|The Tax Publishers2020 TaxPub(DT) 4051 (Mad-HC) : (2020) 275 TAXMAN 0196
INCOME TAX ACT, 1961
Section 45 Section 48 Section 55
Where on land mortgaged to bank for loan and for repayment thereof whether contribution of the assessee to the extent of the land settled in his favour would be part of cost of acquisition or cost of improvement of the asset acquired by him as per section 48 and section 55, the computation of the same deserves to be gone into by the Tribunal, being a fact finding body.
Capital gains - Computation - Cost of acquisition and cost of improvement -
Land of 3 acres in question, which was in the form of collateral security with SBI, had been settled by Mrs. Ammal in favour of the assessee and to clear off that debt, the sale of the land in question along with other parts of the land had to be undertaken in the settlement of dues to the SBI under the OTS Settlement. Assessee claimed that a sum of Rs. 1,06,76,905 was part of his contribution of the Settlement amount of Rs. 9,60,00,000 being the amount agreed in OTS to clear up the dues to SBI, through its Asset Reconstruction Company, ASREC (India) Ltd. and therefore, the said amount forms part of 'cost of acquisition or cost of improvement' under section 48 read with section 49 and the same is liable to be deducted from the sale value of land to compute capital gains tax liability. However, the same was disallowed by the authorities below. Tribunal took the average value adopted on the consideration of the SRO's guideline value and the Chartered Engineer's valuation report to quantify the cost of acquisition being the fair market value as on 1-4-1981 in the recomputation of long-term capital gains despite the settled position on the sanctity of SRO's guideline value. Held: While there was no doubt that the said contribution of the assessee to the extent of the land settled in his favour would be part of cost of acquisition or cost of improvement of the asset acquired by him as per section 48 and section 55, the computation of the same deserves to be gone into by the Tribunal, being a fact finding body, to find out whether the said sum of Rs. 1,06,76,905 was correct amount or not and whether the advance of Rs. 4 Crores received from the Purchaser M/s. Martin Group on 19-8-2009 vide Demand Draft payable to ASREC (India) Limited was correct fact or not. Therefore, in respect of issue regarding computation of capital gain in the hands of assessee and to compute the cost of acquisition properly in the light of the decision of the Supreme Court. The matter was, therefore, remitted back to the Tribunal to decide the appeal of the assessee on that ground once again.
Followed:R.M. Arunachalam, etc. v. CIT (1997) 227 ITR 222 (SC) : 1997 TaxPub(DT) 1307 (SC).
FAVOUR : Matter remanded.
A.Y. : 2010-11
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