ITR 880 (Ker) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce thereon. This is because the mortgage was discharged by payment of Rs. 9 lakhs and it was only thereafter, that the sale deeds were executed by the petitioners. On the date of the sales, the mortgage had been extinguished and what the petitioners transferred was the full right in the property sans any mortgage. No doubt, the petitioners state that the payment of Rs. 9 lakhs was made through the purchasers or with their assistance. But this is irrelevant as the payment was made in discharge of the dues of the petitioners and the receipts were made out in their names. It was a payment made by them. The mortgage was not kept alive by any subrogation in favour of the purchasers. The sale was, therefore, of the property as such without any en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount is reserved with the vendee for payment to the mortgagee, the fact remains that it is the money of the vendor already paid or due, that is utilised for the purpose. And it is the vendor's liability that is discharged. The amount paid for discharging the mortgage is thus part of the consider ation for the vendor parting with his rights in the property. The consideration for the sale by the petitioners was thus Rs. 10,33,966 and not this amount reduced by Rs. 9 lakhs. There is no diversion of any amount at source or by overriding title as contended, as the amount of Rs. 9 lakhs had actually reached the petitioners and gone in discharge of their dues. I do not think this contention requires any serious consideration. The furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by succession or inheritance on the death of P, who had acquired the property in December, 1953, under section 49(1) of the Income-tax Act, 1961, the cost of acquisition of the asset is to be deemed to be the cost for which the previous owner P acquired it, as increased by the cost of any improvement of the assets incurred or borne either by the previous owner or the assessee. The original cost of the property was Rs. 49,920. Having regard to the definition of 'cost of improvement' contained in section 55(1)(b), in order to entitle the assessee to claim a deduction in respect of the cost of any improvement, the expenditure should have been incurred in making any additions or alterations to the capital asset that was originally acquired by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adabhoy Kapadia v. CIT [1967] 63 ITR 651, though I do not find any applicability for it to the facts of this case. The assessee in that case relinquished her right to acquire certain right shares in a company of which she was a shareholder, and made a capital gain of Rs. 45,262.50 in the process. She sought deduction from this amount, of the capital loss suffered by her by the diminution in value of her shares by reason of the enlarged shareholding consequent on the new issue. This was accepted and the capital loss was directed to be deducted from the capital gains. As I stated earlier, this decision holds no analogy for the case on hand. I, therefore, hold in concurrence with Ambat Echukutty Menon's case [1978] 111 ITR 880 (Ker), that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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