TMI Blog2017 (4) TMI 1471X X X X Extracts X X X X X X X X Extracts X X X X ..... outstanding dues. However, this in my opinion will not establish an overriding title to the borrower on the income arising out of the sale of the property. Offering a property as a collateral security and selling the property which was offered as a collateral security are two independent and different transactions. Just because the seller is duty bound to pay the proceeds to the borrower for the settlement of the loan, would not perse create an overriding title on the income arising from the sale of the property. It is not a pre-existing title on the income arising out from the sale of the property. The proceeds of the sale are only used to satisfy a debt. When proceeds of a sale is used to satisfy the debt, the debt cannot be set off again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of property in its return of income. For arriving at such loss assessee s had set off the amount paid by them to M/s. Axis Bank on a loan raised a company called M/s. Shreyas Communication and Services P. Ltd, in which the assessee s were Directors. Subject property which was sold was offered as collateral for the loans raised by the said company from M/s. Axis Bank. Argument of the assessee before ld. Assessing Officer was that there was diversion of entire consideration received at source to M/s. Axis Bank, before it became the income of the assessees. As per the assessees, bankers had taken possession of the house preventing any transactions, without settling the loan taken by the company. Contention of the assessee was that advance rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions relied on by the assessee were completely different on facts. According to him, by virtue of the judgment of Hon ble Apex Court of Attili N. Rao (supra) the additions were rightly made by the ld. Assessing Officer. While holding so, the Ld. Commissioner of Income Tax (Appeals) made a detailed analysis of the judgment of Apex Court in Attili N. Rao (supra) and reached a conclusion that facts were very similar. He thus upheld the order of the ld. Assessing Officer. 5. Now before me, ld. Authorised Representative reiterated the same contentions which were taken before the lower authorities. Further, according to him, by virtue of Sec. 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Securit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was a one time settlement entered between the company and Axis Bank, whereby the bank agreed to settle the loan for a sum of F70,00,000/- against the due of F93,35,000/-. Assessee s on 11.08.2010 entered into a sale agreement for selling the residential property offered as collateral, and received a consideration of F70,00,000/- from the buyer who paid the amount directly to the bank accounts of the assessees. The money which came in to the bank accounts of the assessee s was paid for settlement of the loan and thereafter the document of the property were released by the bank. The question before us, is whether the above sequence show diversion of income through overriding title. No doubt by virtue of SARFAESI Act once the borrower ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason the Tribunal held the creditors to have an overriding title on the income arising from the sale of shares. However, in the instant case before me, there was no transfer of ownership of the property to M/s. Axis Bank when the property was offered as collateral. Coming to the decision of Delhi Bench in Rajasthan Petro Synthetics Ltd (supra) the question there was whether taking over of the possession and control over of the assets of the borrower by a secured lender would tantamount to transfer of assets from the borrower to the lender. Co-ordinate Bench held that lender never became the owner of the assets nor acquired ownership of the assets. This case in my opinion only further the view taken by the Revenue and does not help the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly ₹ 4,33,960/-, i.e., ₹ 5,62,980/ minus ₹ 1,29,020/-. 17.On perusal of the above case law, it is noticed that in the referred case the impugned capital asset was mortgaged by the assessee with State Government to provide security for the amounts of 'kist' which were due by him to the State. In the present case of the appellant, the impugned property was mortgaged as collateral security for obtaining loan for the company in which the appellant and his wife were directors/shareholders and not for their own business purposes. As categorically held in the above referred case, the amount of interest deducted' by the State Government, cannot be reduced as cost of acquisition of capital asset for calculatin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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