Case Law Details
Devendra Kumar Shroff Vs ITO (ITAT Kolkata)
We note that the immovable property which is in issue was initially owned by Smt. Bakul Rani Bose. And we note that Smt. Bakul Rani Bose bought the property by Indenture of Sale on 18.11.1949 from one Smt. Chitralekha Choudhrani (refer page 89 of paper book). Thereafter, the property was sold by Smt. Bakul Rani Bose to the assessee on 15.04.1976, which fact is seen from perusal of page 90 of paper book. The deed of conveyance mentions the fact that the land was purchased by the assessee vide Indenture of sale 15th day of April, 1976 made between Bakul Rani Bose and the assessee and was registered with the Additional District Sub Registration Office, Cossipore Dum Dum and Recorded in Book No. 1, Volume No. 48, pages 78 to 85, and the AO erred in making a factual finding that the property was purchased on 25.04.2000. And since the land was acquired before 01.04.1981, as per the provisions of the section 55(2) clause (b), the cost of acquisition of the land to the assessee or the fair market value of the land as on 01.04.1981, at the option of the assessee, could be taken to be the cost of acquisition of the land. We note that the Fair market value of the land was determined by the Certified Valuer Rs.8,30,000/- , which was taken to be the cost of acquisition by the assessee in his revised computation of income. It is noted that the valuation report received from such Valuer was furnished before the AO and is attached herewith in pg. nos. 136-144 of paper book. Thus, we are of the opinion that the computation of indexed cost of acquisition by the AO, taking the cost of acquisition at the cost price of 15.04.1976 without considering the provisions of section 55(2) clause (b) and taking the base cost inflation index at 406 is bad in law and we direct that Rs. 8,30,000/- must be taken as the cost of acquisition instead of Rs.1,122/-.. So we order accordingly.
ITAT Remand Back Case to Verify Capital Gain Chargeability
The issue under consideration is whether capital gain applicable when assessee as guarantor remitted consideration from sale of land to bank (lender) for squaring up loan liability of a third party (borrower)?
ITAT states that, in the instant case, they need to ascertain the facts as to firstly whether the sale of the property has been made directly by the SBI and the sale consideration was appropriated to the loan amount; or secondly whether the assessee has got the property sold and the buyer has deposited it directly to the SBI and thereafter the SBI appropriated it to the loan amount. On ascertainment of facts, it is revealed that the assessee’s case falls in the second category, then it is application of money of the assessee for repayment of loan and then the question of diversion of fund at the source by overriding title will not apply. However, if the facts of case falls in the first category then it would be case of diversion of fund at the source by over-riding title and the decision of CIT vs. Smt. Thressiamma Abraham (supra) would be applicable. Be that as it may be. It is observed that a vide letter dated 26.05.2007, SBI has written to the buyer of the property M/s. Svarna Infrastructure & Builders Pvt. Ltd (supra) to deposit the full value of the consideration with SBI, SSI Branch, Bhowanipore before signing the conveyance deed. However, the Facts are not clear. It is not clear from the document as to whether the SBI conducted the sale by Public Auction and then consideration money was deposited by the buyer directly with the bank; or the sale of property was carried out by the assessee and the sale consideration was deposited by the buyer in assessee’s account as per the SBI’s instruction or in the account of M/s. PPPL. From the discussion supra, it is needless to say that if the assessee has got the sale of property and consequently, if the money was routed through the bank account of the assessee before being finally appropriated towards the dues of M/s. PPPL, there cannot be diversion of income by overriding title and in that fact situation, capital gains tax liability would arise in assessee’s hands. In the interest of justice, ITAT, therefore, ITAT remand this issue back to the file of the A.O. for the limited purpose to verify the correct facts on the lines stated by them as above.
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