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Capital gains

CA. K George Philip (Partner) (226 Points)

11 March 2017

Sale of residential house given as collateral security to Bank for a loan taken by the Company where seller is a Director. Entire sale consideration adjusted against by bank against loan. Any capital gain for seller ?

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4 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160327 Points)
Replied 11 March 2017

Director/owner and company are two different entities. CG tax liability arises over owner, which cannot be set-off by any loss of company!

manoj (student) (5205 Points)
Replied 11 March 2017

AGREE WITH SIR

Ajit Hegde (CA - Final) (1367 Points)
Replied 12 March 2017

Much more details are required to answer this question. Prima facie There is no capital gain to the director. Basically Capital gain to be taxed for any profits and gains arising out of transfer. In this case the amount of realisation in uts entirety is adjusted to the loan.

And director being a guarantor, is not liable to any capital gain. Further it has to be seen whether company has reimbursed the loan amount to the director for adjusting the loan amount against the property. Refer case law CIT Vs Smt. Thressiamma Abraham292/Del/2010 wherin it is held that there is no transfer as such and no capital gain arises for the assessee being a guarantor.

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CA. K George Philip (Partner) (226 Points)
Replied 12 March 2017

Thank you very much. The decision in CIT Vs Smt. Thressiamma Abraham seems to be helpful. Besides, Income Tax Appellate Tribunal decision in Delhi Additional Commissioner Of ... vs Glad Investments (P.) Ltd is also equally good.

Thank you once again.