TMI Blog2019 (10) TMI 979X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore, we deem it fit to remit this issue back to the AO who shall refer the matter to DVO and proceed to determine the issue in accordance with law. The assessee s corresponding grounds of the appeal are treated as allowed for statistical purpose Guarantee / security for the borrowals made by other entities given - benefit or accrue any benefits from the transfer - HELD THAT:- The assessee has pledged its property to Canara Bank as a security to the loan availed by its group concerns. No lay man can execute a deed of mortgage of his property against the loan availed by a third party/ parties, until and unless the individual has substantial interest over them. Thus, it is clear that the assessee availed loan from the Bank under the banner of group concerns by mortgaging its own property and group concerns failed to repay the loan, the bank sold the property and the entire consideration was recovered by the bank. Thus, it cannot be held that the assessee has not received any consideration directly or indirectly, which were liable to tax. As decided in CIT v. Attilli N. Rao [ 2001 (10) TMI 5 - SUPREME COURT ] it is clear that the mortgaged property sold, in disch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be arrived at based on the guideline value furnished by the SRO as on 01.02.1989. The assessee clarified before the AO that in 1975-77 there was no immediate public demand for land in Guindy Estate. As such, the Government has allotted the land to the assessee almost free, so that industries can develop and that is why the rate of land was at the rate of ₹ 1.26 per sq.ft. During the period 1975-1980, the amenities and infrastructure development took place in the industrial area of Guindy and it is evident from the approved valuer s report that the rate of land in 1975 was at ₹ 1.26 per sq.ft. In 1975-80, development took place and therefore in 2015, the rate of land is at ₹ 8,500/- per sq.ft. Increase in rate from 1975 to 2014 it is ₹ 8,499/- per sq.ft. Therefore, average for 39 years (8499/39) increase is for ₹ 217/- per year and therefore from 1975-1981 increase for 5 years works out to ₹ 1085 per sq.ft. (217 x 5) and accordingly the Government approved valuer has adopted the land rate at Fair Market Value at the rate of ₹ 684/- per sq.ft. is reasonable. Considering the indexed cost of acquisition of 1981, the value of the land would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho has inspected the site, made extensive inquiries and valued the same at ₹ 684 per sq ft. in 1981. Even though all infrastructure developments were made by the Government only during 1975-1981, the valuer has adopted only 63% of the average increase method. 3. The Assessing Officer called for the 1981 Valuation from the Sub- Registrar who replied that the 1981-1982 records are damaged and are not available. However, he gave a ridiculously low Guideline value of ₹ 8.33 per sq ft. in 1981. 3. It is submitted that the Honorable Supreme Court in the case of R. Sai Bharath Vs J. Jayalalithaa and others has held the Guideline value is not the Fair Market Value. It is Trite Law that the Guideline Value published by the Registration Department is not a conclusive evidence to work out the Fair Market Value as on 01.04.1981. 4. It is also submitted that the IT Appellate Tribunal B Bench Chennai in ITA 619/MDS/2012 Assessment 2007-2008 held that the Guideline Value of ₹ 5/- per sq ft. is abysmally low and directed the Assessing Officer to accept the value of ₹ 454 per sq ft. reported by the Registered Valuer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal are treated as allowed for statistical purpose 5. The next is in connection with the additional ground. It is submitted that the assessee firm had given guarantee / security for the borrowals made by other entities. The assessee did not receive any benefit or accrue any benefits from the transfer and therefore , the levy of Capital Gains Tax is not correct. The assessee contends that since it has not received any benefit from the transfer of its property given as security to bank others for borrowals made by other entities, no capital gain is leviable. The Appellant relies on the case law ITA (2006) 102 ITD 227 (Delhi) - Additional Commissioner of Income-Tax, Special Range-26, New Delhi Vs. Glad Investments (P) Ltd., a copy of which is enclosed. The Appellant submitted that the property was sold for ₹ 30 crores, the sale proceeds of which were disbursed to Bank and creditors of other entities and the disbursement details are also submitted herewith. In view of the above, the legal question now raised is to cancel the levy of Capital Gains Tax. 6. We heard the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Appellate Tribunal. 6. The Tribunal upheld the assessee's claim. According to it, the full sale price realised by the sale of the immovable property had two components; the first represented the price which could be ascribed to the interest of the assessee in the immovable property and the rest represented the arrears of debt and interest due to the State. In its opinion, as there was a clear charge or mortgage over the immovable property, the amount realised under the charge or mortgage was an amount which never reached the hands of the assessee but which reached the Government by overriding title. 7. From out of the judgment and order of the Tribunal, the questions aforestated were placed before the High Court for its consideration. The High Court observed that the undisputed fact was that the immovable property was mortgaged to the State. Thereby, an interest in the property was created in favour of the State. When the immovable property was sold by public auction, its value had to be reduced to the extent of the interest that was created in favour of the State by reason of the mortgage. 8. We are of the view tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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