ITO Vs Surendra Nath Gubbala (ITAT Visakhapatnam)
ITAT Visakhapatnam held that amount paid to clear mortgage/encumbrances on title of property is rightly claimed as deduction under section 48(1) of the Income Tax Act. Accordingly, appeal of revenue is dismissed.
Facts- Assessee had sold immovable property and out of the sale consideration an amount of Rs. 9 Crore was paid to clear mortgage/encumbrances on the title of the property. Assessee claimed the said amount under section 48(i) as wholly and exclusively in connection with transfer. However, AO disallowed the said claim. CIT(A) allowed the appeal of the assessee. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that finding no infirmity in the order of the CIT(A), wherein he had based on a well-reasoned order, observed that the sum of Rs. 9 crores paid directly by the purchaser of the subject property to clear mortgage /encumbrances on the title of the property that was provided to the said banks as collateral by the assessee as a guarantor for the loans raised by third-party companies, i.e., M/s. Siva Sivani Surgical Cottons Pvt. Ltd. and M/s. Maddipoti Consultants Pvt. Ltd.; AND (iii) M/s Kothapeta Settibalija Ramamandiram Committee (Rs. 2.00 crores) in order to settle the title disputes of the rival claimant, was rightly claimed as a deductible by the assessee under section 48(1) of the Act, while computing the “Capital gains” on the sale of the subject properties, uphold his order. Accordingly, ground of appeal raised by the revenue are dismissed.
