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TMI Blog2024 (1) TMI 1341X X X X Extracts X X X X X X X X Extracts X X X X ..... an on mortgage of the property sold by him. Tribunal has rightly held that the assessment order by the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue. No substantial question of law. - Honourable Mr. Justice Bhargav D. Karia And Honourable Mr. Justice Niral R. Mehta For the Appellant(s) No. : Mr Nikunt K Raval(5558) For the Opponent(s) No. : Mr Manish J Shah(1320) ORAL JUDGMENT PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA 1. Heard learned Senior Standing Counsel Mr. Nikunt Raval for the appellant and learned advocate Mr. Manish J. Shah for the opponent on caveat. 2. By this Tax Appeal under section 260A of the Income Tax Act,1961 [hereinafter to be referred to as the Act,1961 ] the Revenue has propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer allowed the deduction for payment of Rs. 1,50,00,000/- made to Titco Ltd. 5. The PCIT, therefore issued a show-cause notice on the ground that the Assessing Officer had incorrectly allowed the deduction of payment to Titco Ltd amounting to Rs. 1.5 cores in view of the decision of the Apex Court in case of V.S.M.R. Jagdadishchandran vs Commissioner of Income Tax reported in 227 ITR 240 wherein it is held that where the property was not mortgaged by previous owner but by assessee himself, then the amount paid to discharge mortgage debts could not be treated as cost of acquisition so as to allow same as deduction. Accordingly, the PCIT set aside the assessment order on the ground that the order has been passed without making inqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not a case where no enquiry has been made by the assessee officer during the course of assessment proceedings. It is also not the case of the Pr. CIT that the Ld. AO failed to apply his mind to the issues on hand taken a view which was not legally plausible in the instant facts. As held by various courts, Principal CIT cannot in 263 proceedings set aside an assessment order merely because he has different opinion in the matter. In our view, s 263 of the Act does not visualise a case of substitution of the judgement of the Principal CIT for that of the Assessing Officer who passed the order unless the decision is held to be wholly erroneous. As noted in various judicial precedents highlighted above the Principal CIT on perusal of the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee submitted that the Tribunal has taken overall view considering the aspects on merits as well as the powers of the PCIT under section 263 of the Act,1961. It was submitted that the facts of the case before the Apex Court is distinguishable which is also evident from the order passed by the Apex Court wherein the Apex Court did not interfere in the order passed by the High Court on the fact that the mortgage was created by the assessee himself in the case before the Apex Court whereas in the facts of the case, the mortgage was not created by the assessee but was created by the Titco Ltd which was discharged by the assessee and to that extent, the assessee received less sale consideration. It was also submitted that for the discharge of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the assessee that there was an overriding title of the creditors in respect of the sale proceeds and, therefore, there was diversion at source on the basis of such overriding title and the assessee was not liable to charge under the capital gains in respect of the sale of the properties and, therefore, he deleted the capitals gains of Rs. 68,400 as computed by the ITO. The Tribunal, following the decision of the Kerala High Court in Ambat Echukutty Menon vs. CIT (1 (1978) 111 ITR 880 (Ker), and the decision of the Madras High Court in CIT vs. V. Indira (1979) 119 ITR 837 (Mad) held that clearing of the mortgage debt could neither be treated as cost of acquisition nor as an cost of improvement made by the assessee. The Tribunal, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the previous owner during his time and the same was subsisting on the date of his death, the successor obtains only the mortgagors interest in the property and by discharging the mortgage debt he acquires the mortgagees interest in the property and, therefore, the amount paid to clear off the mortgage is the cost of acquisition of the mortgagees interest in the property which is deductible as cost of acquisition under s. 48 of the Act. In the present case, we find that the mortgage was created by the assessee himself. It is not a case where the property had been mortgaged by the previous owner and the assessee had acquired only the mortgagors interest in the property mortgaged and by clearing the same he had acquired the interest of the mor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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